|Annual Taxable Income Slab||Tax Rate|
|Less Than BRL 22,848||0%|
|BRL 22,849 to 33,920||7.5%|
|BRL 33,921 to 45,012||15%|
|BRL 45,013 to 55,976||22.5%|
|BRL 55,977 and above||27.5%|
How to determine residents and non resident taxation in Brazil
Nutralised Foreigners with a permanent visa or a temporary visa and a local work contract or who live in Brazil for at least 183 days in the year are considered as residents.
Resident taxpayers are taxed on their worldwide income, unless otherwise agreed in a tax treaty. Non-residents of a non-treaty country are liable for a flat rate 25% tax on their wages earned in Brazil and 15% on their other income.
What are the deductions and Tax Credit allowed in Brazil
The following items are deductible while calculating monthly tax liability
- Social security and pension contributions to Government entities
- Alimony and pension amounts decreed by court
- Dependent allowance (BRL 189.59 per capita)
- Tuition expenses.
Some deductions, such as those for dependants, alimony, and Brazilian official social security contributions are allowed on monthly basis
15% is the flat rate of Capital gain tax. Transactions below BRL 35,000 is exempt in each month.
- Gift tax upto 8% is applicable in case of transfer of estate by donation or inheritance
- 4% tax rate in Sao Paulo and Rio de Janeiro
|Taxable Income Slab||Tax Rate|
|0 to $ 87,000||32.5c per $1|
|$87,001 to $180,000||$28,275 + 37c per $1 over $87,000|
|$180,001 and above||$62,685 + 45c per $1 over $180,000|
Medicare Levy is not applicable to Foreign residents
Working holiday makers are liable to pay tax regardless of residency for tax purposes. The following visa subclass classifies working holiday maker.
- 417 (working holiday)
- 462 (working holiday)
Tax Rates as of January 1 2017
|Income Category||Tax Rate|
|Corporate Income Tax||15%|
|Surtax on companies with corporate taxable profits over BRL 240,000||10%|
|Social Contribution tax (non deductible)||9% (20% for financial institutions, Private insurance companies and capitalization companies until 2018)|
|Effective Tax Rate||34%|
Capital Gain tax rate
|Capital Gains||Tax Rate|
|Less Than BRL 5,000,000||15%|
|BRL 50,00,000 to 10,000,000||17.5%|
|BRL 10,000,000 to 30,000,000||20%|
|BRL 30,000,000 and above||22.5%|
Non Resident investors are subject to obligatory withholding tax of 15% - rising to 25% for residents of tax heavens for capital gain investments registered with the central bank
Deductions and Credits
All the expenses necessary for company activity are deductible.
Other deductible items
- Social security taxes
- Private pension contributions
- qualifying educational and medical expenses and qualifying cultural contributions
Taxpayers may also elect for a standard annual deduction of 20% of taxable income, capped at BRL 16,754, instead of itemising deductions.
Exemptions and reductions of corporate income tax are provided for businesses in certain less developed areas.
Foreign tax credit is available for resident companies on foreign income tax paid, generally limited to the amount of CIT and SCT on the foreign income.