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Taxing digital services in Brazil: no separate digital services tax, but ISS, import contributions, CIDE and the new platform rules

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Last verified: 2026-10-27 · Status: Changing

Brazil has no stand alone digital services tax; a 2020 bill for a CIDE on big tech revenue has stalled in the Chamber of Deputies since April 2023. Digital services are taxed through the general system: municipal ISS on software licensing, hosting and streaming, PIS and COFINS import at 9.25 percent on services from abroad, income tax withholding, and the 10 percent CIDE on royalties and technical services, from which plain software licences are carved out. The 2025 consumption tax reform adds the next layer: digital platforms, including foreign ones, are liable for CBS and IBS on sales they intermediate, and unregistered foreign suppliers have the tax withheld by the FX bank.

USD figures use the Banco Central do Brasil PTAX selling rate of R$5.5007 per US dollar for 26 October 2026, the latest rate published when this page was verified. Conversions are for orientation only; the rate on the day of each FX contract will differ.

Key facts

Stand alone digital services tax	None in force; CIDE Digital bill PL 2358/2020 stalled statusPL 2358/2020, as of 2026-10-27 · pending
PIS and COFINS import on services from abroad, combined	9.25 %Law 10,865/2004 art. 8 item II, as of 2026-10-27 · in force
CIDE on royalties, technology and technical services paid abroad	10 %Law 10,168/2000 art. 2 § 4, as of 2026-10-27 · in force
CIDE on software licence fees without technology transfer	0 (outside CIDE) %Law 10,168/2000 art. 2 § 1-A, as of 2026-10-27 · in force
Minimum municipal ISS rate	2 %Complementary Law 116/2003 art. 8-A, as of 2026-10-27 · in force

The rule

1. Software is a service: the STF held, in the joint judgment of ADIs 5659 and 1945 concluded on 18 February 2021, that licensing or assigning the right to use software, standard or customized, whether by download or cloud access, is subject to municipal ISS and not to state ICMS. On 24 February 2021 it limited retroactive effects: those who paid only ICMS get no refund and municipalities cannot charge ISS for the past.STF, ADIs 5659 and 1945, Plenary judgment and modulation of effects, 2021-02-18 official text · verified 2026-10-27

2. ISS list items for digital services: 1.03 processing, storage or hosting of data, texts, images, videos, pages, applications and information systems; 1.04 writing software, including games, for any device; 1.05 licensing or assigning the right to use software; 1.09 making audio, video, image and text content available over the internet without permanent transfer (streaming), excluding books and periodicals and conditional access pay TV, which is under ICMS.Complementary Law 116/2003, list as amended by Complementary Law 157 of 29 December 2016, Annex items 1.03, 1.04, 1.05 and 1.09, 2016-12-29 official text · verified 2026-10-27

3. Imported digital services: ISS also applies to services from abroad or whose provision began abroad, and the Brazilian recipient or intermediary is responsible for it; the export exemption does not cover services performed in Brazil whose result is verified in Brazil, even if paid by a non resident. Municipal rates cannot go below 2 percent.Complementary Law 116/2003, Art. 1 § 1; art. 2 item I and sole paragraph; art. 6 § 2 item I; art. 8-A, 2003-07-31 official text · verified 2026-10-27

4. PIS and COFINS import: services from abroad performed in Brazil, or performed abroad with result verified in Brazil, bear 1.65 percent PIS import and 7.6 percent COFINS import. The Brazilian contracting party is the taxpayer; the event is payment, credit, delivery or remittance; the base is the amount paid before income tax withholding plus ISS and the contributions themselves.
Cost to do it: 9.25 percent combined on a grossed up baseLaw 10,865 of 30 April 2004, Art. 1 § 1; art. 3 item II; art. 5 item II; art. 7 item II; art. 8 item II, 2004-04-30 official text · verified 2026-10-27

5. CIDE royalties at 10 percent: due by Brazilian companies holding technology licences, signing technology transfer contracts with non residents, contracting technical, administrative or similar services from abroad, or paying royalties of any kind to non residents.
Cost to do it: 10 percent of the remittance
Example: Trademark royalty of R$550,070: CIDE R$55,007 / US$100,000 trademark royalty: CIDE US$10,000Law 10,168 of 29 December 2000, as amended by Law 10,332/2001, Art. 2 caput, §§ 2 and 4, 2000-12-29 official text · verified 2026-10-27

6. Software carve out: CIDE does not apply to payments for licensing, marketing or distributing computer software unless the technology is transferred, with effect from 1 January 2006.
Example: Software licence fee of R$550,070 without technology transfer: CIDE zero / US$100,000 licence fee: CIDE zeroLaw 10,168/2000, art. 2 § 1-A inserted by Law 11,452 of 27 February 2007, Art. 2 § 1-A (Law 11,452 arts. 20 and 21), 2007-02-27 official text · verified 2026-10-27

