The Brazilian Government is moving forward with the introduction of a Dual VAT system. A modern, unified, and less fragmented indirect tax framework will undoubtedly simplify the Brazilian tax system, which is, by nature, one of the most complex worldwide.
The enactment of Constitutional Amendment No. 132/2023 and Complementary Law No. 214/2025 establishes a dual VAT system. The enforcement of this legislation will replace the current five traditional taxes with two new taxes: CBS (Contribution on Goods and Services) and IBS (Tax on Goods and Services).
This major tax reform shall introduce VAT liabilities for foreign digital platform operators. To learn more about the effects of the dual VAT system on non-resident providers of digital services and marketplace facilitators, please refer to the table below.
Dual VAT Regime – New Requirements for Foreign Digital Platforms
| Critical novelties | Explanation |
| What’s this reform about? | Introduction of a VAT regime that simplifies tax collection, extends the scope of liable taxpayers, and unifies taxes. |
| Impact of the new regime on digital platforms? | With the enforcement of new tax provisions, non-resident digital platforms as well as non-resident service providers shall become liable for both CBS and IBS. |
| Will the deemed supplier tax provision also become a reality for non-resident platform operators? | According to preliminary reports, digital platform operators that facilitate the provision of specifically indicated services should be deemed suppliers, and they will be responsible for collecting taxes instead of non-resident third-party providers. |
| Mandatory registration requirement by default for non-resident underlying suppliers of digital services? | The legislation indicates that non-resident digital service providers may be exempt from VAT in cases where the platform operators are required to collect and remit VAT on all sales facilitated by the platform. |
| Will there be additional reporting responsibilities for platform operators, besides VAT reporting? | Yes. Platform operators will be mandated to provide informative reports, detailed reports about their registered users(such as total sales, tax number if any, tax status) |
| What are the primary effects of this reform for overseas digital platforms? | Overseas digital platforms will need to address their pricing strategies, develop tax compliance practices for their sales in Brazil, adjust terms and conditions, implement a new risk management strategy, adjust profit margins, and address other relevant issues. |
| Will the imposition of VAT on cross-border digital services lead to higher prices? | It depends on the internal policies that the most influential stakeholders will establish. Most probably, the prices will rise. |
Takeaway
Brazil’s new VAT framework aligns with OECD best practices regarding the taxation of non-resident digital service providers and platform facilitators. Platform operators will be responsible for VAT collection and remittance as soon as the new system is implemented to that extent.
Aleksandar Delic
Indirect Tax Manager – E-commerce
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