The income of foreign subsidiaries and branches of Brazilian companies is not taxable in Brazil. The effective rate on profits is approximately 50.5 percent. Brazilian corporations are required to withhold tax on behalf of shareholders at a rate of eight percent of net after-tax income, after certain adjustments. The eight percent net after- tax income withholding tax may be used to offset the 25 percent tax. Expatriates are considered to be non-residents if they have never lived in Brazil, or have lived in Brazil under 12 months on any visas other than permanent resident visa.
Exports are exempt.
In Rio de Janeiro and Sao Paulo, the basic VAT rate for imports and goods shipped to as final consumer is 18 percent. Brazil does not have a treaty with the United States to avoid double taxation. However, it does have treaties with Japan, Canada, and most of the nations of South America. The Administrative Council for Economic Defense is responsible for suppressing abuse of economic power in general, and monopoly, oligopoly, cartel, and antitrust situations in particular. National Institute of Industrial Property is responsible for technological development and regulates technology transfer issues.