Brazil: Proposed contribution for digital content that targets children
“Digital detox” contribution (CIDE–Digital Detox)
Brazil’s Congress is considering a legislation (Portuguese) that introduces a “digital detox” contribution (CIDE–Digital Detox*), which, if approved, would affect local and foreign suppliers of certain digital products or services to Brazilian consumers.
The bill states that further executive regulations will provide more details on compliance and administration.
* Contribuição de Intervenção no Domínio Econômico incidente sobre a receita bruta derivada da exploração de plataformas e conteúdos digitais
Taxable event and taxpayers
The taxable event of CIDE–Digital Detox is the earning of revenue resulting from the economic exploitation of digital platforms, social networks, streaming services, online electronic games, and other interactive digital content in Brazil.
The tax would apply regardless of whether the economic exploitation is carried out through a paid or free offer, including when supported by advertising revenues or data monetization.
It would also apply even if provided by legal entities based abroad, provided the services are offered, made available, or accessed by users located in Brazil.
Threshold
Taxpayers of CIDE–Digital Detox are legal entities, domiciled in Brazil or abroad, that earn, in the previous calendar year, annual gross revenue exceeding BRL100 million in Brazil, resulting from the above-listed activities.
Tax base and rates
The tax base of CIDE–Digital Detox would be the gross revenue earned by the taxpayer in the calendar year as a result of the above activities.
For taxpayers domiciled abroad, the tax base would be calculated considering the revenues from users located in Brazil.
The rate of CIDE–Digital Detox would be 1% of the tax base. The rate may be reduced by up to 0.5% for taxpayers that implement, cumulatively, effective measures of:
- Parental control and limitation of usage time by children and adolescents
- Restriction of access to content inappropriate for the age group
- Elimination of compulsive engagement mechanisms directed at children and adolescent
- Protection of personal data of children and adolescents
- Implementation of periodic notices about usage time and incentives to disconnect after prolonged periods of use
Further regulations will define the requirements and procedures for granting the rate reduction as well as the mechanisms for verifying compliance.
Compliance and administration
If approved, the CIDE–Digital Detox would be administered by the federal tax administration (Receita Federal do Brazil). Also, the tax will be calculated annually and will be due by the last day of March following the calendar year in which the transaction occurred.
Failure to pay the contribution within the established deadline would subject the taxpayer to a fine and other legal sanction.
The resources collected from the CIDE–Digital Detox will be fully allocated to the National Fund for Children and Adolescents (Fundo Nacional para a Criança e o Adolescente) and will be applied towards:
- Digital education programs in public and private schools
- Awareness campaigns for parents, guardians, and educators
- Creation and maintenance of specialized centers for the prevention and treatment of digital dependency
- Scientific research on the effects of excessive use of digital technologies on child and adolescent development
- Training of health, education, and social assistance professionals for the identification and management of digital dependency
- Support for projects and initiatives of civil society aimed at the healthy and safe use of digital technologies by children and adolescents
- Development of technologies and tools that promote the healthy use of digital devices
Contact us
For more information, contact a KPMG tax professional:
Philippe Stephanny | philippestephanny@kpmg.com
Ramon Frias | ramonfrias@kpmg.com
Chinedu Nwachukwu | chinedunwachukwu@kpmg.com
Carlos Toro | ctoro@kpmg.com.br
Livia Bertolini | liviabertolini@kpmg.com.br