Invoicing and Tax regulation in Brazil
Invoicing Regulation in Brazil
The Brazilian government mandates that all businesses must have an electronic system for issuing invoices, known as Sistema Público de Escrituração Digital or SPED. The Nota Fiscal Eletrônica (NF-e) is the official digital invoice used in Brazil for B2B, B2C and B2G transactions. It's essential to understand that any inaccuracies or irregularities in invoicing can lead to fines and penalties.
Real-time Reporting / Fiscalization in Brazil
Brazil adopts a complex process for real-time reporting and fiscalization. The Brazilian tax authorities mandate that companies must submit their fiscal documents and invoices electronically in real time. This means all business transactions must be reported to the tax authorities as they occur. Brazilian tax law is complex and companies need to ensure they meet these real-time reporting regulations carefully to avoid any non-compliance issues.
e-Invoicing in Brazil
e-Invoicing is a mandatory requirement in Brazil. Its implementation is part of a broader taxation system called SPED. E-Invoices need to be issued in specific formats and sent to Brazil’s tax authority for approval before they can be sent to customers. Both suppliers and customers are required to keep the invoices for five years plus the current year for audit purposes.
VAT/GST/tax Compliance in Brazil
Brazilian businesses are subject to a variety of taxes, most notably the Imposto sobre Operações relativas à Circulação de Mercadorias e Prestação de Serviços (ICMS), a state-level value-added tax on the circulation of goods and services, and the Program of Social Integration (PIS) and Contribution for the Financing of Social Security (COFINS), federal-level taxes on revenue. Tax rates and regulations vary significantly by state. Compliance with VAT/GST/tax regulations is mandatory and failure to do so can result in severe penalties.