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New taxation makes companies choose to store and process data in Brazil

Brazilian IRS has changed its understanding regarding taxation on rental of data centers

Until quite recently, companies could freely choose where to store and process their data, regardless of whether the service provider was based in Brazil or not. Now, with the change in the tax understanding with regard to payment of rental for the data storage and processing structure, Brazilian business owners will tend to opt for companies based in Brazil, thus being able to save quite a bit in taxes.

What was seen by the Receita Federal [Brazil’s internal revenue service] as rental of a structure, now has a new classification – provision of services – therefore the taxation is different than before. The change is expected to take effect in the next few days.

“Business owners will now be reviewing their choice of providers, since the simple storage of a website at a vendor outside of Brazil will result in payment of taxes,” stated Eber Lacerda Junior, VP of Operations at Matrix.

For the executive, this change in the tax interpretation will place greater value on domestic companies, especially those who have invested in the state-of-the-art technology to meet the growing demands of this market. The expectation for 2014 is a 40% growth in demand for data centers alone, according to Lacerda Junior.

 

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