Fonte: ITR

Brazil’s government has not officially framed the bill as a countermeasure amid trade tensions with the US, but the move is being considered as part of Brazil’s strategic response, one expert tells ITR

The bill, called ‘Complementary Law Project Number 157/2025’, has been formally submitted to the lower house of Brazil’s congress.

Its submission has kicked off the legislative process for a new digital social contribution (CSD).

In addition, it comes after US President Donald Trump earlier this month announced a new 50% tariff on US copper imports as well as a 50% duty on goods from Brazil.

Trump’s tariff order came via a letter to Brazil’s President, Luiz Inácio Lula da Silva.

Brazil’s president replied to Trump's letter and warned that any unilateral measure to raise tariffs would be met with a response in line with Brazilian law.

Complementary Law Project Number 157/2025 proposes a 7% levy on the gross revenue of major digital platforms such as Google, Meta, and X.

This levy would only apply to companies with an annual global revenue exceeding R$500 million ($89.7 million).

The bill also prohibits the transfer of this levy’s cost to Brazilian users.

Allan Fallet, a tax partner at law firm Duarte Garcia, Serra Netto e Terra in São Paulo, tells ITR the bill is part of a broader global movement toward tax fairness in the digital economy.

“However, unlike the multilateral approach advanced by the OECD through Pillar One of the BEPS 2.0 project, which aims to reallocate taxing rights among jurisdictions in a coordinated and technically consistent manner, the Brazilian proposal takes a unilateral path.

[It] lacks both international alignment and operational clarity,” Fallet says.

The bill’s inclusion of vague terms such as ‘sale of data’ and the absence of nexus-based criteria significantly undermines legal certainty, according to Fallet.

“Although the bill claims inspiration from European models such as those adopted in France and Spain, the Brazilian version is broader in scope, less precise in defining its taxable event, and imposes a higher tax burden,” he adds.

Fallet goes on to say the proposal must be considered in light of recent tax policy shifts that have already increased the tax burden on digital businesses in Brazil.

He highlights as examples Brazil’s transition to a new consumption tax regime, the rise in tax on financial transactions on cross-border service payments, and the upward pressure on CIDE-Royalties as a retaliatory mechanism.

“Introducing a new sector-specific tax on top of this landscape, particularly one with a narrowly defined but poorly drafted taxable base, would amplify uncertainty, litigation and compliance costs. It would also pose significant operational challenges for the Brazilian Federal Revenue Authority, especially in identifying the taxable revenue and auditing highly digitised multinational groups with a global tax planning structure,” says Fallet.

He argues that, in practice, the economic burden of the CSD is likely to be passed on to Brazilian consumers.

This will be, according to Fallet, either through price increases or the reduction of subsidised and ad-based services currently offered by digital platforms.

“Brazil has the opportunity to play a leadership role in shaping the future of global digital taxation, but it must do so through technically sound and multilaterally coordinated solutions that combine revenue effectiveness with predictability and treaty compliance,” Fallet adds.

Thais Shingai of Mannrich e Vasconcelos Advogados in São Paulo also suggests consumers are likely to be hit by the bill.

Despite the explicit prohibition on passing the tax to users, the reality is that costs tend to be absorbed indirectly, Shingai says.

This, according to her, is done through reduced free services, higher prices, or diminished investment in platform innovation.

“This disproportionately affects low-income users and informal workers who rely on digital platforms for income, visibility, and access to essential services,” says Shingai.

In addition, Shingai claims that the proposal adds another layer to Brazil’s already complex tax system.

She tells ITR that, instead of integrating with broader tax reform efforts, the bill creates a sector-specific contribution that may increase litigation and regulatory uncertainty.

Shingai also points out that this initiative has emerged in the context of retaliatory trade tensions, noting Trump’s recent 50% tariff on Brazilian exports.

“The government has not officially framed the CSD as a countermeasure, but taxing foreign tech giants is being considered as part of Brazil’s strategic response,” she says.

Gabriel Caldiron Rezende, a partner in the indirect tax team at law firm Machado Associados in São Paulo, argues the proposed levy comes as a setback in the face of advances provided by consumption tax reform.

The consumption tax reform expressly determined that the Brazilian tax system should be based on the principle of simplicity, Rezende tells ITR.

“Indeed, the consumption tax reform provided for a broad simplification and reduction of taxes, while addressing the debated under-taxation of services, by unifying the tax treatment of goods and services,” he says.

Bill of Law 157/2025, however, provides for more complexity and tax burden on digital services, according to Rezende.

Its imposition of differentiated tax treatment for a specific economic activity goes against the simplification and equality of taxation on goods and services, he tells ITR.

If local experts are proven right, this bill becoming law is not just likely to hit consumers but will also add complexity to Brazil’s tax system.