Brazil Income Tax and Corporate Tax Rate

Brazil Income Tax Rate 2018-2019 for salaried Individuals, Self employed persons, Resident individuals and Corporate / Companies.

 

 

Brazil Individual Income Tax Rate for 2018-2019

 

Monthly Taxable Income Slab Tax Rate
Less Than BRL 1903,98 0%
1903,99 to 2826,65 7.5%
2826,66 to 3751,05 15%
3751,06 to 4664,68 22.5%
4664,69 and above 27.5%

 

How to determine residents and non resident taxation in Brazil

Withholding tax 25%

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

 

Capital Gain Tax Rate in Brazil for 2018-2019

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 Tax Rates

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)

Brazil Corporate / Company Income Tax Rate 2018-19

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

- alimony

-  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.

 

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