Brazilian companies contracting services from other countries (import of services) offers several advantages, but the parties involved must consider the tax burden.
In general, the taxation over services contracted internally from Brazil, compared to the import of same services from other jurisdictions (e.g. tecnology, engineering, and others), differ substantially in disadvantage to the import.
We highlight the main taxes levied on the import of services:
1. ISSQN: when importing services, ISS may be charged by the municipality where the importing company is located, varying in rate depending on the location.
2. IRRF: the tax is levied on remittances of resources intended to pay for imported services, under the standard rate it is 15%, however it can increase to 25% if the beneficiaries are located in a jurisdiction considered a tax haven.
3. PIS: it is essential to note that PIS can be calculated in a cumulative or non-cumulative manner, depending on the company’s tax regime. The rate applied varies between 0.65% and 1.65% of the amount paid for the service.
4. COFINS: on imports of services, the rate varies between 3% and 7.6% on the amount to be paid.
5. CIDE: at a rate of 10%, the tax is levied on the import of services of a technical nature and administrative assistance.
6. IOF: IOF rates vary depending on their nature. Currently, for foreign remittances with different ownership, it is 0.38%.
It is essential that the company measures the tax impact before contracting imported services, in order to avoid negative economic impacts.
