Brazil seeks to tax revenues of foreign tech companies

A digital services tax bill was submitted to Brazil’s congress earlier this month, and which targets large, foreign technology companies, seeking to tax their revenues obtained in Brazil but without them having to have a physical presence in the country. 

If passed into law, the bill would create a tax on the gross revenues of digital services and the placement of advertising in Brazil by foreign technology companies.

The bill’s approach to taxing digital services is similar to that taken by France and Spain, according to a note by DLA Piper in São Paulo, penned by partners Alex Jorge (pictured), Paulo Takafuji, Abelardo Acosta and John Guarin.  

Tech companies would be eligible to pay tax on revenues from the placement of advertising on digital platforms to users located in Brazil, the use of a digital platform that allows users to have contact and interaction among themselves, with the purpose of the sale of goods or the provision of services directly to such users, as long as one of them is located in Brazil. The resulting law would also tax revenues gained from the transmission of data of users located in Brazil, collected during the use of digital platform or generated by such users.

To become law, the bill must be approved by both legislative houses (Brazil’s House of Representatives, and the Senate), and ratified by the country’s president.