The latest report showed that Brazil has the second highest tax burden among latin American countries, after Argentina.

Brazil also had the highest tax to the GDP ratio in Latin America from 1990 to 2009, and was surpassed by its neighbor Argentina recently, according to a report released Tuesday by the Organization for Economic Cooperation and Development (OECD).

Currently, taxes in Brazil amount to 32.4 percent of the country's gross domestic product, it said.

The report showed that indirect taxes are especially high in Brazil, compared to OECD members, and the value-added tax (VAT) system, operated at sub-national state level, is "complex, leading to predatory tax competition among the states and entailing high compliance and administration costs."

Direct taxation has also been growing in recent years, although at a slower pace, it said.

"The potential progressivity of the tax system is reduced by the combination of the heavy reliance on indirect taxes, the low contribution of personal income taxes to total tax revenues, and the significant weight of social security contributions and payroll taxes," said the report.

Xinhua