Brazilian Tax Collection Rising

August 19, 2010 Taxation in Brazil

Flag of the Federative Republic of Brazil (1968-1992)Brazil showed signs of continued economic recovery in July, announcing an increase in its tax collections levels compared to both the previous month and the same month of 2009.

In its latest federal tax report, released August 17th, the Brazilian Ministry of Finance announced that total tax collections in July reached BRL 67.97 billion (approx. USD 38.75 billion). The figure represents a 10.8 percent increase over July 2009, and 10.5 percent rise in comparison to June 2010. The total tax revenues for the 2010 calendar-year have reached BRL 447.46 billion (approx. USD 255.11 billion), a 12 percent improvement over the same period in 2009.

The July collections figure even exceeded market expectations, with many economists having projected a marginally lower result of BRL 67 billion (approx. USD 38.19 billion). In the face of the better than estimated results the Brazilian Planning Ministry has increased the 2010 total cumulative tax forecast to BRL 636.96 billion (approx. USD 363.15 billion).

The overall positive results for the first seven months of 2010 were caused by notable improvements in collections in almost all tax categories. Most impressively, fuel tax revenues grew 139 percent throughout 2010, with a cumulative tax total of BRL 4.35 billion (approx. USD 2.48 billion). Additionally, collections from the industrial product tax rose 26 percent, to a level of BRL 15.25 billion (approx. USD 8.69 billion). National import tax, and welfare taxes increased 19 percent and 17 percent respectively. The financial operations tax (IOF) also brought in 33 percent more revenue compared to the same period in 2009, rising in 2010 to a total of BRL 14.44 billion (approx. USD 8.23 billion). Guido Mantega, Finance Minister of Brazil, recently commended the IOF for also bringing significant secondary economic benefits by greatly reducing volatility in prices of the Brazillian Reais.

Despite the overall positive results for the first seven months of 2010, a marginal drop was reported in revenues from corporate income tax. Total corporate tax collections for the period were BRL 80.62 billion (approx. USD 45.96 billion), a drop of 0.79 percent compared to the timeframe in 2009.

Photo by Vibracobra23