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Individuals Income Tax in Brazil

«Taxes in Brazil

Individual taxpayers (in Portuguese, "contribuintes pessoas físicas") pay income tax in accordance to their annual income.
All income earned in Brazil is, in principle, subject to taxation (see taxable income and allowed deductions); that means that even non-resident foreigns who have an income in Brazil must pay tax; Brazil have signed agreements with a few countries to avoid bi-taxation (i.e., income taxed in Brazil shouldn't be taxed again in the other country, and vice-versa).

In Brazil, there is only a federal income tax; the federal agency in charge of all federal taxes is Receita Federal; every individual taxpayer must file a record with Receita Federal and obtain a CPF, a taxpayer number.

Most income is taxed according to an income tax table (certain incomes are charged differently; such is the case, for example, of profits in financial investments, and income from rentals; see this page about taxable income).
Income is broken down in brackets. For each income bracket, a different tax ratio (in Portuguese, "alíquota") applies.

Since 2005, the Government has adjusted the brackets yearly, to take inflation in account; however, there is no law to oblige the Government to make the adjustments, nor is there a rule to determine how much adjustment should be made (from 1995 to 2002, the Government of ex-President Fernando Henrique Cardoso, the brackets were adjusted only once, in 2001); check out the past tax income brackets.

In 2009, the brackets were as follows:

Income Tax Ratio Amount to deduct
Up to R$ 17.989,80 Exempt -
From R$ 17.989,81 to R$ 26.961,00 7.5% R$ 1.349,24
From R$ 26.961,01 to R$ 35.948,40 15% R$ 3.371,31
From R$ 35.948,41 to R$ 44.918,28 22.5% R$ 6.067,44
Above R$ 44.918,28 27.5% R$ 8.313,35

This table is for annual income. Income tax must be paid monthly, following a monthly table which corresponds to 1/12th of the above table.

In 2009, someone with an annual taxable income of R$ 40.000,00 in 2009 shall pay (R$ 40.000 x 0.225) - R$ 6.067,44 = R$ 2.932,56 of income tax, or about 7.3% of the income.
Someone with a taxable income of R$ 200.000 (which is approximately US$ 100.000) shall pay (R$ 200.000 x 0.275) - R$ R$ 8.313,35 = R$ 46686,65, or about 23.3% of income.
As income grows, the income tax tends to 27.5%, but no individual in Brazil pays more than 27.5% income tax.

In 2009, the minimum wage in Brazil was R$ 465 monthly, or R$ 5.580 yearly. So, people who earn minimum wage are exempt from income tax.
In 2008, the income per capita was US$ 10.100 yearly (source), or about R$ 20.000 yearly; so, people who earn the average income pay about 1% income tax.

Brazilian taxpayer must present an annual income tax declaration.

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