Answering an e-mail I received requesting information on the Brazilian tax system and, since this is a complex subject, just describing what is relevant, the Brazilian tax system is based on the principle os strict legal reserve.
That means that the jurisdiction to impose taxes is limited to those provided for in the Federal Constitution, and may only be made through ordinary law voted and approved by National Congress (federal taxes), by state legislatures and city councils.
Despite this legal strictness, in relevant and urgent cases, the President of the Republic may impose federal taxes via Provisional Measures, with legal effect, which must be submited to the approval of the National Congress in order to become a law. Provisional measures that are not converted into law within 30 days lose their legal effect.
The Federal Constitution provides for the application of the following taxes:
1) Taxes: these taxes are due regardless of any specific service directly rendered by the government to the taxpayer;
2) Charges: these charges are levied based on police power (regulatory fees) or as counterpart for specific, divisible public services, which are actually rendered or made available to individuals by the government upon request;
3) Improvement Contributions: or betterment fee; these contributions are collected from real estate owners who benefit from public work;
4) Contributions: compulsory levies destined for specific purposes.
The constitutional system is based on three jurisdiction and tax collection levels. The Federal Constitution grants to the federal government, states, Federal District and municipalities differente and independent powers to impose and collect the following taxes specified therein:
a) Federal Government:
- Import Duty (II - Imposto de Importação);
- Export Duty (IE - Imposto de Exportação);
- Income Tax (IR - Imposto de Renda);
- Excise Tax (IPI - Imposto sobre Produtos Industrializados);
- Tax on Financial Operations (IOF - Imposto sobre Operações Financeiras);
- Rural Land Tax (ITR - Imposto Territorial Rural);
- Tax on Personal Wealth (IGF - Imposto sobre Grandes Fortunas). - Not created yet.
The Federal Government has exclusive jurisdiction to impose domain economic intervention contributions and social contributions.
b) States:
- Tax on estate and donation of assets or rights;
- Value-added Tax on Sales and Services (ICMS - Imposto sobre Circulação de Mercadorias e Serviços);
- Vehicle Tax (IPVA - Imposto sobre Propriedade de Vehículos Automotivos).
c) Municipalities:
- Municipal Real State Tax (IPTU - Imposto Predial e Territorial Urbano)
- Property Transfer Tax (ITBI - Imposto sobre a Transmissão de Bens Intervivos);
- Service Tax (ISS - Imposto sobre prestação de Serviços de qualquer natureza)
In addiction to compliance with the principles of legality mentioned above, the Federal Government, states and municipalities are not allowed to:
a) give different tax treatment to taxpayers with similar situations;
b) claim taxes in relation to taxable events occuring before the date of effect of the law by which taxes have been enacted or increased;
c) charge taxes in the same financial year in which the law (that introduced or increased the taxes) was published;
d) use taxes with the purpose of seizing taxpayers' properties (rule of non-confiscation);
e) restrict the trafic of people or goods by way of interstate of inter-municipal taxes.
There is more:
Federal Income Tax:
- Corporate Income Tax (IRPJ - Imposto de Renda Pessoa Jurídica);
- Social Contribution on Net Income (CSLL - Contribuição Social sobre o Lucro Líquido).
...among others.
Hope it helps.
