A proposal to create a new digital tax has been presented to the Brazilian Chamber of Deputies (Câmara Dos Diputados), under Bill 2,358/2020.
The proposed tax, known as the contribution for intervention in the economic domain – digital (contribuição de intervenção no domínio econômico, CIDE-Digital), reflects the move towards a digital services tax many European countries have taken in recent months.
The CIDE-Digital would apply to large digital groups with an annual worldwide gross revenue of BRL3 billion and a local gross revenue of BRL1 million, and would apply to groups domiciled both in Brazil and abroad. It would be levied progressively on a sliding scale according to revenues.
Under the Bill, the tax will be levied on any revenue derived from entities providing services to users located in Brazil, including; advertising on digital platforms; digital platforms allowing users to contact and interact with each other to sell goods or provide services; and the transmission or generation of data from said users, collected during the use of a digital platform.
OECD countries are continuing discussions on updated rules for taxing multinational groups, although disagreement has arisen around whether the new rules should apply to all multinational companies or just those whose main revenues are from digital services. However, the reforms are still expected to reach consensus at the next Inclusive Framework base erosion and profit shifting (BEPS) meeting in October 2020, ready for implementation in January 2021.
The two chambers of the Brazilian National Congress – the Chamber of Deputies and the Senate – will now debate the Bill.
Published on June 12, 2020