Brazil to introduce indirect taxes on digital service providers from 2026

31 May 2024

From 2026, Brazil will introduce two new indirect taxes that will replace its old tax system. These two new taxes will work in a similar way to VAT and are called:

  • CBS 8.8% (Contribuição sobre Bens e Serviços – Contribution on Goods and Services) – This is a federal consumption tax.
  • IBS 17.7% (Imposto sobre Bens e Serviços – Tax on Goods and Services) – This is a state / municipal tax.

As part of this agreed implementation, non-resident providers of digital services will become liable for collection of the new indirect taxes on the supplies that they make to the country, and under current legislations, this presently impacts both sales to businesses and consumers.

Currently, foreign businesses providing digital services in Brazil do not have to charge any taxes on their sales. This presents an unfair advantage to non-resident companies over resident providers, and by implementing this new tax on these supplies the Brazilian tax authorities hope to level the playing field. 

This new tax will likely apply to a range of electronic services including advertising, streaming games, music, apps, films, e-books, e-journals, software, and internet services.

Are you trading globally? Whether you require basic VAT advice or specific VAT compliance support, Fiscal Solutions can help. Our team of multi-lingual experts are knowledgeable in all the different VAT rules in Europe and around the world.

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