Brazil has proposed new taxation for companies that operate on-demand video streaming services.
This taxation will be levied soon on companies such as Netflix, YouTube and cable providers that offer video on-demand (VOD). While the new taxes are not completely implemented yet, it is expected that cable providers will also have to pay taxes on the portion of their revenue that comes from the VOD services. It is too soon to know if the taxes will be placed on companies that offer free videos and are not subscriber based.
Brazil's Ministry of Culture has put provisions in the law that will allow for companies to opt for taxation in one of two ways. They can either choose to pay based on the number of videos that are available in their catalog in Brazil or they can be taxed a single fee per subscriber or transaction. Each company can decide which tax option works best for them.
In order to encourage and increase the presence of national content available on these types of platforms, Brazil's Ministry of Culture will offer tax discounts for inclusion of Brazilian content. The reductions in tax will depend on how many Brazilian videos will be added to the catalogs. This will be an incentive to the companies to lower their taxes but also help the Brazilian movie and film production companies.The reduction percentage has not yet been defined.
The last five years have seen a huge increase in streaming and VOD services but they have not been regulated in terms of taxes. The big streaming companies were involved in the plan for taxation and are comfortable with their options of payment.
Brazil has many complex tax regulations which sets it apart from other countries throughout the world. Companies can choose to try to navigate Brazil's complex tax environment themselves through an in-house facility, but it is more cost-effective to outsource tax management to a specialist organisation, such as TMF Group.
TMF Group has been operating in Brazil for 12 years and has three offices in Brazil - two in São Paulo and one in Rio de Janeiro. TMF Brazil employs over 700 professionals supporting more than 400 clients from a wide variety of business and industrial sectors. A dedicated taxation team which includes indirect and direct tax experts, analysts, and managers constantly evaluates each day's regulatory changes.
Working pro-actively, the team advises clients in advance of upcoming legislative changes such as this streaming services tax. If you're thinking of investing in Brazil and need expert help in navigating one of the world's most complex tax environments, TMF Group has the expertise and experience to support your business plans. Contact us to learn more.
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