Companies seeking to enter South America’s largest economy should consider Brazil’s unique math regarding indirect tax calculations.
Latin America is a hotbed of innovation for real-time taxation as applied to value-added tax (VAT), and countries elsewhere around the globe are starting to take notice. The United Kingdom, for example, has proposed a split payment VAT system that echoes the rules already in place in some Latin American jurisdictions.
If you’re a tax authority faced with loss of revenue due to value-added tax (VAT) fraud and error in online transactions, here’s an appealing idea: Why not impose an obligation on one of the parties involved in effecting an electronic transaction to extract VAT at the time of purchase and then deposit it into the government’s account?
Qualifiers are crucial when addressing withholding taxes on domestic business-to-business transactions in Latin America. These qualifiers – which include phrases like “usually,” “at the moment,” and “in other cases” – point to the inherent complexity of withholding tax applicability, rates, calculations and exemptions in Argentina, Brazil and Mexico.
The demand for technology professionals throughout Latin America will outpace supply by 2019 -- that insight comes from a study commissioned by Cisco for IDC, and it has some troubling implications for the tax functions of companies doing business in the region.
As I indicated in my last post and my colleagues Ana Paula Maciel and Ernesto Levy note in a recent webcast, Latin America is one of the largest and fastest-growing regions for U.S. exports. Of course, many countries in the region are also renowned for the intricacy of their tax environments. Companies looking to enter or expand their activities throughout Latin America need to master the complex challenges of transactional tax data management in the region.
U.S. goods exports to Latin America represent one of the largest and fastest-growing components of all U.S. global exports. Just ask the U.S. Department of Commerce. Last year, the Commerce Department launched its “Look South” initiative to help more U.S.-based companies of all sizes understand why expanding into Latin America markets “will improve their bottom line.”
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