Starting in 2026, Brazil will implement a landmark tax reform, introducing two new indirect taxes that will modernize its tax system. This change will introduce the Contribution on Goods and Services (CBS) of 8.8%, a federal tax, and the Tax on Goods and Services (IBS) of 17.7%, a state and municipal tax. Both will operate analogously to Value Added Tax (VAT), aligning Brazil with international best practices.
A crucial aspect of this reform is the taxation of non-resident digital service providers. This measure aims to equalize competition between foreign and domestic companies by eliminating a tax advantage that unfairly favored non-resident entities. The new tax regime will cover a wide range of electronic services, including digital advertising, content streaming, applications, software, and internet services.
Panorama of e-commerce in Brazil
The Brazilian digital market presents a robust and expanding landscape. With 207 million internet users, the country is approaching the fifth stage of digital commerce development, characterized by the normalization of online sales of perishable goods and the presence of multiple well-established marketplaces.
The B2B sector dominates the digital space, outnumbering B2C by three times. Despite recent economic challenges, Brazil's GDP has demonstrated resilience, reaching 2.9% in 2023, with World Bank projections pointing to more moderate growth of 1.7% by the end of 2024.
Brazilian consumer behavior is particularly favorable to e-commerce. Data from Meltwater's 2023 Global Digital Report indicates that 59.2% of users aged 16 to 64 make online purchases weekly. Furthermore, the country leads in time spent online on activities such as gaming, social media, and content streaming.
Regulatory Framework and Compliance
The Brazilian regulatory environment for digital commerce is evolving steadily, although implementation may occur at a different pace than in Europe. The country has a robust legal framework, including legislation on electronic transactions, data protection, combating cybercrime, and consumer protection.
Companies operating in the Brazilian market must be mindful of consumer expectations, as they are accustomed to a high level of legal protection. Compliance with local regulations is essential for market success.
Growth prospects and economic impact
E-commerce has revolutionized global retail, providing brands with international reach and offering consumers unprecedented convenience. Statista projects that global e-commerce retail sales are expected to exceed US$1.4 trillion by 2027, a significant increase from the US$1.4 trillion recorded in 2017.
In Latin America, online sales are expected to reach US$1.6 billion by 2025, with Brazil, Mexico, and Argentina representing US$1.6 billion of this market in 2024. This expansion scenario has driven mergers and acquisitions in the sector, in addition to attracting significant investments to the Brazilian market.
Brazil is positioning itself as a global player in e-commerce by implementing a compliance program that promises to simplify the treatment of taxes and duties. This initiative will benefit not only businesses but also consumers through reduced import tariffs and a more transparent approach to international transactions.
Tax reform and new regulations for digital commerce represent a milestone in Brazil's economic modernization. National and international companies must prepare to adapt their operations to this new scenario, which promises to create a more equitable and dynamic business environment in the country.
