• Brazilian Tax Reform

    By Gabriel Quintanilha


    Brazilian tax legislation is outdated, amended, adapted and, of course, an obstacle to the country's growth. Although the political scenario is not favorable, the economy has shown signs of recovery and a slight warming with the falling interest rates and the increase of production.

    There is no better time to implement the tax reform in Brazil. If it is really approved, a well-structured reform will help attract investment, especially foreign investment, and stimulate entrepreneurship.

    In Brazil there are more than eighty different taxes, two hundred thousand tax regulations and a company spends up to two thousand six hundred hours a year to fill tax obligations.

    Take as an example an e-commerce company that sells its products to the final consumer. It must collect the Tax on Circulation of Goods (Imposto sobre Circulação de Mercadorias - ICMS) in its state, of origin of the merchandise, by the interstate rate and for the destination state of the merchandise, the difference between the internal rate of this and the interstate that was collected for that one. Of course, the absurd does not stop here. This company will still have to collect federal taxes, such as income tax and its supplement, Social Contribution on Profit, PIS and COFINS on revenues, etc.

    The simplification of this failed system is the only way for Brazil to develop and become a competitive country. If Brazil confirms its intention to join the OECD, some rules of tax management and fiscal transparency must be fulfilled, which will be very important for the country. The growth of the country depends on an urgent tax reform.

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  • The information provided in this article is for general information purposes only. The information is not intended to be comprehensive or to include advice on which you may rely. You should always consult a suitably qualified professional on any specific matter.

Gabriel Quintanilha

Gabriel Quintanilha is based in Rio de Janeiro. Gabriel has been an attorney at law since 2006. He is also Professor of Tax Law at Fundação Getulio Vargas – FGV and IBMEC. Author of books and articles published in Brazil.

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