The Fiscal and Accounting Relationship
Between Brazil and the United States

International accounting is important for business management because it allows companies to be compared consistently and accurately with other companies in different countries. This is essential for strategic decision-making, such as identifying market opportunities, assessing risks, and forming business partnerships. Additionally, international accounting is crucial for compliance with international tax regulations and laws, which can help avoid sanctions and fines.

There are some differences between accounting in Brazil and the United States. One of the main differences is that in Brazil, accounting is regulated by the Federal Accounting Council (CFC), while in the United States, each state has its own accounting board. Additionally, there are differences in the applicable accounting standards. In Brazil, the Brazilian Accounting Standards (NBC) are applied, while in the United States, Generally Accepted Accounting Principles (GAAP) are used.

Another difference is that accounting in Brazil is more focused on meeting tax and fiscal requirements, whereas in the United States, accounting is more oriented towards providing useful financial information to investors and creditors.

Moreover, there are differences in the accounting treatment of certain items, such as depreciation, amortization, and provisions.

In general, the differences between accounting in Brazil and the United States can affect how companies present and report their financial information, and investors and creditors should be aware of these differences when evaluating a company's financial information.

The tax burden in Brazil is considered one of the highest among Latin American countries and compared to developed countries. According to the World Bank, the tax burden in Brazil is about 36.3% of GDP, while in the United States it is around 26%. This means that businesses and individuals in Brazil pay a significantly larger share of their income in taxes than people in the United States.

However, it is important to note that there are significant differences between the tax systems of the two countries. In the United States, there are many state and local taxes in addition to federal taxes, while in Brazil, most taxes are collected by the federal government. The tax burden can vary significantly between different sectors and types of income and cannot be directly compared between the two countries.

There is a possibility of double taxation for Brazilians with dual Brazilian and American nationality, which occurs when individuals' incomes are taxed both in Brazil and the United States due to each country's tax obligations.

To avoid double taxation, the United States and Brazil signed an agreement to avoid double taxation and prevent tax evasion. This agreement allows individuals with taxable income in both countries to apply the provisions of the agreement to reduce or avoid double taxation.

Individuals with dual Brazilian and American nationality can also benefit from foreign income exclusion provisions, tax credits, and other exemptions available in both countries to reduce their tax burden.

It is advisable for individuals with dual Brazilian and American nationality to consult an accountant or tax specialist to understand their tax obligations and benefit from the provisions of the double taxation avoidance agreement.

In this regard, international accounting is important for tax determination because it allows businesses and individuals to comply with applicable international tax regulations. This includes the accurate and timely filing of tax returns as well as compliance with transfer pricing rules, which aim to prevent tax evasion through manipulation of prices in transactions between companies in different countries. International accounting is also important for strategic tax planning, such as identifying opportunities for tax reduction.

There are several differences between tax laws in Brazil and the United States. Some of the main differences include:

• Tax system: In Brazil, most taxes are collected by the federal government, while in the United States there are federal, state, and local taxes. This means that individuals and companies in the United States may have a more complex tax burden than in Brazil.
• Types of taxes: In Brazil, the main taxes include the Income Tax on Individuals and Legal Entities, the Tax on Industrialized Products (IPI), and the Tax on the Circulation of Goods and Services (ICMS). In the United States, the main taxes include the Federal Income Tax, Sales Taxes generally ranging from 6% to 7%, and Property Tax which can range from 8% to 15%.
• Tax rate: In Brazil, income tax rates range from 7.5% to 27.5% for individuals and from 15% to 34% for legal entities. In the United States, income tax rates range from 10% to 37%.
• Deductions and credits: In Brazil, there are some permitted deductions in income tax, such as medical and educational expenses. In the United States, there are many available tax deductions and credits, such as mortgage expenses, career expenses, and education expenses.
• Tax enforcement: In Brazil, tax enforcement is primarily carried out by the Federal Revenue Service, while in the United States there are various tax agencies, including the Internal Revenue Service (IRS) and state and local tax collection agencies.

These are just some of the main differences between tax laws in Brazil and the United States. It is important for businesses and individuals to understand their tax obligations in both countries and consult a tax specialist to avoid tax issues.

Tax planning is important for starting businesses and legally paying the least amount of taxes possible, especially in an international business environment. Tax planning allows companies to identify and take advantage of available tax reduction opportunities while complying with applicable tax regulations.

Some of the main advantages of tax planning include:

• Reducing the tax burden: Tax planning allows companies to identify and take advantage of tax reduction opportunities, such as available tax deductions and credits.
• Improving financial efficiency: Tax planning allows companies to optimize their financial structure to maximize profitability and minimize tax costs.
• Compliance with tax regulations: Tax planning allows companies to comply with applicable tax regulations, avoiding sanctions and fines.
• Strategic planning: Tax planning allows companies to identify business opportunities and make informed strategic decisions considering tax implications.

It is important for companies to be aware of the differences between tax regulations in different countries, especially when it comes to international business, and seek guidance from tax specialists to benefit from double taxation avoidance provisions existing between countries.

Diego Corrêa is an Accountant in Brazil and the United States, Founder of All7 Service, and Specialist in International Taxation.