Brazil
Provinces
Goods
Provinces
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Digital services
About
Goods
About
Goods
About
Digital services
About
Digital services
Goods
Digital services
Goods
Digital services
VAT Standart rate in Brazil
- Brazil uses ICMS, a state-level VAT, rather than a unified federal VAT.
- Standard ICMS rates range from 17% to 18% in most states, with São Paulo, Minas Gerais, and Paraná generally at 18%, while Rio de Janeiro applies 19%
- For interstate transactions, reduced ICMS rates (7% or 12%) may apply depending on origin and destination
VAT Reduced rates in Brazil
Brazil applies reduced ICMS rates (typically 7%, 12%) on goods like:
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Interstate deliveries
- Essential items such as medicines and food
VAT Zero rates in Brazil
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Exports of goods from Brazil are zero-rated, enabling businesses to reclaim input taxes
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Certain goods—like eggs, fruits, medicines—will remain zero-rated under the planned IBS/CBS system
State VAT (ICMS)
State VAT, known as ICMS in Brazil, is levied by the individual states. While states determine the taxation rates, the Brazilian federal government may establish a minimum rate. ICMS is applicable to various transactions conducted in Brazil, irrespective of whether the transaction initiates abroad. These transactions include: Brazil currently implements the following varieties of indirect taxes, commonly referred to as Value-Added Tax (VAT):- State VAT (ICMS)
- Federal VAT (IPI)
- Municipal service tax (ISS)
- Federal social contributions (PIS-PASEP and COFINS)
The movement of goods (involving a transfer of ownership)
- Importation of goods.
- Provision of transportation services between states and municipalities.
- Provision of communication services.
- Supply of electricity.
Federal VAT (IPI)
National and imported goods in Brazil are subject to the federal VAT, known as IPI, imposed by the federal government. The taxable events for IPI include:- The dispatch of goods from an industrial establishment in Brazil or those recognized as industrial by law.
- Customs clearance of goods.
Municipal Service Tax (ISS)
ISS is a sales tax paid to municipalities in Brazil and is applicable to services not covered by state authorities (ICMS). The federal law (complementary law) delineates the general list of taxable services. Typically, ISS is owed to the municipality where the service provider operates, except for construction services, where it is imposed in the city where the construction occurs.Federal Social Contributions (PIS-PASEP and COFINS)
- PIS-PASEP and COFINS are turnover-based social contributions levied on companies’ gross revenue monthly. Exports are exempt from PIS-PASEP and COFINS, but import operations (both goods and services) are subject to these contributions. The rates for PIS-PASEP and COFINS may vary based on the company’s activities.
Numerous efforts were made to levy taxes on digital services; however, at present, there are no consumption taxes in Brazil for digital or electronic services provided by non-residents.
Standart VAT rate for digital services in Brazil
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There is currently no VAT or ICMS (state VAT) charged on cross-border digital services supplied by foreign providers to Brazilian consumers.
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Domestic digital services may incur ICMS, but foreign digital services remain untaxed until 2026 under the existing regime
VAT Zero Rate for digital services in Brazil
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Until 2026, there are no exports of digital services being zero-rated because no VAT applies under the current cross-border regime.
- Under the new system (CBS/IBS), cross-border services consumed outside Brazil may be treated as 0%, depending on final regulations—full details are pending
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VAT Standard rate
0% to 19%
VAT Reduced rate
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Thresholds
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Thresholds
- An ICMS taxable person refers to any individual or legal entity that regularly engages in the sale or importation of goods or provides communication, interstate, and intermunicipal transport services. There is no turnover threshold.
- An IPI taxable person includes any individual or legal entity engaged in the regular industrial processing of goods or the importation of goods from abroad. No turnover threshold applies.
- An ISS taxable person is defined as any individual or legal entity that regularly provides services listed in the ISS law. No turnover threshold applies.
- A PIS and COFINS taxable person is any company involved in business activities. Contributions are imposed on companies’ gross revenue on a monthly basis.
Registration procedure
Businesses planning to engage in commercial product sales are obligated to register with both federal and state tax authorities. Additionally, if the business aims to offer services, municipal registration becomes a necessity. The registration process is predominantly electronically at Brazilian tax portal. Alongside the request, supplementary information must be provided, including articles of association, business address, official entities-issued business license, taxable person ID, among other details.Tax representatives
Tax representatives are not allowed in Brazil.VAT filing and payment date
ICMS, IPI, ISS, PIS-PASEP, and COFINS returns are filled and paid on a monthly basis. The due date is the final business day within the two-week period following the month under consideration.Keeping records
Records should be preserved for a period of five years.Penalties
There is a penalty from 1% to 100% of the non-filled tax returns that were omitted in case of not registering or late registration.What is E-Invoice?
E-invoices are electronic invoices created, submitted, and stored digitally to meet tax compliance and legal standards. In Brazil, the Nota Fiscal Eletrônica (NF-e) system plays a key role in ensuring real-time validation by SEFAZ (Brazil’s tax authority), enhancing transparency and reducing fraud. This system is mandatory for most businesses and is customized for specific industries, such as retail (NFC-e) and logistics (CT-e).Timeline for E-Invoicing in Brazil
- September 1, 2023: Micro-entrepreneurs (MEIs) were required to adopt e-invoicing using formats like NF-e or NFS-e.
- September–October 2025: A testing phase allows businesses to adapt to new tax compliance systems.
- November–December 2025: Systems go live, enabling final business preparations.
- January 1, 2026: Full compliance with CBS and IBS becomes mandatory. Selective Tax implementation follows in 2027.
Who needs to issue E-Invoices?
E-invoicing is required for:- Businesses engaging in B2B and B2C transactions: Most companies must issue e-invoices for goods and services in XML invoice format to ensure compliance with SEFAZ.
- Retailers and logistics companies: Specific invoices, like NFC-e for retail and CT-e for freight, are mandatory.
- Micro-entrepreneurs (MEIs): As of September 1, 2023, individual MEIs not engaged in interstate sales must issue e-invoices.
- Non-resident businesses: Starting in 2026, tax reforms may require foreign companies to issue e-invoices for transactions with Brazilian customers.
E-Invoicing vs. E-Billing
Though both involve electronic invoices, they differ in purpose:- E-Invoicing: Focused on tax compliance and validated by SEFAZ. It requires digital signatures, uses formats like NF-e, NFS-e, and CT-e, and mandates archiving for at least five years. Applicable to B2B and B2G transactions, it ensures legal authenticity and compliance with Brazilian regulations, including the Nota Fiscal Eletrônica system.
- E-Billing: Centered on billing and payments in B2C relationships. It is less formal, often not requiring SEFAZ validation, and focuses on record-keeping rather than tax compliance.
- In Brazil, e-invoicing is a regulatory requirement, particularly for NF-e issuance, while e-billing serves customer management needs without mandatory compliance aspects.
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