Taxation under services and goods in the “digital era”

Taxation under services and goods in the “digital era”

It is well-known that the growth of the cybernetic environment has brought a real revolution to several economic segments.  Nowadays, lots of commercial operations are exclusively done through the Internet, in great volume and speed. Obviously the issue taxation wouldn’t be forgotten to such an effervescent movement of innovation.

Several doubts may appear to the taxpayer, especially when it comes to the collection of taxes related to goods and services’ circulation in a digital scenario. There are some peculiarities inherent to the virtual market to which the legal order still doesn’t have a clear approach. Actually, the taxation issue related to the Internet is one of the most current and polemic juridical subjects.

Brazil has an extremely complex taxation system. The tax under services (ISSQN) is set by and collected on behalf of the municipalities, whereas it competes to the states the institution and collection of the duty under the circulation of goods and other services such as transport and communication (ICMS). Because of the prohibition of a dual taxation, both cannot be imposed at the same time under the same transaction. Therefore several uncertainties arise to the taxpayer related to the assessment of business concluded on the Internet. Which tax should be paid? To whom? Is it actually necessary to pay anything?

In practical examples, which duty should be paid under the VoIP technology, which allows voice transmission through the Internet, such as Skype? What about the streaming technology, which enables voice and video instant transmission online? And when it comes to software as a service?

These concerns are only a few from the numerous tax difficulties to be faced in the cyber environment. Because it is such a new matter there is no solid jurisprudence in any sense. The decisions are sparse and sometimes discordant. Unfortunately, there are no easy answers. This is exactly why it is crucial to count on an appropriated tax planning traced by professional experts on the area. As Brazil is a huge digital market, with 210 million inhabitants and a connected society where internet is everywhere, companies want to tap this market and therefore the need to face these issues are present.

Our firm is specialized in such matters and follows the most current jurisprudence and academic studies on the fields. Count on us to assist on an adequate planning for your Brazilian approach. Ask for contact through the form below.

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