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IRF

IRF (Income tax at source; Imposto de Renda na Fonte)

IRF is due on income paid, credited, remitted, or delivered to non-residen,s, and other income, such as prizes, advertising services provided by legal entities and remuneration for services provided by legal entities. at the rate of 15% or 25% depending upon the beneficiary’s country of residence and the nature of the income. As of January 1, 2001, a ‘Contribution of Intervention in the Economic Domain’ is due, at the rate of 10%, upon remittances of royalties or compensation deriving from technology transfers, in cases where the withheld income tax rate is 15%. This does not apply to profits and dividends, which are exempt from income tax at source.

As of January 1, 1997 new rules were introduced in income tax law to regulate transfer pricing in business transacted by resident individuals or corporations with non-resident parties for import and export, and interest payments abroad. These rules apply in the following situations:

  • when a corporation domiciled in Brazil conducts business with non-domiciled related parties;
  • when a domiciled individual or corporation carries out business with a related or unrelated party domiciled in a country where income tax is not charged or is assessed at a rate lower than 20%, or where the domestic legislation maintains secrecy with regard to equity participation or corporate ownership.
  • when a domiciled individual or corporation carries out business with a related or unrelated party domiciled in a country where income tax is not charged or is assessed at a rate lower than 20%, or where the domestic legislation maintains secrecy with regard to equity participation or corporate ownership.