Jefferson José RodriguesChief of Economics Studies
Secretaria da Receita Federal
Brasília – Brazil November 20-23, 2006
PIS/COFINS and IPI
Encontro de Especialistas em Política Tributára – Receita Federal e União Européia
Programa EUROsociAL Fiscalidade
Estratégias Fiscais Ligadas à Coesão Social
The Federal Consumption Taxes
Receita Federal
Brazilian Tax System
Consumption Income Social Sec. Property Others
Federal
IPI
PIS/Cofins
Cide Comb.
State
ICMS
Local
ISS
Federal
IRPF
IRPJ
CSLL
Federal
INSS
Federal
Rural
State
Vehicle
Local
Urban
% GDP 16.4 8.1 6.9 1.0 5.0
% Tax Burden 44.0 21.6 18.4 2.8 13.2
General Aspects
Receita Federal
Brief history
The Social Integration Program (PIS) was created in 1970 and had
incidence on company's turnover at the rate of 0.65%.
The Contribution for the Financing of Social Security (Cofins) was
created in 1982 and had incidence on company's turnover at
the rate of 0.5%. Gradually, the rate was increased until achieving
3%, in 1999.
Along the years, there was a trend to converge the tax bases of
the two contributions. Consequently, nowadays the tax rates are
almost a simple addition.
PIS/COFINS
Receita Federal
Features until 2003
Until 2003, the PIS/Cofins were contributions with incidence on
company's turnover.
The incidence was cumulative at total rate of 3.65%, with no
incidence on imports and exports.
The financial sector was charged at the rate of 4.65% on the
spread (the difference between the financial revenues and the
interest rate a bank pays on deposits).
There were few exemptions, and some economic activities were
charge in a single stage.
PIS/COFINS
Receita Federal
Features after 2004
Under the present rules, PIS/Cofins are hybrid contributions: for
some economic activities, they are cumulative at total rate of
3.65%. For others, they are non-cumulative at total rate of
9.25%.
When they are non-cumulative, the tax basis is the difference
between gross revenue and total deductible purchases.
Imports are charge at total rate of 9.25% and exports are
exempt.
The financial sector is still charged at the rate of 4.65% on
the spread (the difference between the financial revenues and the
interest rate a bank pays on deposits).
PIS/COFINS
Receita Federal
Features after 2004
There are some exemptions, like capital goods and basic foods .
There are more economic activities charged in a single stage.
In some cases, the buyer of a service must withhold at source
the PIS/Cofins
The collection of PIS/Cofins is not shared with States and
Municipalities.
The collection is directed to financing the social security system
(health care, pension system and social assistance).
PIS/COFINS
Receita Federal
PIS/Cofins Collection *
0,0%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Tax C
olle
ctio
n (
% o
f G
DP)
* Pasep included.
PIS/COFINS
1.65% (1983) 5.40%
(2005)
Receita Federal
0%
5%
10%
15%
20%
25%
30%
35%
40%
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
PIS/Cofins Collection *R
ela
tive S
hare
(%
)
PIS/COFINS
* Pasep included.
% of Federal Revenue Taxes
% of Consumption Collection
Receita Federal
Basic features
The Tax on Industrialized Products (IPI) replaced, in 1967, the
federal consumption tax.
The IPI is a value-added tax only charged on the
manufacturing stages (it is not charged on services).
The rates are defined under the harmonized system (several
different brackets).
According to a constitutional rule, the IPI shall be selective,
based on the essentiality of the product.
The highest brackets are levied on tobacco, alcoholic drinks,
vehicles and luxury goods.
IPI
Receita Federal
Basic features
Is levied on imports and is not levied on exports.
57% of the collection is shared with States and Municipalities.
In the last few years, there has been a gradual exemption of
capital goods.
It is an important tool of industrial policy of the federal
government. The brackets may be changed by the executive
power.
There are many programs of regional development based on
the exemption of IPI (e.g. Zona Franca de Manaus).
IPI
Receita Federal
IPI CollectionTax C
olle
ctio
n (
% o
f G
DP)
IPI
0,0%
0,5%
1,0%
1,5%
2,0%
2,5%
3,0%
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
2.52% (1983)
1.29% (2005)
Receita Federal
0%
5%
10%
15%
20%
25%
30%
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
IPI CollectionR
ela
tive S
hare
(%
)
IPI
% of Federal Revenue Taxes
% of Consumption Collection
Receita Federal
Tax CollectionTax C
olle
ctio
n (
% o
f G
DP)
PIS/COFINS + IPI
0,0%
1,0%
2,0%
3,0%
4,0%
5,0%
6,0%
7,0%
8,0%
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
4.18% (1983)
6.70% (2005)
Receita Federal
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
PIS/Cofins + IPI Collection *R
ela
tive S
hare
(%
)
PIS/COFINS + IPI
* Pasep included.
% of Federal Revenue Taxes
% of Consumption Collection
Receita Federal
Basic features
The Economic Contribution on Fuel (CIDE Combustíveis) replaced,
in 2002, a non-tax government revenue that was charged on
fossil fuel and directed to a fund used do balance changes in the
international price of oil.
It is charged in the refinery. The tax rate is specific (a fixed
amount per liter of fuel).
The amount of the specific contribution is variable, according to
the type of fuel.
CIDE - Combustíveis
Receita Federal
0,0%
0,1%
0,2%
0,3%
0,4%
0,5%
0,6%
83 84 85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05
Tax CollectionTax C
olle
ctio
n (
% o
f G
DP)
CIDE Combustíveis
0.56% (2002)
0.39% (2005)
Secretaria da Receita Federal
PIS/COFINS and IPI
Brasília – Brazil November 20-23, 2006
Programa EUROsociAL Fiscalidade
Estratégias Fiscais Ligadas à Coesão Social
Encontro de Especialistas em Política Tributára – Receita Federal e União Européia
Jefferson José RodriguesChief of Economics Studies
The Federal Consumption Taxes
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