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May 8, 2020

Brazilian Congressman proposes digital services tax

On 4 May 2020, Brazilian Congressman João Maia proposed Bill 2,358/2020, which would establish an annual federal digital services tax called the Contribution for Intervention in the Economic Domain – Digital (CIDE-Digital).

Similar to the digital services tax (DST) introduced in many European and OECD1 countries, the CIDE-Digital is targeted at large digital groups whose annual worldwide gross revenue and local gross revenue exceed R$3 billion and R$100 million, respectively.

The CIDE-digital would be levied on gross revenues derived from:

  • Placing advertisements on a digital platform targeted at Brazilian users of that interface (i.e., digital-targeted advertising)
  • Making online platforms and multi-sided digital interfaces available to allow users to interact for purposes of facilitating the marketing of goods or services to those users (at least one user must be located in Brazil)
  • Transmitting data collected about users and generated by users’ activity on digital interfaces

Should the bill be approved as presented, local and foreign legal entities that provide digital services and are part of groups whose income exceeds the thresholds would have to collect the CIDE-Digital. The CIDE-Digital would apply progressively as follows:

  • 1% on the portion of the annual gross revenue up to R$150 million
  • 3% on the portion of the annual gross revenue over R$150 million and up to R$300 million
  • 5% on the portion of the annual gross revenue that exceeds R$300 million

Both chambers of the National Congress (i.e., Chamber of Deputies and Senate) still need to discuss and approve the bill, in different voting rounds. The legislative process usually takes time in Brazil and there may be changes to the current wording of the bill during this process. Further developments should be monitored.


1. Organisation for Economic Co-operation and Development.


For additional information with respect to this Alert, please contact the following:

EY Assessoria Empresarial Ltda, São Paulo
EY Assessoria Empresarial Ltda, Rio de Janeiro
Ernst & Young LLP (United States), Latin American Business Center, New York
Ernst & Young LLP (United Kingdom), Latin American Business Center, London
Ernst & Young Abogados, Latin America Business Center, Madrid
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific



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