Table 2.2 Snapshot of Taxes in Brazil (2010) Tax
Rate (%)
Corporate
15%
CSLL
9%
Interest
15%
FGTS ICMS
IPI
8% on monthly salary 025% 26.8%28.8% on monthly salary paid by employer and 7.6511% paid by employee 0%330%
II
0%35%
Import tax.
IR ISS IOF
top rate 27.5% 2%5% 0%25%
Personal income tax. Municipal service tax. Financial operations tax (on loans and foreign investment).
INSS
Description The basic rate of 15% is increased by a surtax of 10% on annual taxable profits exceeding 240,000 reals Social contribution on net profits The rate for interest payments on loans can increase to 25% for residents of tax havens. Fund for the guarantee of length of service. State value-added tax (VAT). Social security contribution. Tax on industrial products. The national average is about 10%.
Source: Based on data from KPMG 2012 and Deloitte 2012. Note: II = import tax; IPI = tax on industrial products; II = Import tax; IR = Export tax; ISS = Personal income tax; ISS = Municipal service tax; IOF = Financial operations tax. — Not available. 2.1.3 Population and Labor Force
Brazil’s population is the largest in Latin America and has been steadily growing since 1950. As shown in Figure 2.4, the country’s labor force will peak early next decade, returning to current levels toward 2040. This is paralleled by an exploding generation of the elderly. PT came into power after a period of growing unemployment, which reached 12.3 percent when Lula took office in 2003. Since then, unemployment has been trending toward historically low rates on the back of a growing economy. Figure 2.4 Evolution of the Brazilian Population and Labor Force over Time, 1950–2050 (in millions of people) 250
80% 70%
Million People
200
60%
150 100 50
50-59
50%
40-49
40%
30-39
30%
20-29
20%
10-19
10%
0-9
0%
% 15 - 64
1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020 2025 2030 2035 2040 2045 2050
0
60+
Source: Based on data from UN 2010.
The mean years of education of the Brazilian labor force averaged at 7.2, lower than resource-rich and developed economies averages. In terms of labor compensation, the real average labor wage has been rising, with a sharp increase in the minimum wage (which reached $300 in 2010). While this presents a positive development internally, it might affect the country’s competitiveness in the global arena. Table 2.3 presents a summary of key labor-related indicators.
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