By Manoel Antonio dos Santos, legal director of ABES
ISS is a tribute of municipal and Federal District competence, which focuses on the provision of related services in a list attached to LC No. 116/03
Sanctioned by the Federal Government at the end of 2016, Complementary Law No. 157 was widely celebrated by companies in the Information and Communication Technology (ICT) sector. The text determined new activities that may be taxed by the ISS (Service Tax), including modalities such as streaming and cloud computing (storage and / or hosting of applications and information systems), among others. The achievement represented a real milestone for the area, beneficial to businessmen and consumers by supplying voids in the law and eliminating the "tax war" between municipalities regarding the ISS.
ISS is a tax of municipal and Federal District competence, which is levied on the provision of related services in a list attached to LC No. 116/03. It is the responsibility of each City Hall, therefore, to adapt to the changes made in Complementary Law 116/2003 through Complementary Law No. 157/16, submitting the text to the local Legislative Branch. Recently, São Paulo, the largest city in the country, followed this direction when forwarding a bill to the City Council, with the aim of adapting its legislation to federal rules.
Through the aforementioned bill, the City Hall took the initiative to equalize the ISS rates in relation to Information Technology services that varied from 2% to 5% on the total billing of service providers. Under the new definition, companies will begin to collect 2.9% of tax for all IT activities, aiming to remove the legal uncertainty resulting from the inclusion of IT services in the various items of the list of taxed activities, when the tax rates are different.
The new rate was defined thanks to a consensus of the business community with the public sector, after several negotiations, so as not to impact the collection of the City Hall and to burden the market in a fair way. If the Legislative of São Paulo approves the text in its entirety, which adapts the municipal legislation to the Federal Law, the rules will come into force in the São Paulo capital as of January 1, 2018, ending serious problems of legal insecurity that impact the investments of the sector.
With the regularization of the tax burden, companies will be able to plan their investments in the long term, which naturally increases investment, productivity and generates more jobs in the sector. The entire operation becomes more transparent and fair, which also benefits users, with improved services and the disappearance of "double taxation" - often passed on in the price of products.
The inclusion of ICT activities in the ISS collection was a major national advance in legal certainty, achieved by the clarifying work of several associations that represent the segment. However, other measures can still be taken to further modernize taxation - creating more legal certainty, creating attractive conditions for investors and reducing costs for consumers.
We still face several bottlenecks, but, seeking simplification and formalization, we are on the right track to improve business conditions in Brazil. The tax advances in the ICT segment are excellent news for the expansion of the technological sector, which has a lot to contribute to the development of the country as a whole. Increased investment and competitiveness will be a natural consequence.
Sanctioned by the Federal Government at the end of 2016, Complementary Law No. 157 was widely celebrated by companies in the Information and Communication Technology (ICT) sector. The text determined new activities that may be taxed by the ISS (Service Tax), including modalities such as streaming and cloud computing (storage and / or hosting of applications and information systems), among others. The achievement represented a real milestone for the area, beneficial to businessmen and consumers by supplying voids in the law and eliminating the "tax war" between municipalities regarding the ISS.
ISS is a tax of municipal and Federal District competence, which is levied on the provision of related services in a list attached to LC No. 116/03. It is the responsibility of each City Hall, therefore, to adapt to the changes made in Complementary Law 116/2003 through Complementary Law No. 157/16, submitting the text to the local Legislative Branch. Recently, São Paulo, the largest city in the country, followed this direction when forwarding a bill to the City Council, with the aim of adapting its legislation to federal rules.
Through the aforementioned bill, the City Hall took the initiative to equalize the ISS rates in relation to Information Technology services that varied from 2% to 5% on the total billing of service providers. Under the new definition, companies will begin to collect 2.9% of tax for all IT activities, aiming to remove the legal uncertainty resulting from the inclusion of IT services in the various items of the list of taxed activities, when the tax rates are different.
The new rate was defined thanks to a consensus of the business community with the public sector, after several negotiations, so as not to impact the collection of the City Hall and to burden the market in a fair way. If the Legislative of São Paulo approves the text in its entirety, which adapts the municipal legislation to the Federal Law, the rules will come into force in the São Paulo capital as of January 1, 2018, ending serious problems of legal insecurity that impact the investments of the sector.
With the regularization of the tax burden, companies will be able to plan their investments in the long term, which naturally increases investment, productivity and generates more jobs in the sector. The entire operation becomes more transparent and fair, which also benefits users, with improved services and the disappearance of "double taxation" - often passed on in the price of products.
The inclusion of ICT activities in the ISS collection was a major national advance in legal certainty, achieved by the clarifying work of several associations that represent the segment. However, other measures can still be taken to further modernize taxation - creating more legal certainty, creating attractive conditions for investors and reducing costs for consumers.
We still face several bottlenecks, but, seeking simplification and formalization, we are on the right track to improve business conditions in Brazil. The tax advances in the ICT segment are excellent news for the expansion of the technological sector, which has a lot to contribute to the development of the country as a whole. Increased investment and competitiveness will be a natural consequence.
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