Individual Corruption

In Brazil, as in most other Latin American countries, tax evasion is widespread given the large informal sector. This is also reflected in the Latinobarómetro 2007 (see English version) in which just below half of the households surveyed viewed paying taxes as a necessary condition for legitimate citizenship.

Business Corruption

According to both the US Department of State 2011 and the Global Competitiveness Report 2011-2012 by the World Economic Forum, tax regulations can be extremely burdensome and complicated in Brazil. The Enterprise Surveys 2009 also reveal that it is not uncommon for companies to meet requests for bribes when interacting with tax officials. Tax collectors frequently ask for bribes to relax assessments and inspections, to cease threatening the company, to refrain from pursuing acts of tax fraud and to give advice on the legal possibilities of reducing tax obligations. All administrative levels suffer from these malpractices, but companies report that the state-level value added tax (ICMS) is the tax most vulnerable to corruption. Although tax regulations are applied equally to foreign and national companies, the US Department of State 2010 reports that foreign companies have complained that the value-added tax (ICMS) favours local companies.

Companies in a CMI 2008 report cite that skills on strategic tax planning are important for a company's competitiveness. Some companies also claim that they have been driven out of their market segment by competitors' informal sales outside the tax system. However, the report also states that almost all companies in Brazil seem to be more concerned with the correct payment of taxes, and not tax avoidance, despite the demanding taxation system.

Political Corruption

Tax evasion by high-ranking officials, politicians and other powerful individuals is considered to be common practice in Brazil. In one example, a scandal in 2004 saw the director of monetary policy at Brazil's Central Bank accused of tax evasion. These allegations eventually forced him to resign. The reputation of the bank's president also suffered severely from this case, as he was believed to be involved in similar cases of tax evasion. However, as soon as the accusations were made public, a presidential decree was issued, giving him - and all future Central Bank presidents - the status of cabinet minister to be better protected against accusations regarding financial irregularities. Under Brazil's 1988 Constitution, only the Supreme Court has jurisdiction to try the President, ministers, legislators and high court justices.

Frequency

The World Bank & IFC: Doing Business 2012:
- During the course of a year, a medium-sized company can expect to pay an average of 9 different taxes and spend 2,600 hours managing the administrative tasks related to these payments.

- The time spent managing taxes by far exceeds the regional average, which is slightly below 382 hours.

- The total tax rate is estimated to be 67% of profits - the regional average is 48%.

World Economic Forum: The Global Competitiveness Report 2011-2012:
- Out of 15 factors that are identified as being problematic for doing business in Brazil, business executives rank 'Tax Regulations' and 'Tax Rates' as the most constraining factors.

Transparency International: Global Corruption Barometer 2010:
- 1.5% of households who had contact with tax revenue authorities in 2009 report to have paid a bribe.

The World Bank & IFC: Enterprise Surveys 2009:
- 16.4% of the surveyed companies report that they expect to give gifts in meetings with tax inspectors.