Brazil

The National Congress recently approved and the Presidency of the Republic sanctioned the new ISS (Tax on Service of Any Kind) Law – Complementary Law 157/2016. The new law states that the place of provision of services and, consequently, the ability to collect the ISS on services performed by credit and debit card administrators, leasing companies and investment fund managers, is moved from the municipality in which the provider’s establishment is located to the one where the beneficiary of the service is located.

The Paulista Association of Municipalities clarifies that taxes on the use of debit card and credit, leasing and even signing of Netflix and Spotify are now accounted at the place of purchase of the service and no longer in the municipality where the company’s administrative headquarters is located.

That is, if the company that provides the service is from the capital, but the contractor resides in a city in the Northwest Paulista region, the ISS payment must be made in the city where the beneficiary of the service lives.

This measure promotes more collection of ISS by municipalities and improves public finances. However, there is a question to be addressed: what refers to the effectiveness of the rule provided by the complementary law and the need for municipal law that establishes the collection in each of the cities. The new standard is not self-enforcing.