Accounting Rules

Tax Year: From 1 January, finishing 31 December of the same year.
Accounting Standards: Inspired by the American model: translated from the American Institute of Certified Public Accountants' Statement of Auditing Standards.
Accounting Regulation Bodies: CFC
Regulation of financial institutions
Accounting Reports: According to the American model, the financial statements must include at least: a table of variation of equity capital apart from the reserve account, a table of cash flow, notes to the accounts. For additional information go to the websit of the Brazil Company Handbook.
Publication Requirements: Commercial companies are obliged to publish annually a balance sheet, a profit and loss account and all the information necessary to understand the financial health of the company. The documents are controlled within the 60 days preceding the shareholders' Annual General Meeting.
Professional Accountancy Bodies: IBRACON , Professional association of chartered accountants
CFC , Federal Accountancy Council
CPC , Committee for the improvement of accounting standards and practices
Certification and Auditing: Independent auditors and international firms registered with the Instituto Brasileiro de Contadores.
The financial statements are controlled by an independent auditor registered with the "Securities and Exchange Commission" or the "Instituto Brasileiro de Contadores". Approximately half of the audits in Brazil are carried out by international audit firms.
The present trend is towards an increase in the number of companies audited, including those which are not obliged to be audited. The guarantee of quality arising from a certification represents a not inconsiderable advantage for Brazilian companies.
Accounting News: Brazil Accounting News

Tax Rates

Consumption Taxes

Nature of the Tax: ICMS : Tax on operations concerning the movement of goods and on national, municipal and local transport services.
Tax Rate: The ICMS is 17%:
transactions: 17% (18% in Sao Paolo);
inter-state transactions: between 7% and 12%;
imports are subject to: between 18% and 25%;
communication services: from 13% to 35%.
Reduced Tax Rate: A great number of deductions are applicable, each State being able to alter them.
Other Consumption Taxes: A tax on industrialized products (IPI) is also collected: an excise duty levied at the federal level. It applies to almost all sales and transfers of goods manufactured or imported in Brazil. The IPI rate can vary between 0% and 335%. The least taxed products are: basic foodstuffs, and the most taxed: alcohol and cigarettes.

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Corporate Taxes

Company Tax: 15%. Companies can benefit from reductions or exemptions when they are located in under-developed geographical areas (zonas francas).
Tax Rate For Foreign Companies: Companies resident in Brazil pay taxes on their worldwide profits. Foreign companies are only subject to tax if they engage in certain sales operations involving companies or agents resident in Brazil.
Capital Gains Taxation: The tax rate on long term capital gains is the same as for corporate tax. Non-resident investors are subject to an obligatory deduction of 15%, rising to 25% for residents of tax havens.
Main Allowable Deductions and Tax Credit: All the expenses necessary for company activity are deductible. Other expenses can be added: for employees' lunches, training, investment in the north-east of the country or in IT equipment. On the other hand, only 20% of managers' salaries are considered to be deductible expenses.
Other Corporate Taxes: There are many indirect taxes:
- The PIS and COFINS, respectively allocated to an employee savings scheme and to reimbursement of social security, and levied on the gross income of the company (1.65% and 7.6%). Exports are exempt, but imports are liable.
- A supplementary tax, the ISS, is deducted by municipalities on services which are not subject to the ICMS, and is about 2 to 5% of the price of the service billed.
- A Financial Transactions Tax (IOF) to a 4% rate.
- Concerning real estate, a property tax which varies from 0.3 to 1% of the value of the property is deducted every year by the municipality, as well as a second tax of 0.03 to 20% on rural property, according to the States and the use of the land. Every buyer must pay a progressive tax of 2 to 6% on the price of the property. This federal value added tax is levied on nearly all sales and transfers of products manufactured in or imported into Brazil, depending on the degree of necessity.
- In addition, import companies pay an import duty which varies according to the type of goods, and companies which pay royalties or pay for services rendered by foreign companies are subject to a deduction of 10%.

Individual Taxes

Tax Rate

Progressive rate	from 0% to a maximum of 27.5% for income exceeding BRL 44,918
Up to BRL 17,275	0%
BRL 17,276 - 25,800	7.5%
BRL 25,801 - 34,400	15%
BRL 34,401 - 44,917	22.5%
Over BRL 44,918	27.5%

Allowable Deductions and Tax Credit: Social security contributions, voluntary contributions to a private pension scheme (up to 12% of salary), professional travel expenses, pensions paid by order of a court, a deduction of 123 BRL per dependant per month, as well as BRL 2,374 in annual educational expenses. Some donations are also allowable for deductions or tax credit.
Special Expatriate Tax Regime: No special regime for residents.

