This is a sore subject for most Brazilians. Taxes in Brazil are outrageous. Everything is more expensive because of the taxes levied on them. It is generally understood that the high level of tax evasion among individuals and businesses is a direct result of the stupendously high tax rates at every turn. There is a campaign underway to educate residents as to just how ridiculously high their taxes are (on everything) and to get the government to simplify the tax system (lowering many consumer taxes) and thereby lower the rate of tax evasion. A more sane taxing system would cost most people less, and raise more revenue for the government – or so goes the argument.
Remember that I am just a simple guy. I am not a tax accountant or attorney. The information posted here is what I could learn from various web resources. So please do not take this as totally accurate. If tax issues are your concern, consult a professional.
Let’s take a look at the overall tax situation for folks living in Brazil. [I got much of this information from this website.]
There’s the income tax. All Brazilians and foreign residents are subject to this tax. There are five categories for taxpayers:
Monthly Salary | Percentage | Deduction |
R$1,434.59 | Exempt | 0 |
R$1,434.59 to 2,150.00 | 7.5% | R$107.59 |
R$2,150.01 to 2,866.70 | 15% | R$268.84 |
R$2,866.71 to 3,582.00 | 22.5% | R$483.84 |
above R$3,582.00 | 27.5% | R$662.94 |
Other taxes include: taxes on services. That is, for example, if you are a taxi driver, 2 -5% of your earnings are paid to your local jurisdiction (percentage varies by locality).
Inheritance tax. This is typically 8% on the value of your inheritance, but your local state may boost this a bit.
Tax on motor vehicles. This tax is based on the value of your vehicle and is paid annually.
Property tax. For urban and suburban property, the rate varies from 0.3 – 2%; rural property is taxed from 0.3 – 20%
Real estate transfer tax (paid by the buyer). This tax varies from 0.5 – 6%
Social Security tax (INSS).
Monthly Salary | Percentage |
Up to R$911.70 | 8 percent |
R$911.71 to R$1,519.50 | 9 percent |
More than R$3,038.99 | 11 percent |
And those are just the taxes you can see.
There are also taxes levied on virtually all the products Brazilians consume. Here is a 9 page pdf that lists scores of products from every sector and the taxes levied on them. It is shocking. Nothing escapes the tax man.
Let me list some things. These are direct consumption taxes (not import taxes):
A soccer ball – 46.49%
A wooden chair – 30.57%
Cigarettes – 80.42%
Christmas tree ornaments – 48.02%
Books – 15.52%
Plastic masks – 43.93%
Sunscreen – 41.74%
A couch – 34.50%
Perfume (not imported) 69.13%
Perfume (imported) – 78.43%
A bikini - 33.44%
Clothes in general – 34.67%
Rice – 15.34%
Sugar 32.33%
Ketchup – 40.96%
Powdered milk – 28.17%
Bread – 16.86%
Microwave popcorn – 34.99%
Band-Aids – 30.39%
Dish washing liquid – 30.37%
Toothpaste – 34.67%
Shampoo – 44.20%
A pen – 47.78%
A pencil – 34.99%
Mineral water – 43.91%
Beer – 54.80%
Soda in a can – 45.80%
A bath towel – 26.05%
A DVD – 44.20%
A video game – 72.18%
A refrigerator – 46.98%
A cell phone – 39.80%
A day at the beauty salon – 26.32%
Going to the theater or a movie – 30.25%
A saxophone – 40.26%
A guitar – 38.77%
Cough syrup – 34.80%
Cachaça – 81.87%
WHERE DOES THIS MONEY GO!?
I guess one of the realities is that these taxes are never collected. The rates are so high and the system so complicated that many businesses find their way around paying the full amount. And given the taxes, by the time the product makes it to the consumer, we are paying a ridiculously inflated price.
It seem like if you could get involved in some aspect of governmental reform here in Brazil – tax reform would be a good place to start – and would bring a hefty return with success.
MORE good tax info (and some taxes I have not included here) can be found here.
