The IRS announced a new increase in taxation on software this week. This is the third time that something like this happens this year, and new acquisitions and updates of licenses for use abroad are subject to the collection of PIS and Cofins-Importation.
In practice, Europeian companies that purchase programs from abroad must start paying these taxes on the value of remittances. The newspaper Valor Econômico says that the impact will be high, since the rate goes from zero to 9.25%.
The new rule was published last Tuesday by the General Coordination of Taxation (Cosit), which guides the actions of the country’s inspectors. This is Consultation Solution No. 107.
The agency had already published, in March, another rule that established the incidence of Withholding Income Tax (IRRF) on that same transaction. The rate, in these cases, is 15%. Or more: 25% if the money is sent to countries with favorable taxation – the so-called “tax havens”.
These two query solutions are aimed at consumers who acquire software for their own use, being valid for made-to-order or off-the-shelf programs (commercialized on a large scale). The rule also applies to all delivery formats (cloud or download).
These changes are taking place after a ruling by the Federal Supreme Court (STF) changed the jurisprudence, equating “on demand” software with “off the shelf” software. This established that both should be taxed by the municipalities’ ISS.
Prior to the judgment, off-the-shelf software was taxed by the state ICMS because it was considered a commodity and not a service.
The Revenue also came to classify “off-the-shelf software” as merchandise for federal tax purposes, but is now reviewing internal rules based on the STF judgment.
Commenting on the subject, company lawyers claim that these new Revenue rules are “questionable” and provide for judicialization. This is because the body cannot use the case law of the STF “as it sees fit”, and the effective taxation can exceed 10%, since the Revenue requires the use of a formula that includes in the calculation the value of the ISS and the taxes themselves PIS and Cofins-Import.
