In most legal systems throughout the world, the government has the right to raise revenue through taxes and other fees that allow it to provide services and security to its people. Brazil is no exception, and because of the high rate of taxation in the country, it behooves the person living in or doing business in Brazil to understand the legal system surrounding it.
Brazilian law recognizes two types of taxation: bound and unbound. Bound taxation refers to a certain state function. For example, the government might institute a road tax the proceeds of which specifically go to maintaining and building new roads. These types of taxes are common in the United States as well. However, in Brazil, these types of taxes are specifically referred to as fees or contributions for improvement.
Unbound taxes, on the other hand, are not reserved for a specific function. Income taxes are the best example of this class of taxation. However, social insurance contributions fall somewhere in between, and could be considered an example of either bound or unbound taxation, depending on how you look at it.
Ricardo Tosto is the founder of one of Sao Paulo’s best known blue-chip law firms, Ricardo Tosto& Associates. With over two decades of experience practicing law in Brazil, Ricardo Tosto has offices in Brazil’s two largest cities and in the capital, Brasilia.
As a leader in civil litigation and dispute resolution, Ricardo Tosto has served as a trendsetter in the Brazilian legal profession. In fact, Ricardo Tosto is a huge proponent of innovation and fosters new ways of thinking about the law among his associates in order to gain the advantage. Click here