01/27/2016

Taxation

 

In this page: Taxes and fees applied to the Telecom sector in Brazil.


Brazil is one of the countries holding the biggest taxing in the world on telecom services.

 

A research carried out by GSM Association, analyzing 50 developing countries, set Brazil in the 3rd place among the highest tributes for telecom services, losing only for Turkey and Uganda.

 

 

Taxes on Gross Revenue

 

 

Tax Rate (%)
Cofins 3.0%
PIS/PASEP 0.65%
ICMS 25%
FUST 1.0%
FUNTTEL 0.5%
Total 30.15%

 

So, in the total of a telephone bill, 30.15% are tributes on gross revenue, which corresponds to 43.16% on the net revenue.

 

 

ICMS

 

This situation is worse in some Brazilian states where the ICMS (similar to VAT) rate on communication services is higher than 25%.

 

ICMS States (Until Dec/15) Multiplier Factor*
35% Rondônia 1,629992
32% Mato Grosso 1,5540
30% Pará, Paraíba and Amazonas. 1,507159
29% Goiás, Mato Grosso do Sul, Rio de Janeiro and Paraná 1,484781
28% Pernambuco and Bahia 1,463058
27% Alagoas, Ceará, Maranhão, Rio Grande do Norte and Sergipe 1,441961
25% Remaining states (Acre, Amapá, Distrito Federal, Espírito Santo, Minas Gerais, Piauí, Rio Grande do Sul, Roraima, Santa Catarina, São Paulo and Tocantins) 1,401542

*Factor for calculating the values without tributes including ICMS, PIS and Cofins (doesn't include FUST and FUNTTEL)

 

 

For 2016, readjustments were approved by state laws:

 

States
From
To
Effective on:
Alagoas
27%
30%
01/11/2016
Amapá
25%
29%
02/01/2016
Ceará
27%
30%
02/25/2016
Brasília
25%
28%
01/01/2016
Minas Gerais
25%
27%
01/01/2016
Pernambuco
28%
30%
01/01/2016
Rio Grande do Norte
27%
30%
01/28/2016
Rio Grande do Sul
25%
30%
01/01/2016
Sergipe
27%
30%
01/01/2016
Tocantins
25%
29%
01/01/2016
Rio de Janeiro*
29%
30%
03/28/2016
Rondônia*
35%
37%
2016

* Includes 4% from the state fund to fight against poverty in RJ and in RO were included 2% in 2016 destined to the same fund.

 

With the readjustments above, the average ICMS paid by mobile operators will raise from 26.8% to 27.8%.

 

The goverment of Amazonas increased ICMS aliquote charged for telecom services from 25% to 30% in May/12.

 

In 2012, Bahia raised telecom ICMS from 27% to 28% and Mato Grosso from 30% to 32%.

 

 

Pay TV

 

Since January 1st 2016, ICMS aliquote charged for pay TV service increased from 10% to:

  • 15% in the states of Acre, Alagoas, Amapá, Amazonas, Espírito Santo, Goiás, Maranhão, Mato Grosso, Mato Grosso do Sul Paraíba, Pernambuco, Piauí, Rio Grande do Sul, Roraima, Tocantins and Brasília.
  • 12.5% in Santa Catarina
  • 12% in Minas Gerais

 

ICMS remained in 10% in the states of Bahia, Ceará, Pará, Paraná, Rio de Janeiro, Rio Grande do Norte, Rondônia, São Paulo and Sergipe.

 

 

 

ICMS taxing presents distortions, being the main ICMS tributes applied in value-added and the lack of equality in the postponement of the ICMS.

 

 

ICMS is charged for:
  • Value-Added Services
  • Equipments Renting
  • Equipments/Nets Maintenance
  • Activation and Installation of Services
  • Hosting/Housing/Renting of space
Lack of equality in the ICMS postponement

(There isn't credit of ICMS)
  • On the purchase of electricity for the operation of the company
  • On Fraud cases
  • On cases of default
  • On exits through lending and maintenance

 

 

ICMS on telecommunication service represented 12.7% of all the ICMS charged in Brazil in 2007.

 

 

ICMS exemption for broadband in public schools

Agreement about ICMS, APRIL 3rd 2009, published on 04.08.09

 

CONFAZ council, in tis 133rd meeting, authorized the states of Pará and São Paulo and the city of Brasília, to concede ICMS exemption for communitation services about internet access through broadband connection provided in the program "Progama Internet Popular".

 

The benefit in this agreement is conditioned to:

 

I- the provider company suplies, including in the service price, all the necessary facilities and equipments;

II- the price on the provision of the service can't exceed the monthly value of R$ 30,00 (thirty reais);

III- the client and the provider company are set in the states of Pará and São Paulo and Brasília.

 

 

 

The national council CONFAZ (Conselho Nacional de Política Fazendária), in its 129th meeting, on April 4th, set the agreement number 47, which ensures ICMS exemption on provision of communication services for internet accesses and broadband connection in public schools, as well as, to processe of donation of equipment to be used in this public services.

 

 

Other taxes

 

Besides these taxes there are also other tributes on companies of communication services:

  • Imposto de Renda sobre Pessoas Jurídicas - IRPJ – 15%
  • Contribuição Social Sobre o Lucro Líquido - CSSL – 9%
  • Imposto sobre Operações Financeiras - IOF
  • Other contributions (Contribuição de Intervenção do Domínio Econômico - CIDE)
  • Social security contributions
  • Fundo de Fiscalização das Telecomunicações - Fistel

 

FISTEL

 

The Telecommunications Fiscalization Fund (FISTEL - Fundo de Fiscalização das Telecomunicações) established by law nº 5070 of 07/07/66, aims to provide resources to cover Federal Government expenditures in the telecommunication services fiscalization, develop and improve techniques for this execution. the main revenue sources are:

  • Fiscalization Taxes: Intallation (TFI) and Functioning (TFF)
  • 50% of the revenues of outorged concessions, permissions and authorization of radio frequency use and others in the LGT.

The biggest part of the fiscalization taxes is related to active mobile phones in the operators. The installation tax is R$ 26.83 and for working (annually paid) is R$ 13.42. Considering that in Brazil more than 80% of the cellulars are prepaid with an average of low bills, it has big impact on cost for users.

 

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