With the aim of strengthening political-administrative and financial autonomy, the Brazilian Constitution defines a system of "unconditional" transfers between the Union, States and Municipalities. There are two types of transfers: direct or through special funds (indirect). Independently of the type, transfers always occur from the higher level government sphere to the lower level or, in other words, from the Union to the States and from the Union to the Municipalities or from the States to their respective Municipalities. The constitutionally defined direct transfers are as follows:
The totality of the inflow of the income withholding tax on income paid by the states and municipalities, their semiautonomous agencies and foundations instituted and maintained by them belongs to the states and municipalities;
Fifty percent of the Rural Land Tax (ITR) levied on properties located within the municipalities belongs to the respective municipalities;
Fifty percent of the inflow of the Tax on Automotive Vehicles (IPCA) levied on vehicles licensed within their respective territories belongs to the municipalities;
Twenty-five percent of the inflow of the Tax on the Circulation of Merchandise and Services (ICMS) belongs to the Municipalities (at least ¾ in the proportion of the value added in operations carried out within their respective territories and up to ¼ according to State law);
The IOF – Gold (financial asset) is transferred in the proportions of 30% to the state of origin and 70% to the municipality of origin;
The funds through which indirect transfers are made are as follows:
Export Compensation Fund (FPEx): composed of 10% of the total IPI inflow. Its distribution is proportional to the value of exports of industrialized products, with a ceiling of 20% on individual participation in the fund total.
State and Federal District Revenue-Sharing Fund (FPE): 21.5% of the IPI and IR inflow, distributed in a manner directly proportional to the population and to the surface area and inversely proportional to the per capita income of the state.
Municipal Revenue Sharing Fund (FPM): composed of 22.5% of the IPI and IR inflow, with distribution in proportion to the population of each unit, with 10% of the fund being reserved to the Municipalities of the State capitals.
Regional Funds: Targeted to development programs in the north, central west and northeast regions, with resources corresponding to 3% of the IPI and IR.
Information sources:
Links:
Secretariat of the Federal Revenue of Brazil
http://www.receita.fazenda.gov.br
State Secretariats of Finance
Secretariat of Finance of the State of Acre
Secretariat of Finance of the State of Alagoas
Secretariat of Finance of the State of Amapá
Secretariat of Finance of the State of Amazonas
Secretariat of Finance of the State of Bahia
Secretariat of Finance of the State of Ceará
Secretariat of Finance of the State of Distrito Federal
Secretariat of Finance of the State of Espírito Santo
Secretariat of Finance of the State of Goiás
State Revenue Management of Maranhão
Secretariat of Finance of the State of Mato Grosso
Secretariat of Finance of the State of Mato Grosso do Sul
Secretariat of Finance of the State of Minas Gerais
Secretariat of Finance of the State of Pará
Secretariat of Finance of the State of Paraíba
Secretariat of Finance of the State of Paraná
Secretariat of Finance of the State of Pernambuco
Secretariat of Finance of the State of Piauí
Secretariat of Finance of the State of Rio de Janeiro
Secretariat of Taxation of the State of Rio Grande do Norte
Secretariat of Finance of the State of Rio Grande do Sul
Secretariat of Finance of the State of Rondônia
Secretariat of Finance of the State of Roraima
Secretariat of Finance of the State of Santa Catarina
Secretariat of Finance of the State of São Paulo
Secretariat of Finance of the State of Sergipe
Secretariat of Finance of the State of Tocantins
Federal Legislation
National Statistics