{"id":8537,"date":"2020-05-29T17:45:41","date_gmt":"2020-05-29T20:45:41","guid":{"rendered":"https:\/\/www.b18.com.br\/?p=8537"},"modified":"2020-11-16T16:56:34","modified_gmt":"2020-11-16T19:56:34","slug":"brazil-wants-to-tax-digital-services","status":"publish","type":"post","link":"https:\/\/www.b18.com.br\/en\/brazil-wants-to-tax-digital-services\/","title":{"rendered":"Brazil wants to tax digital services"},"content":{"rendered":"

By Priscila Lucenti Estevam<\/a><\/p>

Brazil\u2019s Congress will review a bill that creates a new tax on digital services provided to local customers. If approved, the new tax should reach major multinational companies that offer digital services to Brazilian customers, including those without a local presence.<\/p>

On May 4, 2020, lawmaker Jo\u00e3o Maia submitted to Brazil\u2019s House of Representative a law project (Project 2,358\/2020) that creates a new tax (namely Contribution of Intervention in the Economic Domain, or CIDE-Digital) on gross revenues of large tech companies that offer digital services to Brazilian customers.   <\/p>

The project reveals the struggle that other countries have already experienced: when it comes to the digital economy, whose business models are intangible-based, it is hard to identify the jurisdiction where value creation takes place for tax purposes. As digital businesses do not require a physical presence to create value creation, major tech companies can allocate their profits in jurisdictions with more favorable taxation as compared to those where income is generated.<\/p>

Based on OECD experience, as well as other countries such as India, France, and Italy, Project 2357\/2020 intends to tax gross income arising from:<\/p>

  1. advertisement exhibition on digital platform displayed to users located in Brazil;<\/li>
  2. delivery of digital platform enabling users to get in touch and interact among themselves for sales of goods or service render directly between the users if one of them is located in Brazil; and<\/li>
  3. transmission of data of users located in Brazil collected while they use digital platforms. Their IP or other geolocation resources determine the user location.<\/li><\/ol>

    If approved, CIDE-Digital will reach companies located in Brazil or abroad<\/u><\/strong>, whose income derives from digital services, and that belongs to an economic group with the following annual gross income in the previous calendar year: <\/p>

    1. global gross income higher than the equivalent of BRL 3 billion; and<\/li>
    2. (local) gross income higher than BRL million. <\/li><\/ol>

      With such local and <\/strong>global gross income requirements, CIDE-Digital would affect large companies with international presence but will not apply to those entirely Brazilian.<\/p>

      The rate of CIDE-Digital will be progressive rates, as follows: <\/p>

      1. One percent on gross income up to BRL million; <\/li>
      2. Three percent on gross income that exceeds BRL million up to BRL 300 million; and <\/li>
      3. Five percent of gross income above BRL 300 million.<\/li><\/ol>

        The project is unclear on a few issues that may make collection hard, or even impossible. For instance, it does not address how multinational companies without a physical presence in Brazil shall assess and remit the tax to the local government. <\/p>

        The project shall be submitted to House commissions before discussion and vote by the full House of Representatives. After that, it shall pass debate and vote in the Federal Senate.<\/p>

        Priscila Lucenti Estevam<\/strong><\/a>, senior tax associate of Battella, Lasmar & Silva Advogados<\/a> and co-author of Tributa\u00e7\u00e3o da Economia Digital no Brasil<\/strong><\/a><\/em>, published by Editora B18.<\/p>","protected":false},"excerpt":{"rendered":"

        By Priscila Lucenti Estevam Brazil\u2019s Congress will review a bill…<\/p>\n

        Read more<\/a><\/p>\n","protected":false},"author":5,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"om_disable_all_campaigns":false,"_uag_custom_page_level_css":"","_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[38],"tags":[137,136,139,138,140],"class_list":{"0":"post-8537","1":"post","2":"type-post","3":"status-publish","4":"format-standard","6":"category-articles","7":"tag-brazilian-taxation","8":"tag-priscila-lucenti-2","9":"tag-tax-guide","10":"tag-taxation-of-digital-economy","11":"tag-taxation-of-new-economy-brazil"},"aioseo_notices":[],"featured_image_urls_v2":{"full":"","thumbnail":"","medium":"","medium_large":"","large":"","1536x1536":"","2048x2048":"","a13_navigation_image_size":"","woocommerce_thumbnail":"","woocommerce_single":"","woocommerce_gallery_thumbnail":""},"post_excerpt_stackable_v2":"

        By Priscila Lucenti EstevamBrazil\u2019s Congress will review a bill that creates a new tax on digital services provided to local customers. If approved, the new tax should reach major multinational companies that offer digital services to Brazilian customers, including those without a local presence.On May 4, 2020, lawmaker Jo\u00e3o Maia submitted to Brazil\u2019s House of Representative a law project (Project 2,358\/2020) that creates a new tax (namely Contribution of Intervention in the Economic Domain, or CIDE-Digital) on gross revenues of large tech companies that offer digital services to Brazilian customers.   The project reveals the struggle that other countries have already…<\/p>\n","category_list_v2":"Articles<\/a>","author_info_v2":{"name":"Editor-Chefe","url":"https:\/\/www.b18.com.br\/en\/author\/dsilvablslaw-com-br\/"},"comments_num_v2":"0 comments","jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"1536x1536":false,"2048x2048":false,"a13_navigation_image_size":false,"woocommerce_thumbnail":false,"woocommerce_single":false,"woocommerce_gallery_thumbnail":false},"uagb_author_info":{"display_name":"Editor-Chefe","author_link":"https:\/\/www.b18.com.br\/en\/author\/dsilvablslaw-com-br\/"},"uagb_comment_info":0,"uagb_excerpt":"By Priscila Lucenti Estevam Brazil\u2019s Congress will review a bill… Read more","_links":{"self":[{"href":"https:\/\/www.b18.com.br\/en\/wp-json\/wp\/v2\/posts\/8537"}],"collection":[{"href":"https:\/\/www.b18.com.br\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.b18.com.br\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.b18.com.br\/en\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"https:\/\/www.b18.com.br\/en\/wp-json\/wp\/v2\/comments?post=8537"}],"version-history":[{"count":3,"href":"https:\/\/www.b18.com.br\/en\/wp-json\/wp\/v2\/posts\/8537\/revisions"}],"predecessor-version":[{"id":12324,"href":"https:\/\/www.b18.com.br\/en\/wp-json\/wp\/v2\/posts\/8537\/revisions\/12324"}],"wp:attachment":[{"href":"https:\/\/www.b18.com.br\/en\/wp-json\/wp\/v2\/media?parent=8537"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.b18.com.br\/en\/wp-json\/wp\/v2\/categories?post=8537"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.b18.com.br\/en\/wp-json\/wp\/v2\/tags?post=8537"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}