Brazil: Increase of PIS and COFINS rates on the importation of goods
On January 30 2015, the Brazilian Government issued Provisional Measure 668/2015 (MP 668/2015) regulating the Social Integration Programme (PIS) and the Social Contribution on Billing (COFINS) applied on the importation of goods and services, with effect from May 1 2015. By way of background, PIS and COFINS are social contributions levied on the importation of goods and services from abroad. A separate PIS/COFINS applies on the gross revenues generated on the provision of goods and services within Brazil, however, this domestic PIS/COFINS is not relevant for the present purposes.
Pursuant to the MP 668/2015, the general PIS and COFINS rates on importation of goods shall increase from 1.65% to 2.1% (PIS) and 7.6% to 9.65% (COFINS) respectively. The combined general rate is therefore increasing from 9.25% to 11.75%.
MP 668/2015 also will increase the rate for PIS and COFINS on importations for certain specific products, including:
Pharmaceutical products: PIS-import and COFINS-import rates increased to 2.76% (previously 2.1%) and 13.03% (previously 9.9%) respectively, totaling a combined rate of 15.79% (previously 12%);
Perfumes, cosmetics and toiletries: PIS-import and COFINS-import rates increased to 3.52% rate (previously 2.2%) and 16.48% (previously 10.3%) respectively, totaling a combined rate of 20% (previously 12.5%);
Machinery and vehicles: PIS-import and COFINS-import rates increased to 2.62% (previously 2%) and 12.57% (previously 9.6%) respectively, totaling a combined rate of 15.19% (previously 11.6%).
Note that PIS and COFINS are also generally applied to the importation of services, however, MP 668/2015 did not increase the rates on such importations (which continue to apply at a combined rate of 9.25%).
A Provisional Measure is a provisionary law issued by the Executive Branch that has the authority of law until it is acted upon by the Brazilian Congress within a prescribed 60-day period. If Congress does not act within this initial period, then the measure expires unless extended for one additional 60-day period.
Brazilian taxpayers importing goods from abroad should consider the impact of MP 668/2015 on their particular circumstances to determine whether the new PIS and COFINS will apply to their importations from May 2015.