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ISS: municipal tax on services in Brazil

Last verified: 2026-10-25

ISS is a municipal tax on services listed in the annex to Complementary Law 116/2003. Each municipality sets its rate between a 2% floor and a 5% ceiling. Exports of services are exempt when the result is produced abroad; imported services are taxed. ISS shrinks from 2029 and disappears in 2033, replaced by the IBS.

The rule

1. The maximum ISS rate is 5%.Complementary Law 116/2003, art. 8, item II, 2003-07-31 official text
2. The minimum ISS rate is 2%, and the tax may not be reduced below that through exemptions, incentives or base reductions.Complementary Law 116/2003, inserted by LC 157/2016, art. 8-A, 2003-07-31 official text
3. ISS also applies to services from abroad or whose provision began abroad.Complementary Law 116/2003, art. 1, para. 1, 2003-07-31 official text
4. ISS does not apply to exports of services, but services performed in Brazil whose result is verified in Brazil are not exports even if paid by a non-resident.Complementary Law 116/2003, art. 2, item I and sole para., 2003-07-31 official text
5. ISS is generally due where the provider is established, with 25 listed exceptions where it is due at the place of service or of the customer.Complementary Law 116/2003, as amended by LC 157/2016, art. 3, 2003-07-31 official text
6. ISS rates are reduced to 9/10 in 2029, 8/10 in 2030, 7/10 in 2031 and 6/10 in 2032, and ISS is extinguished from 2033.Constitutional Amendment 132/2023, arts. 128 and 129 ADCT, 2023-12-20 official text

Worked example

A software services company bills BRL 200,000 (about USD 39,701) in a month. At 5% ISS is BRL 10,000 (about USD 1,985); in a municipality applying the 2% floor it is BRL 4,000 (about USD 794). USD at the BCB PTAX selling rate of 23 October 2026, BRL 5.0377 per USD.

Step by step

  1. Register with the municipality where the establishment is located and confirm the service code in the LC 116 list.
  2. Check whether the service falls into one of the art. 3 exceptions taxed at the place of performance.
  3. For services to foreign clients, document that the result occurs abroad before treating the revenue as an export.
  4. When importing services, withhold or pay ISS along with import PIS and COFINS and income tax withholding.

Common traps

  • Assuming that a foreign payer makes a service an export.
  • Overlooking municipal registration requirements in other cities where services are performed.

Sources

Related pages

Related: Brazil country profile · live dashboard · central bank and release calendar · our posts on X · where Argentina is involved, see The Argentine Thread guide

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