Web-based companies should invoice locally and pay local taxes, Brazil says

By Guido Vinci and Leonardo Homsy

Confirming recent rumours, Valor Econômico — Brazil’s leading newspaper covering developments in the economy, finance and business — reported that the Internal Revenue Service (Receita Federal) is indeed preparing new regulations to require foreign web-based companies to invoice locally and pay local taxes.

A preliminary government study revealed that many web-based companies operating in Brazil are using their foreign offices — mostly located in low-tax jurisdictions — to perform all invoicing and receive payments through international credit cards, thus avoiding payment of taxes in Brazil…

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