You’re reading The Brazilian Report‘s weekly tech roundup, a digest of the most important news on technology and innovation in Brazil. This week’s topics: What Brazilian lawmakers think about a digital tax. Tech made a mark on the 2020 Carnival. The fight over Brazil’s listed companies. And more.
Should Brazil charge a digital tax?
The discussion on tax reform in Brazil has so far largely ignored digital services—a hot-button issue in many countries abroad. But as Congress is about to come up with a definitive tax reform proposal, uniting the bills currently pending in the lower house, it is time for Brazil to tackle this issue.
Digital tax: global scenario. The Organization for Economic Development and Cooperation (OECD) is hosting talks with 137 countries to find a common international framework for digital taxes by year-end. In January, the U.S. and France—which is leading European efforts on the matter—agreed to push talks of a global digital tax forward.
Such a move was far from being guaranteed, as Washington D.C. and Paris have traded barbs over France’s decision to impose tariffs on big tech companies. The French government charges 3 percent on the revenue tech companies earn providing services in the country. The UK could also adopt a similar measure, as may Spain.
In an emailed statement to The Brazilian Report, the OECD Deputy Director for Tax Policy and Administration Grace Perez-Navarro warned that “should the Inclusive Framework negotiations stall or fail, it is likely that we will see more countries take unilateral measures.” According to her, Brazil—being one of the 24 members of the Steering Group—had a leadership role in the Inclusive Framework.
Brazil. The Economy Ministry has not presented its own reform plan yet. In an interview with Reuters, Vanessa Canado—one of the ministry’s special advisors currently working on a draft bill—said Brazil should wait for an international solution for the issue. The ministry has yet to reply to The Brazilian Report‘s request for comment.
Current situation. Streaming services in Brazil pay municipal service tax (ISS), which has rates of up to 5 percent. Major technology companies such as Google and Amazon have branches in Brazil, therefore have to pay income tax.
Possibilities. Fagner Souza, a tax expert at consultancy firm Mazars, believes that a value-added tax model charging duties at the destination to be the best alternative for companies headquartered in Brazil. Congressman Baleia Rossi has made such a proposal in the lower house. However, “in practice, these companies are headquartered in tax havens, so what European countries have been doing is taxing them on revenues, as is the...
Search
