Tax | Taxation on Software in Brazil

Sale tax on software in Brazil can vary from 2% to 18%. 

The taxation on software is one of the most complex. There is a dispute among States and Municipalities of the legitimacy to tax software. 

The states argue that a software is equivalent to a good, so they are responsible for the taxation, and the rates are usually ranging from 12% to 25% depending on the state. On the other hand, the Municipalities argue that the software is equivalent to a provision of services, so they can tax them on a rate ranging from 2% do 5%. 

Neither of them accepts the reality of the facts that a software is neither a pure service nor a good, but a license of use, which would turn out to be exempt of any of those to taxes. 

The Brazilian Supreme Court (STF) is set to define this matter on this week in a trial that initiated at the court more than 20 years ago. Yes. 20 years. Despite the outcome, what is much needed is the legal certainty of the settlement of the matter.


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