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Devendra's Log

How taxes in Brazil hamper innovation

I am doing a research and development project for a client outside Brazil. They sent us, via a well known courier service, a prototype development board with a declared value of USD 326.00 or BRL 520.30. Here’s the breakdown of the taxes charged by the tax office of our state, Pernambuco, on entry

Importation Tax - BRL 312.18 (60% of declared value)

ICMS / GNRE (state sales tax) - BRL 170.51 (20.48% of declared value+importation tax)

Administrative charge - BRL 44.97

Total taxes and charges - BRL 527.66

In other words, the total taxes and other charges amount to approximately the declared value (100%) of the development board.

Now, that is no way to go about encouraging innovation!