Section IV - state and Federal District taxes

 

Article 155. The states and the Federal District shall have the competence to institute taxes on:

Article 155, text in purple added by CA 3, March 17th 1993. The original text remitted the institution of taxes to a clause, and another clause mentioned the possibility of creation of an additional tax of 5% on the income tax; the amended text revoked the additional tax, and brought the mention to taxes to the caption.

I - transfer by death and donation of any property or rights:
II - transactions relating to the circulation of goods and to the rendering of interstate and intermunicipal transportation services and services of communication, even when such transactions and renderings begin abroad;
III - ownership of automotive vehicles.

CA 3, March 17th 1993, turned the letters a, b, and c of the former clause I into the clauses I, II and III of the caption of article 155.
Because of this CA, there were minor changes in the text of the paragraphs below, to adjust references to clauses and letters.

Paragraph 1 - The tax established in item I:
I - regarding real property and the respective rights, is within the competence of the state where the property is located, or of the Federal District;
II - regarding bonds, titles and credits, is within the competence of the Federal District or of the state where the probate or enrollment is processed, or where the donor is domiciled;
III - a supplementary law shall regulate the competence for the institution of such tax:
a) if the donor is domiciled or residing abroad;
b) if the deceased owned property, was resident or domiciled or had his probate processed abroad;
IV - the Federal Senate shall establish the maximum rates for such tax.
Paragraph 2 - The tax established in item II shall observe the following:
I - it shall be non-cumulative, and the tax due in each transaction concerning the circulation of goods or rendering of services shall be compensated by the amount charged in the previous transactions by the same or by another state or by the Federal District;
II - exemption or non-levy, except as otherwise determined in the law:
a) shall not imply credit for compensation relative to the amount due in the subsequent transactions or renderings of services;
b) shall cause the annulment of the credit for the previous transactions;
III - it may be selective, based on the essentiality of the goods or services;
IV - a resolution of the Federal Senate, on the initiative of the President of the Republic or of one-third of the Senators, approved by the absolute majority of its members, shall establish the rates that apply to interstate and export transactions and rendering of services;
V - the Federal Senate may:
a) establish minimum rates for domestic transactions, by means of a resolution on the initiative of one-third and approved by the absolute majority of its members;
b) establish maximum rates for the same transactions to settle a specific conflict involving the interest of the states, by means of a resolution on the initiative of the absolute majority and approved by two-thirds of its members:
VI - unless otherwise determined by the states and the Federal District, under the terms of the provisions of item XII, g, the domestic rates for transactions concerning the circulation of goods and the rendering of services may not be lower than those established for interstate transactions;
VII - the following shall be adopted for transactions and rendering of goods and services to end-users located in another state:
a) the interstate rate, when it is incumbent upon the recipient to pay that tax;
b) the internal rate, when it is not incumbent upon the recipient to pay that tax;
VIII - in the case of subitem a of the preceding item, the tax corresponding to the difference between the internal and the interstate rate shall be attributed to the state where the recipient is located;
IX - it shall also be levied:
a) on the entry of goods imported from abroad by an individual or a corporation, even if those are not usual taxpayers of such tax, whatever the finality of the goods, as well as on services rendered abroad, and the tax shall be attributed to the state where the establishment receiving the goods or services is located;

Clause IX, text in purple added by CA 33, December 11th 2001.

b) on the total value of the transaction, when goods are supplied with services not included in the power to tax of the municipalities;
X - it shall not be levied:
a) on transactions transferring industrialized products abroad, nor on services rendered to parties located abroad, ensured the maintenance and usage of the amount of such tax paid in previos operations and transactions;

Clause X, text in purple added by CA 42, December 19th 2002. The CA eliminated the Tax on Industrialized Products (IPI) which was factored into the prices of Brazilian goods, reducing their competitivity. The former text was more restrictive, reading "a) on transactions transferring industrialized abroad, excluding semi-finished products as defined in a supplementary law;

b) on transactions transferring petroleum, including lubricants liquid and gaseous fuels derived therefrom, and electric energy to other states;
c) on gold, in the cases defined in article 153, paragraph 5.
d) on rendering of communication services in the modes of radio broadcasting of sounds and of sounds and images with open and free reception;

Letter d added by CA 42, December 19th 2003.

