How Consumption Tax Works in Brazil

Brazil has a complex multi-tax consumption system. The main tax visible to consumers is ICMS (state tax), with São Paulo's standard rate at 18%. Essential goods like food and medicine are taxed at reduced rates of 7-12%.

Additional federal taxes include PIS and COFINS (combined 3.65-9.25% depending on regime). Services are taxed by ISS (municipal) at 2-5%.

Brazil is transitioning to a unified VAT system (IBS/CBS) under the 2023 tax reform. The new system will fully replace ICMS, ISS, PIS, and COFINS by 2033.

Data source: https://www.fazenda.sp.gov.br

Last verified: 2026-04-25