What is ICMS? How does it work?

Created by Henrique Vital Valentim, Modified on Tue, 03 Oct 2023 at 04:56 PM by Henrique Vital Valentim

    ICMS stands for "Imposto sobre a Circulação de Bens e Serviços de Transporte e Comunicações Interestaduais e Intermunicipais" in Portuguese, which translates to "Tax on the Circulation of Goods and Services for Interstate and Intermunicipal Transportation and Communications" in English. It is regulated by the Kandir Law (Complementary Law 87/1996) and is a state tax with values determined by individual states and the Federal District.


    In essence, ICMS is a tax applied when a taxable product or service circulates between cities, states, or from legal entities to individuals (such as when an appliance store sells a microwave to a customer).


    Considering that ICMS is a tax on the circulation of goods and services, it is only paid when ownership of the good or service transfers from one company to another or from a company to a customer. It's important to note that, except for electricity and petroleum derivatives, ICMS is collected in the state of origin of the goods or service.

   

    As mentioned, ICMS is a state tax, and its rate is determined by the individual states and the Federal District. However, the tax rate differs for internal movements (within the same state) and interstate movements (between different states).


    It's also important to remember that the tax rates vary depending on the specific goods or services, ranging from 7% to 35%.


    For internal movements, the ICMS rate is the state rate, which generally ranges between 17% and 19%. Below are the figures for 2019:


Acre – 17%

Alagoas – 17%

Amazonia – 18%

Amapá – 18%

Bahia – 18%

Ceará – 17%

Distrito Federal – 18%

Espírito Santo – 17%

Goiás – 17%

Maranhão – 18%

Mato Grosso – 17%

Mato Grosso do Sul – 17%

Minas Gerais – 18%

Pará – 17%

Paraíba – 18%

Paraná – 18%

Pernambuco – 18%

Piauí – 17%

Rio Grande do Norte – 18%

Rio Grande do Sul – 18%

Rio de Janeiro – 19%

Rondonia – 17%

Roraima – 17%

Santa Catarina – 17%

São Paulo – 18%

Sergipe – 18%

Tocantins – 18%

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