Notes on Invoice/VAT Taxes: Core Countries

Table of Contents

Brazil

The VAT taxes you see are a medley of additional items applied to the total invoice cost (payroll + taxes + services fees). It’s rather onerous, but all items that SERVIAP invoices for PEO/BPO are considered income to us, and therefore these taxes apply. This is called “presumed income” and is the current scheme under which SERVIAP’s money flows are taxed (including that which we simply pass on as payroll). The discrepancy between the 19.33% and 16.33% is explained by a monthly income cap; companies that make less than 60,000 R per month are taxed at 16.33%, while those that make more than 60,000 R per month are taxed at 19.33%. Currently, SERVIAP’s income in Brazil qualifies for the lower amount, though that may change.

Below please find an itemized list of the taxes that constitute the 16.33% or 19.33%.

· ISS 5% – service tax – Municipal tax paid for services rendered. calculated monthly – payable on day 10th of the next month.

· PIS 0,65% – Social Integration Program – federal income tax paid. calculated quarterly – payable one month after receiving the money from the customer

· COFINS 3% – Social Security Funding Contribution – federal income tax paid. calculated quarterly – payable one month after receiving the money from the customer.

· IRPJ 4,8% – Corporate Income Tax – federal tax paid quarterly on income. Additional corporate income tax of 10% paid quarterly under the assumption of 32% that exceeds the base of R $ 60,000.00 in the quarter. calculated quarterly – payable one month after receiving the money from the customer.

· CSLL 2,88% – Social contribution on net income – federal tax – federal tax paid quarterly on income. calculated quarterly – payable one month after receiving the money from customer.

Chile

2.57% “corporate tax” on total payroll costs. This rate changes based on corporate income, which now has SERVIAP in a relatively low tier. Ergo, we currently are invoicing .5%. 2.57% is the maximum.

Peru

Generally, no but:
Could be 18% on total invoice under certain conditions. The key difference is whether services are “exported” from Peru, e.g., programmers supporting a startup in San Francisco (no VAT) or “consumed” within Peru, e.g., a renewable energy consultant working on the construction of geothermal turbines (VAT).