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed: See the list of the fiscal agreements signed
Withholding Taxes: Dividends: 0%, Interest: 15%/25%, Royalties: 15%/25%

Sources of Fiscal Information

Tax Authorities: Administration of federal tax revenue
Other Domestic Resources: HSBC Bank information pages on Brazil

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Intellectual Property

National Organizations: The organization in charge of the protection of patents and trademarks in Brazil is the INPI (Instituto Nacional de la Propiedad Industrial).
Regional Organizations: MERCOSUR (Mercado Común del Sur), UCC (Uniform Commercial Code), UPOV (International Union for the Protection of New Varieties of Plants).
International Membership: Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property

National Regulation and International Agreements

Type of property and law	Validity	International Agreements Signed
Patent Lei de Propriedade Industrial	20 years for inventions	Patent Cooperation Treaty (PCT)
Trademark Lei de Propriedade Industrial	10 years, renewable
Design Lei de Propriedade Industrial	10 years, renewable three times for 5 years
Copyright Lei de Direitos Autorais	70 years after the death of the author, or from publication for audio-visual and photographic works	Berne convention For the Protection of Literary and Artistic Works Convention for the Protection of Producers of Phonograms Against Unauthorized Duplication of Their Phonograms Rome ConventionFor the Protection of Performers, Producers of Phonograms and Broadcasting Organizations
Industrial Models Lei de Propriedade Industrial	15 years

Legal Framework

Independence of Justice: Although judicial power is to a great extent independent of the executive branch, it is quite powerless faced with the organized crime which is rife in the country. Legal reforms advance very slowly and the public does not trust the system. The level of corruption is very high in the country.
Each Brazilian province has its own legal system. The country also has a system of courts to settle disputes between provinces. Brazil has not accepted the obligatory jurisdiction of the ICJ. Judicial power belongs to judges, important people, and there is no jury in any lawcourt.
Equal Treatment of Nationals and Foreigners: The judicial power guarantees a fair trial to foreign nationals.
The Language of Justice: Portuguese.
Recourse to an Interpreter: It is often necessary to resort to an interpreter if you do not speak Portuguese.
Sources of the Law and Legal Similarities: The main source of the law is the constitution of 1998. The legal system is based on Roman codes. The civil code, inspired previously by the Napoleonic code, is nowadays closer to the Italian code. Judicial power belongs to judges and important people.
Checking National Laws Online: Brazilian legislation

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Standards

National Standards Organizations: Brazilian technical standards association
Brazilian committee for standardization in the fields of electricity, electronics and telecommunications
National Council of Metrology, Standardization and Industrial Quality (CONMETRO)
National Institute of Metrology, Standardization and Industrial Quality (INMETRO)
Integration in the International Standards Network: Member of the International Organization for Standardization (ISO), of theInternational Electrotechnical Commission (IEC), of the Global Ecolabelling Network (GEN), of the Pan-American Standards Commission (COPANT) and of the MERCOSUL Association for Standardization (AMN) and of the Uniform Commercial Code (UCC), which has become the GSI after merging with a European group (an organization concerning chains of logistics and bar codes).
Classification of Standards: ABNT, NBR standards.
Online Consultation of Standards: The ABNT catalog.
Certification Organizations: List of organizations authorized to issue certifications

Business Practices

General Information: Main recommendations and codes of business relations
Opening Hours and Days: Saturday and Sunday.

Public Holidays

New Year's Day	1 January
Carnival	4 days before Ash Wednesday
Good Friday (Friday before Easter)	March/April
Labor Day	1 May
Ascension	May
Independence Day	7 September
Our Lady of Aparecida	12 October
All Souls Day	2 November
Proclamation of the Republic	15 November
Feast of the Immaculate Conception	8 December
Christmas Day	25 December
St Sebastian's Day in Rio de Janeiro	20 January
Founding of the city of Sao Paulo	25 January
Our Lady of the Sailors in Porto Alegre	2 February

Periods When Companies Usually Close

Carnival	one or two weeks
Christmas and New Year	one or two weeks

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Brazil: Business Environment