7. Digital platforms under the reform: platforms, even if based abroad, are liable for CBS and IBS on operations and imports they intermediate, jointly with the buyer and in place of a foreign supplier, and jointly with a Brazilian supplier that fails to issue an electronic invoice or when the platform omits required information. A digital platform is one that intermediates remote or electronic transactions and controls at least one of billing, payment, terms and conditions, or delivery; pure internet access, regulated payment services, advertising, and unpaid search or comparison are excluded.Complementary Law 214 of 16 January 2025, as amended by Complementary Law 227 of 13 January 2026, Art. 22 caput items I and II, §§ 1 to 3, 2025-01-16 official text · verified 2026-10-27 · changed: Complementary Law 227/2026 reworded art. 22 item II on platform liability for Brazilian suppliers.

8. Registration and withholding: platforms, including foreign ones, must register in the regular CBS and IBS regime. If a foreign supplier or platform does not register, the FX institution segregates and collects CBS and IBS on the remittance at the reference rates, and the buyer pays or recovers any difference to the applicable rate. Foreign suppliers operating in Brazil must register, unless they sell only through a registered platform.Complementary Law 214/2025, Art. 21 § 2; art. 22 § 3; art. 23 and sole paragraph, 2025-01-16 official text · verified 2026-10-27

9. Imports of services and intangibles under CBS and IBS: a supply by a non resident is an import when consumed in Brazil. After Complementary Law 227/2026, consumption in Brazil means the place of the operation is in Brazil under the specific rules of art. 11, or otherwise that the acquirer is resident or domiciled in Brazil. Services performed in Brazil are also imports; only the share consumed in Brazil is taxed, at the same rates as a domestic supply.Complementary Law 214/2025, as amended by Complementary Law 227/2026, Arts. 63 and 64 §§ 1 to 5, 2026-01-13 official text · verified 2026-10-27 · changed: Complementary Law 227/2026 replaced the use, enjoyment or access test of art. 64 § 1 with a place of operation or residence of acquirer test.

10. Pending digital tax bill: Bill PL 2358/2020, presented on 4 May 2020, would create a CIDE on gross revenue from digital services of large technology companies. Its last status entry, of 26 April 2023, has it awaiting a new rapporteur in the communications committee; it has not been voted.Chamber of Deputies, PL 2358/2020 (CIDE Digital), Bill status, 2023-04-26 official text · verified 2026-10-27

Tax	Software licence (item 1.05)	Trademark or technology royalty	Source
ISS on import	Yes, municipal rate from 2%	Depends on list item	LC 116/2003 arts. 1 § 1 and 8-A
PIS and COFINS import	1.65% + 7.6%	1.65% + 7.6% where a service	Law 10,865/2004 art. 8 II
CIDE	No, unless technology is transferred	10%	Law 10,168/2000 art. 2
IOF on FX	Residual outbound rate 3.5% where no specific item	Same	Decree 6,306/2007 art. 15-B XXIV
Income tax withholding	See withholding page	See withholding page	RIR

Taxes on a Brazilian company's payment to a foreign digital supplier (verified provisions; rates on payments depend on classification)

Worked example

A São Paulo company pays a US vendor US$100,000 (R$550,070) a year for a standard software licence. CIDE is zero because no technology is transferred; ISS is due under item 1.05 at the municipal rate (at least 2 percent); PIS and COFINS import apply at 9.25 percent on a grossed up base; income tax withholding applies as described on the withholding page.
If the same company paid US$100,000 for a trademark licence, CIDE of US$10,000 (R$55,007) would apply on top.
From the CBS and IBS phase in, if the US vendor sells through a platform registered in Brazil, the platform answers for CBS and IBS; if neither is registered, the Brazilian bank segregates the tax on the remittance.

Step by step

1. Classify each digital payment: software licence, hosting, streaming, technical service, or royalty; the classification drives ISS item, CIDE and withholding.
2. Check whether the contract transfers technology; if not, document it to support the CIDE carve out.
3. As the Brazilian customer, pay ISS (as responsible party), PIS and COFINS import (as taxpayer), CIDE where due and withholding income tax around the remittance date.
4. For foreign suppliers and marketplaces selling to Brazilian customers, plan CBS and IBS registration or platform sale under LC 214 arts. 21 to 23.
5. Monitor PL 2358/2020 and CBS and IBS regulations for new rules.

Common traps

The Brazilian customer, not the foreign vendor, is the taxpayer or responsible party for ISS, PIS and COFINS import and CIDE on imported services; they are often missed in pricing.
A software contract that also transfers source code or know how loses the CIDE carve out.
ISS on software licensing was confirmed by the STF in 2021; older contracts priced with ICMS need review.
Under the reform, an unregistered foreign supplier does not escape CBS and IBS: the FX bank collects it at reference rates.

Sources

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