Taxation And Double Taxation Risks In Brazil  

Brazilian government is working hard to raise awareness of the role the country has to play in today’s globalized world. This also means that Brazil is working towards reforming its taxation system. Brazil’s taxation system known to be poorly structured and taxpayers have the burden of paying high taxes, complicated levies. This has resulted in widespread tax evasion.

Companies located in Brazil spend substantial amounts in employing tax professionals to manage their taxation and this fact holds true for both foreign and domestic companies. Corporate and indirect taxation in Brazil is rather complex, permeable and unmanageable.

On the other hand, the income tax system is quite efficient, and the highest rate is 27.5 percent. In addition, there is a personal income tax which is either 15 percent or 25 percent. There are many exclusions that can be done from taxable income and some of these include profits on sales of shares, profits from real estate sales, and interest on shares and bonds up to a particular amount. Even foreigners who come to live in Brazil are not required to pay income tax for the first 5 years on returns from overseas holdings.

Brazil has signed the Treaty for Prevention of Double Taxation with many countries. Unfortunately, it does not have this treaty with the United States. However, there are negotiations going on but for the time being, Americans who live in Brazil will be exposed to double taxation risks. They would have to pay taxes in the US according to the US tax laws as well as taxes in Brazil.

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