Application of the service tax (Imposto sobre Serviços—ISS) has been extended to activities including streaming and advertising, and a standard, uniform rate of service tax has been established at 2%.
The service tax is a municipal tax (imposed at the municipal level), but general guidelines and a list of services or activities subject to the service tax are provided under federal law in Brazil.
A federal law (Lei Complementar Federal 157/2016) published in late December 2016 introduces changes to the rules relating to the service tax. Among the provisions is a new list of services that are subject to the ISS:
New measures also provide a uniform rate of service tax, to be applied at 2% by all municipalities. No tax exemptions, incentives or other measures can be introduced by any municipality that would effectively provide for a lower rate of service tax.
Municipalities are being allowed one year from 30 December 2016, during which time they must amend their laws to reflect the standard 2% rate of ISS. Municipalities also must amend their local laws to reflect the new ISS rules for streaming and advertising services.
Read a January 2017 report prepared by the KPMG member firm in Brazil
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