Brazil – taxes on software imports

Question

Hi, we make software products. A customer in Brazil is telling us that they have to pay 60% of the purchase price on top of every software product they buy from us. They would be purchasing through a distributor in the USA.

I can see that there is an import duty of 16% on software imports to Brazil, but cannot see anything for the other 44%. Perhaps there are other local or state taxes that apply.

Can anyone confirm if the information we are getting is correct, and whether there are any legitimate ways to export software cost effectively to Brazil?

Answer

Hi Dave,

I run the Brazil Business Hub – a consultancy specialising in helping UK companies create effective partnerships in the Brazilian market.

This is a big subject – there are many aspects, issues and options involved depending on what you are planning to do over the long term, and it is vital to form a strategy which is specific to each company’s circumstances.

We are happy to help. You can contact me directly at philip.gray@brazilbusinesshub.com or on 07949 402 203

I have also sent you a LinkedIn invitation.

Kind regards

Philip Gray

Answer

Hello Dave,

My jurisdiction is the spanish one so take my advice with a grain of salt. Brazilian tax system when it comes to software imports takes into account different situations to determine if there´s a taxable event and the rate of taxation: physical or electronic software, royalties, treaties to avoid double taxation.

You would need to be a bit more specific about the product to get a general non binding idea and then get deeper knowledge- AKA local expert- if needed.

There are three perfectly viable options:

a) They are getting taxed hard and it´s just the rule.

b They are being too conservative or just apply the worst possible or even unfitting interpretation of the rule. Perfect compliance is ok but with their money.

c) They want to play this as a part of the contract to get some extra margin. Happens quite a bit, specially when rules are somewhat obscure.

Of course C should be ammended and B would be subject to negotiation.

Best regards,

Jose Garriga

Answer

Hello Dave,
Take a look at http://madb.europa.eu/madb/indexPubli.htm which is free to use.

This gives you lots of information about trading with other countries outside the EU.

If you are sending physical goods you can see the taxes that will apply under tariffs.
Enter your destination country and the tariff code of your product.

You will then be shown the duty rate for the product e.g. 16% and all the other taxes that can be applied to imports e.g.

Tax on industrialised goods is levied at a rate of 15% of the duty paid value. Contribution to funding of social security is levied at a rate of 9.65% of the duty paid value.
Contribution to social integration programs is levied at a rate of 2.1% of the duty paid value.
An additional freight fee for the renewal of the mercantile marine is levied at a rate of 25% of the ocean freight charges.
Tax on the circulation of goods and services 17%

You can do this for any country. As you can see with Brazil the additional taxes are high. The above is general information it was not selected for any particular product.

Hope this helps,
Susan

morley-consulting.co.uk

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