XI - its assessment basis shall not include the amount of the tax on industrialized products when the transaction carried out bets ween taxpayers and concerning a product intended for industrialization or sale represents a taxable event for both taxes;
XII - A supplementary law shall:
a) define its taxpayers;
b) provide for tax substitution;
c) regulate the system of tax compensation
d) establish, for purposes of collection of the tax and definition of the responsible establishment, the location of the transactions concerning the circulation of goods and the rendering of services;
e) exclude from levy of the tax, in exports to other countries, services and other products other than those mentioned in item X, a;
f) provide for the event of maintenance of a credit for services and goods remitted to another state and exported to other countries;
g) regulate the manner in which, through deliberation by the states and the Federal District, tax exemptions, incentives and benefits shall be granted and revoked;
h) to define the fuels and lubricants which shall be levied only once, whatever their finality, in which case the provisions of clause X, B, shall not apply;
i) define the assessment bases, in such a way that it comprises the value of the tax, also in the importation from abroad of goods or services.

Letters h and i added by CA 33, December 11th 2001.

Paragraph 3 - With the exception of the taxes mentioned in item II of the caption of the present article, and article 153, I and II, no other tax may be levied on transactions concerning electric energy, telecommunication services, petroleum by-products, fuels and minerals of the country.
Paragraph 4. In the case of clause XII, h, the following provisions must be observed:
I - in operations with lubricants and fuels derived from petroleum, the tax shall belong to the State where the consumption occurs;
II - in inter State operations, between taxpayers, regarding natural gas and by-products, and lubricants and fuels not included in clause I of this paragraph, the tax shall be split between the States of origin and destination, adopting the same proportionality which applies to the operations with other goods;
III - in inter State operations regarding natural gas and by-products, and lubricants and fuels not included in clause I of this paragraph, when the product is purchased by non-taxpayers, the tax shall belong to the State of origin;
IV - the rates of the tax shall be defined by decision of the States and the Federal District, according to the provisions of paragraph 2, XII, g, and with observance of the following:
a) shall be uniform across all national territory, allowed differences by product;
b) may be specific, per unit of measure adopted, or ad valorem, levied on the amount of the transaction or on the the value that the product or a similar would fetch in a free competition market;
c) may be decreased and re-established, the provisions of article 150, III, b not being applicable.

Paragraph 4 added by CA 33, December 11th 2001.
Paragraph 5. The norms necessary to the application of provisions of paragraph 4, including those regarding the assessment and destination of the tax, shall be established by decision of the States and the Federal District, according to the provisions of paragraph 2, XII, g.

Paragraph 5 added by CA 33, December 11th 2001.
Paragraph 6. The tax mentioned in clause III:
I - shall have minimum rates established by the Federal Senate;
II - may have different rates, depending on its nature and utilization.

Paragraph 6 added by CA 42, December 19th 2003. Clause II allows that, for example, an ambulance have a lower tax than an ordinary car.

SECTION V - MUNICIPAL TAXES

 

Article 156. The municipalities shall have the competence to institute taxes on:
I - urban buildings and urban land property;
II - inter vivos transfer, on any account, by onerous acts, of real property, by nature or physical accession, and of real rights to property, except for real security, as well as the assignment of rights to the purchase thereof;
III - services of any nature not included in article 155, II, as defined in a supplementary law.
IV - (revoked)

The CA 3, March 17th 1993, revoked the former clause III, and turned clause IV into the current clause III. The former clause III read: "III - retail sale of liquid and gaseous fuels, except diesel oil." The supplementary law mentioned by clause III is Supplementary Law 116, July 31st 2003, which regulates the Tax on Services of Any Nature.

Paragraph 1 - Without prejudice of the progressivity based on time mentioned by article 182, paragraph 4, II, the tax of clause I may:
I - be progressive in proportion to the value of the building;
II - have different rates, in accordance with the localization and the use of the building.

Paragraph 1 amended by CA 29, September 13th 2000. Original text read: "The tax set forth in item I may be progressive, under the terms of a municipal law, in order to ensure achievement of the social function of the property."

Paragraph 2 - The tax set forth in item II:
I - shall not be levied on the transfer of goods or rights incorporated into the assets of a corporate body to pay up its capital, nor on the transfer of goods or rights resulting from the merger, incorporation, division or dissolution of corporate bodies, unless, in such cases, the predominant activity of the purchaser is the purchase and sale of such goods or rights, the lease of real property or leasing;
III - is within the competence of the municipality where the property is located.
Paragraph 3 - As regards the tax established in item III of the caption of this article, a supplementary law shall:

Text in purple added by CA 37, June 12th 2002.

I - establish its maximum and minimum rates;

Text in purple added by CA 37, June 12th 2002.

II - exclude exportations of services to other countries from levy of the said tax.
III - regulate the manner and the conditions by which exemptions, incentives and fiscal benefits shall be granted and revoked.

Clause III added by CA 37, June 12th 2002. Check also the article 88 of the Temporary Provisions, which was also amended by this same CA.