VAT Number Format In Brazil

Brazilian VAT number contains 8 digits, a 4-digit radical, and 2 check digits (e.g., 0.123.4567/8901-23)

VAT Rates In Brazil

The standard VAT rate in Brazil is from 17-19%, depending on the state, with reduced rates from 4-12% for interstate movement of goods.

• 17% (Standard) – applies to all taxable supplies in the following states: Acre, Alagoas, Ceará, Espírito Santo, Goiás, Mato Grosso, Mato Grosso do Sul, Pará, Piauí, Rondônia, Roraima and Santa Catarina.
• 18% (Standard) – applies to all taxable supplies in the following states: Amazonas, Amapá, Bahia, Distrito Federal, Maranhão, Minas Gerais, Paraíba, Paraná, Pernambuco, Rio Grande do Norte, Rio Grande do Sul, São Paulo, Sergipe, and the Tocantins
• 19% (Standard) – applies to all taxable supplies in the following state: Rio de Janeiro
• 4%, 7%, or 12% (Reduced) – applies to interstate movement of goods depending on the state of destination

VAT Payments And Returns In Brazil

All businesses with Brazilian VAT number (domestic established companies) must submit periodic payments.

VAT Returns Frequency In Brazil

For all companies that operate in Brazil, VAT returns must be submitted monthly.

Penalties in case of late filings or misdeclarations

In the case of the late filing of VAT returns and payments, the Brazilian government prescribed the penalty from 1% to 150% of the tax due. The regular penalty is 75% of the tax due.

The main fields that must be filled in the NFe are:

• Description of products
• NCM (Nomenclatura Comum do Mercosul) – Customs Code Classification and Revision
• CFOP (Código Fiscal de Operações e Prestações) – Fiscal Code of Operations and Services
• Quantity
• Amount
• CST (Código de Situação Tributária)
• Transport data
• Taxes
• Additional information

As the strongest economy in LATAM, Brazil was one of the forerunners in adopting electronic invoicing. As of 2005, invoices and some other e-tax documents must be authorized by the Brazilian Tax Authorities before the issuance. Even though considered the most complex invoicing process in the world, Brazil developed a powerful system for reducing the grey economy and, in that way, became a global leader in the use of e-invoices and other electronic tax documents.

Governmental body responsible for e-invoicing in Brazil:‍

• ‍Secretaria de Estado da Fazenda - SEFAZ
  

Currently, there are three electronic documents mandatory in Brazil:

1. NFe (Nota Fiscal Eletrônica) - the essential e-invoicing document in B2C transactions, used for supplies of goods
2. NFSe (Nota Fiscal de Serviços Eletrônica) - a document mandatory in B2B transactions, for the provision of services
3. CTe (Conhecimento de Transporte Eletrônico) - a document mandatory for the provision of transportation services
   

The most common electronic document in B2C transactions is NFe (Nota Fiscal Eletrônica). 

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What does the NFe reporting process in Brazil look like?

1. The selling party generates an XML document (NFe) with all required information to issue an electronic invoice and sends it to Brazilian Tax Authorities (SEFAZ) for authorization. The seller’s electronic signature, i.e., a digital certificate which guarantees the data’s authenticity, must be included in the message.
2. SEFAZ validates the content of an XML document, authorizes the transaction, and sends the authorization back to the seller. 
3. The selling party must convert the NFe (XML document) into DANFe. DANFe is basically an Auxiliary Document of the Electronic Invoice which represents the readable summary of the transaction, an invoice in the form we know. Once the DANFe is generated, it can be sent to the customer.

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Date updated [May 12, 2021]