Brazil is recognized around the globe as having one of the most complicated tax systems in the world. The complex and constantly-changing tax requirements regularly confound large international corporations that seek to open or expand subsidiaries in the country.
One of the many difficulties corporations must manage is following the Brazilian government’s rules for classifying services and inventory items.
What exactly does that involve? And why do so many international corporations in Brazil struggle with this issue? Let’s investigate!
What Codes Do I Need to Know?
Two important classification systems in Brazil for items and services include:
- Código Fiscal de Operações e Prestações (CFOP) aka Fiscal Code of Operations and Services — This is the numeric code that describes the type of business transaction and includes information on the good’s origin as well as the type of operation (e.g., stock transfer, return, sale, etc.). The CFOP is used by Brazilian authorities to determine tax collection and which kind of tax should be applied.
- Mercosur Common Nomenclature (MCN) — Eight-digit MCN codes are used to classify goods imported into Brazil and determine certain taxes. MCN codes are part of a harmonized classification system shared among full members of Mercosur, a South American trading bloc made up of Brazil, Argentina, Paraguay and Uruguay.
What Makes Brazilian Taxes so Complex
Ok, now you know the most important tax codes. So, what do you do with them?
Brazilian tax authorities require CFOP and MCN codes to be accurately applied by businesses and included in tax reporting forms for:
- Inventory Items
- Non-inventory Items
This is easier said than done! Taxes in Brazil are very complex, with items and services being subject to different types of taxes depending on not only the type of product or service but also on which state within Brazil business is conducted.
And — just to make things even more complicated — tax regulations in Brazil change all the time, making it difficult for businesses to keep up with the latest requirements.
How LatamReady Solves the Problem
The LatamReady SuiteApp is the only native Built-for-NetSuite SuiteApp that handles inventory item and services tax rules for in 18+ Latin American countries, including Brazil.
Our innovative solution extends the power of Oracle NetSuite to ensure tax codes are accurately applied to all transactions and included in mandatory legal tax reporting forms for large international corporations with subsidiaries in Latin America.
If you are a leading global corporation with plans to open or expand operations in Brazil or elsewhere in the region, the LatamReady SuiteApp is the solution you need to achieve 100% tax compliance.
Jumpstart your success in Latin America by partnering with the expert team at LatamReady. Visit www.LatamReady.com or call one of our sales reps at +1-786-600-2641 to get started.
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