Brazil removes taxes on telephony and internet and stops considering them “superfluous” services

Brazil put into operation a new fiscal law of national scope that considers telecommunications, energy and public transport services as essential. This new law establishes that the Tax on the Circulation of Goods and Servicess (ICMS) must impose a maximum tax burden of between 17% and 18%, depending on the state of the federation where said services are used or consumed.

This is Complementary Law No. 194, which was sanctioned and published in the Official Gazette of Brazil on June 23, but which becomes effective on this day and its impact reaches the Brazilian National Tax Code and the so-called Kandir Law, as The most recent Brazilian tax reform has been baptized.

As of today, it is expected that telecommunications services such as mobile and fixed broadband, fixed and cellular telephony, and pay television, among other mass consumption services provided by this sector that until yesterday had been taxed with average ICMS tax rates of 25% to 27% for being considered “superfluous” by the previous rule, now they do not exceed the 18 percent mark due to legal prohibition.

The brazilian government promised to compensate the losses in ICMS collection by the states and the Federal District of Brasilia through deductions so that from the states to the municipalities, local governments can compensate or stabilize their accounts without major difficulties.

The initiative was celebrated by the National Telecommunications Agency of Brazil (Anatel), which recalled that in some regions of the country and in very particular telecommunications services, the ICMS was around more than 27% and that between 33% and 54% of the total accounts of service bills was only a tax burden. of the ICMS.

Anatel trusted that the resources that until yesterday went to the Brazilian treasuries, will now be directed to the growth of cell phone or broadband coverage and other services throughout the country to limit the digital gap, in a Brazil where 68% of households that still do not have decent access to the Internet is because the cost inhibits their contracting.

The national government would be in the same line of ensuring the reactivation of the economy, after inflation has diminished the consumption power of Brazilians, since only in May inflation stood at 11.9% and it is expected to close the year in 8.8%, while the economy would grow 1.20% in this 2022. The creation of the new law is also part of the start of the electoral campaign that will give a new president to Brazil in the election of October 2.

Anatel estimates that thanks to Complementary Law No. 194, telecommunications services will lower their prices by 11% and it is expected that these benefits will be transferred directly to the consumer. As an example, Anatel He said that a service plan that is offered to the consumer at 29.84 reais, with the reduction of the ICMS, will now be marketed at 26.50 reais.

Two of the most recognized brands in the mass market, Live Y Of coursesaid that the first improvements will come in the recently launched and upcoming service plans, according to TeleSintesi.

The states of São Paulo and Goiás, two territories that host a combined population of 53 million people, indicated that they will immediately apply Complementary Law No. 194, setting an ICMS of 18 percent. However, the governments of both states recognized that this law will mean a shortfall of 7.4 billion reais, some 1.415 million dollars in terms of telecommunications, so they will seek other mechanisms to balance their finances without affecting the population too much.

Only the state of São Paulo, where 46 million people live, said that one year there will be a shortfall of 15.2 billion reais due to the “new” ICMS, which is also applied to other services such as public transport and energy consumption, reported Teletime .

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