There are currently no Brazilian consumption taxes on non-resident provided digital or electronic services. The Brazilian indirect tax system is highly complex, and overlapping, with many conflicted state, federal and municipal taxes.
Follow VAT Calc’s global live VAT invoice transaction and e-invoice reporting tracker to see where else real-time submissions of invoices is being implemented.
Attempts to impose taxes on digital services
ICMS Agreement 106 of 2017, digital services (media; software; games; apps; data etc)sought to allow the taxation of B2C transactions in the state of the consumer. In March 2021, the Brazilian Supreme Court blocked an attempt to levy digital ICMS (Imposto sobre a Circulação de Mercadorias e Prestação de Serviços de Transporte on digital services – including exchange of licensing and download of software.
Another proposal for levying ISS on video and music services by municipalities. But this is still pending partially to avoid double taxation through ICMS.
There are no IPI or PIS on digital services.
Introduction of VAT in Brazil
Brazil VAT implementation plans are split in two at the moment, with likely progress soon on a plan to consolidate its many taxes into a single VAT regime. Although an attempt to form a Federal VAT plan in June failed to merge PIS and COVINS taxes.
Brazilian Digital Services Tax proposals
There are currently five proposal with the Chamber of Deputies and Senate introduced between August 2020 and March 2021. These are all closer to global Digital Services Taxes, a new class of tax on the turnover of digital service providers. Most of them include COFINS and similar Brazilian taxes on:
- Digital platform advertising
- Selling commissions on goods or services sold on electronic platforms
- Sales of data
- Software sales
B2B withholding taxes
Whilst not direct taxes are in place in digital services provided by non-residents, payment may be subject to withholding tax (IRRF). This could also include PIS/COFINS
Central and South America VAT on digital services
|Comments (click for details)||Rate||Date||Threshold||Comments|
|Bahamas||10%||Jan 2015||BSD 100,000|
|Barbados||17.5%||Dec 2019||BBD 200,000|
|Costa Rica||13%||Oct 2020||Nil||Withholding VAT option|
|Dominican Republic||18%||2023?||Nil||Currently withholding VAT|
|El Salvador||13%||2022||-||Replace Withholding VAT|
|Paraguay||10%||Jan-21||Nil||Withholding VAT; 4.5% DST|
|Puerto Rico||10.5%||Jan 2020||$100,000; or 200 transactions||Marketplaces|
|Uruguay||22%||Jan 2018||Nil||VAT and Withholding Tax|