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Brazil court blocks ICMS tax on digital services

The Brazilian Supreme Court has blocked the levying of state VAT on licensing, electronic transfer or downloading software. ICMS (Imposto sobre a Circulação de Mercadorias e Prestação de Serviços de Transporte Interestadual e Intermunicipal e de Comunicação) is one of the range of VAT-like taxes. It is levied at the federal level. The ruling confirmed an earlier majority vote in November of the same court.

Part of the basis of the decision was the existing levying of ISS (Imposto sobre Serviços), Municipal Services Tax, a further federal level indirect tax. The court held that the two taxes could not be both charged.

This ruling applies to the states of Minas Gerais and Mato Grosso

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