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Brazil Tax Laws and Tax System 2014













Brazil Income Taxes 2014


Last partial update, October 2014.

Individual Income Tax: Brazil's individual income tax rates for 2014 are progressive, from 7.5% to 27.5%.

Personal annual tax rates 2014 (BRL)


Income (BRL) %
1-21,453 -
21,454-32,151 7.5
32,152-43,869 15
43,870-53,566 22.5
Over 53,566 27.5


Note: Nonresidents pay a flat 27.5% tax on income earned in Brazil

Corporate Tax: Brazil's combined corporate tax rate for 201Addiyional is 34%. The tax consists of a basic tax of 15%. There is also a surtax of 10% for annual income of over BRL 240,000, about $ 110,000. Addiyional 9% are added for social contribution on net profits.
Capital Gains: Capital gains of companies are added to the regular income.
Individuals: Pay 15% tax on capital gains, dividend income from local companies is tax exempt.


Residence

A foreign company is resident if incorporated in Brazil.
An individual is resident when holding a permanent visa, or a temporary visa with an employment agreement, or even without an employment agreement, when staying in Brazil for more than 183 days within 12 months.




Brazil Tax Deductions

  • Operating losses are carried forward indefinitely. In future years only 30% of the current year taxable income can be set off against the loss.
  • Depreciation is deducted using the straight line method. Companies working in 2 shifts can claim 150% of the standard rates, while companies working in 3 shifts are entitled to 200% of the standard rates.
  • Companies involved in development of technical research can use accelerated depreciation for tax purpose.
  • There is no company consolidation for tax purpose.
  • Thin capitalisation rules relating to interest expenses are in effect in Brazil from 1.1.2010.
  • In general the related party debit to equity ratio must not exceed 2:1 ratio.




Brazil Personal Credits and Deductions

For Brazilian residents, the first annual income of BRL 21,453 is tax exempt.
There is a standard monthly deduction for each dependant.
Education expenses are deductible, up to a limit.
Deductions are also permitted for social security payments by an employee, payments to private Brazilian pension plans, up to a limit, and for alimony payments.


Deduction of Tax at Source

In Brazil tax is deducted at source from the following payments to non residents:
Dividend- 0%.
Interest- 15%/25%.
Royalties- 15%.
Services -15%/25%.


Social Security

The contributions by the employer and the employee are subject to ceiling defined by law.

Employer: 36.8% of the gross salary, 28.8% social security and 8% for severance fund.
Employee: 8% -11% of the gross salary. The employee's payment, which is capped, is based on a "contribution salary table", provided by the government.


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