• Service: Tax, Global Indirect Tax, Global Compliance Management Services, International Tax
  • Type: Regulatory update
  • Date: 8/22/2014

Brazil - Tax treatment of foreign data centers as “services” 

August 22:  Brazilian tax authorities have clarified their position with respect to taxation on the provision of foreign data centers as “services.”

The Federal Revenue Service (RFB) issued Interpretive Ruling #7/2014, stating that the tax authorities understood that payments made by Brazilian residents to foreign residents with respect to the provision of data centers (e.g., infrastructure for storing and processing data for remote access) are to be considered as remuneration for the provision of services from a Brazilian tax standpoint.

Previously, it was not clear whether payments for the provision of foreign data centers to Brazilian residents would be taxed: (1) as the rental of equipment for storage and/or data processing, or (2) as a service.

The distinction is relevant from a tax perspective because payments made to a foreign resident for the provision of services are generally subject to certain taxes or levies—including income tax withholding (IRRF), contribution for intervention in the economy (CIDE), and contributions on imports (PIS/COFINS-Import)—whereas payments to foreign residents for the rental of movable goods are only subject to IRRF.

Read an August 2014 report (English) or (Portuguese) prepared by the KPMG member firm in Brazil: Brazilian tax authorities and taxation on foreign data centers

©2014 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved.

The KPMG logo and name are trademarks of KPMG International.

KPMG International is a Swiss cooperative that serves as a coordinating entity for a network of independent member firms. KPMG International provides no audit or other client services. Such services are provided solely by member firms in their respective geographic areas. KPMG International and its member firms are legally distinct and separate entities. They are not and nothing contained herein shall be construed to place these entities in the relationship of parents, subsidiaries, agents, partners, or joint venturers. No member firm has any authority (actual, apparent, implied or otherwise) to obligate or bind KPMG International or any member firm in any manner whatsoever.

The information contained in herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation.

Direct comments, including requests for subscriptions, to
For more information, contact KPMG's Federal Tax Legislative and Regulatory Services Group at:

+ 1 202 533 4366

1801 K Street NW
Washington, DC 20006.


Share this

Share this


Subscribe to receive the latest TaxNewsFlash email alerts (you must select the option for TaxNewsFlash)

Already a Subscriber? Login

Not a member? Subscribe now