Brazil 7% Digital Services Tax proposal

Digital Social Contribution levy on advertising and user data income Bill in Chamber of Deputies

Complementary Law Project No. 157/2025 has been formally submitted to the Chamber of Deputies, initiating the legislative process for a new Digital Social Contribution (CSD).

The new tax proposal comes as OECD Pillar 1 discussions falter and President Trump’s DST retaliatory measures progress.

The bill proposes a 7% levy on the gross revenue of major digital platforms, targeting global tech giants such as Google, Meta, and X. The measure would apply exclusively to companies with annual global revenue above BRL 500 million (approximately USD 90.9 million) and explicitly forbids the transfer of this cost to Brazilian users.

Clash with OECD global objectives?

Brazil’s CSD mirrors OECD Pillar One’s market allocation principle by taxing foreign digital giants based on economic engagement with Brazilian users. However, CSD taxes gross revenue, whereas Pillar One applies to residual profits, avoiding double taxation on less profitable firms.

Brazil’s unilateral approach could conflict with future multilateral agreements if Pillar One becomes widely implemented – although this is looking doubtful under the current US administration.

Previous DST proposals failures

The initiative reflects recurring debates in Brazil over taxing digital services, following earlier proposals such as Bill No. 2,358/2020, which sought to implement a Digital Services Tax (DST) inspired by models adopted in France and the European Union but faced political resistance and concerns about trade relations with the United States.

Similarly, during the 2019–2021 tax reform discussions, attempts to incorporate a CIDE-Digital (Contribution for Intervention in the Economic Domain) stalled amid lobbying from foreign tech firms and apprehension about retaliatory tariffs.

According to the bill’s sponsors, the CSD aims to compensate Brazilian users for the exploitation of their personal data and exposure to targeted advertising, while also asserting national sovereignty in a digital economy dominated by foreign Big Tech companies, particularly those headquartered in the United States. The proposal must now navigate committee analysis, public hearings, and potential amendments before any vote in the full Chamber of Deputies and subsequent consideration by the Federal Senate, in accordance with Brazil’s bicameral legislative process.

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