Tax complexity should not drive away foreign companies from Brazil

Specialized support can be the difference to establish your company in the country


The Brazil tax system is known to be complex. The high number of taxesdifferent methods of calculation, constant changes in tax rules and several exceptions are known characteristics in the country. To get an idea of the bureaucratic obstacles, in 2017, 86% of Brazilian companies had at least one pending tax payment or did not comply with the requirements of tax authorities.

Changes in standards

The lack of coordination of tax laws is certainly one of the biggest difficulties for companies to comply with all tax rules. Brazil does not have a single tax, such as VAT (Value-Added Tax), which is used in several countries. There are five main taxes, collected in a fragmented way by three government spheres.

The Federal Government charges taxes such as the IPI (Tax on Industrialized Products), PIS (Social Integration Program) and Cofins Cofins (Contribution for the Financing of Social Security). States impose the ICMS (Tax on the Circulation of Goods and Services), and municipalities, the ISS ISS (Tax on Services).

These taxes have different rates on goods and services and vary from state to state, leading to an interstate tax “war” to attract foreign companies in a constantly changing environment. From 1988 to 2019, more than 400,000 tax rules were issued, reaching 2.17 rules per hour (considering working days).


Foreign companies

If it is difficult for Brazilian entrepreneurs to understand and have up-to-date information about the tax system, the situation is even more challenging for foreign companies. The large amount and complexity of taxes can bring legal uncertainty and fiscal problems for those establishing new companies in the country.

Even so, as the world’s fourth destination of foreign investment, Brazil is still a market full of business opportunities. To take advantage of the opportunities offered by the country, foreign companies can have high-quality tax advisory services. Tax specialists can help these companies so that they can focus on their core business, that is, on what really matters.

According to the World Bank, , companies spend between 1,483 and 1,501 hours per year preparing and paying taxes in Brazil. Good tax advisory services not only ensure compliance with rules and requirements, but also allows companies to focus these hundreds of hours on their core activities. This time can make all the difference for a company to establish in the Brazilian market.

At Pryor Outsourcingwe develop risk mitigation strategies for international operations. We have specialized tax consultants who can help companies to understand different tax regimes and offer advice on calculating, preparing and paying taxes. Contact us to get more information about solutions and budgets. Keep in touch with our team to receive more information about our solutions and budgets.

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