BRAZIL LAW AND PRACTICE Contributed by: Ricardo Barretto Ferreira da Silva, Ingrid Bandeira Santos, Sylvia Werdmüller von Elgg Roberto and Isabella da Penha Lopes, Azevedo Sette Advogados
• Metaverse: Bill No 2,175/2023 proposes a metaverse regulatory framework. • Sports bets: The recently enacted Law No 14,790/2023 regulates online betting on sports events, with several government con - trol provisions. Although the Brazilian legislature has approved various laws that touch upon the digital econo - my, technology is always evolving and is inno - vative by nature. In this context, the absence of regulations for specific sectors may be the big - gest challenge in relation to the digital economy. This absence leads to legal uncertainty for com - panies and society, difficulty in applying the law, insecurity for investors and limited guidance for clients and internet users, who are not always aware of legal changes. Nonetheless, the Brazilian government has tak - en steps towards promoting digital transforma - tion in the country through the implementation of the Brazilian Strategy for Digital Transforma - tion (E-Digital). E-Digital is a strategic frame - work comprising recommendations designed to steer the initiatives of the federal executive branch towards digital transformation. Its goals include enhancing access to public services; promoting citizens’ rights; strengthening social participation and democracy; and ensuring socioeconomic development through innova - tion, increased competitiveness, productive and technological autonomy, and improved employ - ment and income levels. In this context, the SinDigital system was recent - ly revoked, followed by the implementation of the Interministerial Committee for Digital Transfor - mation (CITDigital) by Decree No 12,308/2024. The purpose of CITDigital is to assist the Presi - dent of Brazil in the drafting, implementation and
following-up of public policies aimed at digital transformation. In the context of the foregoing, it will be impor - tant to follow up on the digital transformation expected to take place in Brazil based on gov - ernmental initiatives, legislation updates and Brazil’s tax system is known for its complexity, mainly arising from the mixing of federal, state and municipal taxes. This complexity extends to the taxation of digital services and goods, which has been a growing area of focus due to the rap - id digitalisation of the economy. Digital services and goods are taxed through a combination of indirect taxes, including the ISS ( Imposto Sobre Serviços ), ICMS ( Imposto Sobre Circulação de Mercadorias e Serviços ), PIS ( Programa de Inte- gração Social ), and COFINS ( Contribuição para o Financiamento da Seguridade Social ) taxes. ISS ISS is a municipal tax levied on the provision of services. For digital services, the ISS frame - work was expanded to include streaming ser - vices, software as a service (SaaS) and cloud computing. Rates may vary from 2% up to 5% depending on the municipality where the service provider is located. ICMS The ICMS is a state-level tax applied to goods and some services (like telecoms and transpor - tation). In recent years, Brazilian states have interpreted the applicability of ICMS in various ways, leading to disputes over whether certain digital transactions are classified as goods or services. However, the Federal Supreme Court ( Supremo Tribunal Federal ; STF) established in 2021 that the licensing or right to use software private sector inputs and demands. 1.2 Digital Economy Taxation
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