Brazil has 27 States and 1 Federal District; the States have competence to create State taxes (read also about federal taxes and municipal taxes).
The State taxes are detailed by article 155 of the Federal Constitution; this is certainly the longest article in this Section of the Constitution, which reflects the complexity of managing inter-State interests on taxes.
According to the above mentioned article, States and the Federal District can create the following three taxes: Tax on Circulation of Goods and Services (ICMS), Tax on Automotive Vehicles (IPVA), Tax on Death and Donations.
ICMS is the tax which collects the highest amount of money (more than any of the federal taxes and contributions). For large industrial States like São Paulo and Rio de Janeiro, ICMS is by far the biggest source of revenues.
IPVA applies to property of vehicles, such as cars, trucks, motorcycles, boats (with motor), buses, airplanes.
As IPVA is ruled by State laws, that means that there may be differences in cars tax across States; many car rental companies license all their fleet in the State of Paraná, which has one of the lowest IPVAs in Brazil.
The Tax on Death and Donations is the Brazilian equivalent to Heritage Tax. The tax should be charged when someone dies and the assets are transmited to the heirs. It would be an excellent means of distributing income.
However, several States didn't even create the Law, and those which created established a very low ratio: something around 2%, flat.
Besides, several transactions involving transfer of expensive real estate are not audited by the States; that means that values of real estate may be under-declared, hence resulting in very low taxation of heritages.
States can only institute these three taxes; States can also create a social security contribution, but the revenues of this contribution must be directed to future payments of social security (many States have not created such contribution).
Most States in Brazil have a strong dependence on the Fund of Participation of States, which is formed by part of proceeds of Income Tax and Industrial Tax.
Every State in Brazil has a Secretary of Finances (in Portuguese, Secretaria de Finanças or Secretaria da Fazenda). This is the place to go in case you are starting a commerce business, or if you are going to buy a car and wants to check out legacy fines.
For example, see Secretaria da Fazenda de Sao Paulo, Secretaria da Fazenda do Distrito Federal and Secretaria da Fazenda do Rio de Janeiro.
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