Brazil Sets Tax on Payments for Imported Software

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By Ed Taylor

Brazil’s revenue service has determined that remittance payments for imported software are subject to a 15 percent income tax.

On April 6, the service’s department responsible for resolving conflicting tax rulings issued Divergence Solution 18, in which it stated that remittances made by companies that import foreign software to sell in Brazil constitute royalty payments and must pay federal taxes.

The ruling changed the service’s previous position that software sold on the local market should be treated as merchandise, subject only to a state value-added tax. That position, taken in 2008, was in line with a similar ruling by Brazil’s federal supreme court. The new interpretation now becomes the official position of the revenue service.

Tax attorneys, however, told Bloomberg BNA on April 7 that the change of position can likely be contested in the courts. According to attorney Fabio Alexandre Lunardini of the law firm Peixoto & Cury Advogados, the wording of the “divergence solution” indicates that it is referring to situations involving technology transfer and not merely the sale of software. He stated via email that the decision could be challenged on these grounds.

For attorney Luiz Rogerio Sawaya of Nunes and Sawaya Advogados, “the right to sell a product is not a copyright for which royalties are paid and which are subject to income taxes.”

In an April 7 email, Sawaya added that the position of the revenue service is in direct conflict with the software market. “Today, a technology company signs a contract with a company in Portugal, for example, and pays a set value for software that will be downloaded by its clients in Brazil. This is a buy and sell operation,”he said.

With its change of interpretation, the revenue service is now free to assess companies that didn’t pay taxes on remittances for imported software based on the service’s previous position taken in 2008. These companies, however, can’t be charged fines or interest, Sawaya stated.

To contact the reporter on this story: Ed Taylor in Rio de Janeiro at

To contact the editor responsible for this story: Penny Sukhraj at

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