Brazil: ICMS liability for download | KPMG Global
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Brazil: ICMS liability for download, streaming of software (São Paulo)

Brazil: ICMS liability for download

The tax administration of the State of São Paulo issued guidance—CAT 4/2017—providing that ICMS* will be due with respect to transactions of standard software, programs, applications, electronic files, and electronic games, even if they can be adapted, and without regard as to how the software or files are marketed.


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*Imposto sobre Circulação de Mercadorias e Serviços (ICMS) is a state-level sales tax imposed on the physical movement of merchandise. The ICMS is also levied on certain inter-state and inter-municipal services. 

CAT 4/2017

According to Coordenadoria da Administração Tributária (CAT) 4/2017, mass-produced electronic software or software programs are subject to ICMS—regardless how the software is transferred and sold to customers. Thus, imposition of ICMS would focus on the sale of software, whether physically distributed, downloaded, transmitted, accessed through the "cloud" or otherwise transferred.

Convênio ICMS 106/2017

Subsequently, the National Council of Treasury Policy (Conselho Nacional de Política Fazendária—CONFAZ) concluded Convênio ICMS 106/2017 that, among other measures, regulates ICMS collection procedures for transactions involving digital goods and merchandise traded via electronic data transfer. In general, Convênio ICMS 106/2017 provides the following rules:

  • The ICMS taxpayer is the legal entity that owns the website or electronic platform that sells or makes available the digital goods / merchandise.
  • The taxpayer must collect and remit the ICMS to the state where the purchaser / customer is located.
  • Responsibility for collecting ICMS may be transferred to a credit card company, the customer or others on a case-by-case basis.
  • Ancillary obligations may arise, such as a requirement for the seller to register for ICMS collection purposes, in the different states where sales are made.

These measures under Convênio ICMS 106/2017 will be effective 1 April 2018.

KPMG observation

Previously, there was uncertainty as to whether transactions involving electronic transfers of software (that is, those made by means of a download or streaming) would be subject to the service tax (Imposto sobre Serviços—ISS) at the municipal level or would be subject to ICMS, at the state level. Taxpayers generally took the postion that they were not required to impose or collect tax on software programs being made available electronically by means of a download (that is, without physical transfer or movement of the product). 

Both CAT 4/2017 and Convênio ICMS 106/2017 reflect a change in tax policy for companies involved in transfers of software, electronic programs, and similar applications in Brazil.


Read an October 2017 report (Portuguese) prepared by the KPMG member firm in Brazil

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