Even though the Tax over Services (Imposto sobre Serviços or “ISS”) is a Municipal tax, the Brazilian Federal Government approved, on 30 December 2016, Complementary Law 157/2016 that, among other things, expanded the scope of ISS, setting out the minimal 2% and maximum 5% rates and creating an express limitation on tax exemptions, incentives or benefits related to ISS.
This change gave rise to some public complaints of taxpayers, including Netflix and Spotify which will both now be affected by the law, and must pay ISS over the services provided.
The actual rates within the set range will be established by the Municipality where the services are provided. The changes will come into force on 30 March 2017.
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Last modified: January 22, 2020