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Brazil opts for origin principle on e-commerce VAT

  • Sep 24, 2014 | Richard Asquith

Brazil opts for origin principle on e-commerce VAT

In a move leaving it at odds with the OECD VAT Guidelines and practise in the rest of the world, Brazilian ICMS (VAT) will be charged on intra-state e-commerce sales on the origin principle.

As a consumption tax, most countries elect to make the location of the consumer the place of supply or taxation, and therefore expect to charge the local VAT. This means that when a shopper buys online from an e-retailer in a foreign country (origin), they are charged their country’s VAT (destination).

However, a ruling last week by the Brazilian Supreme Court means that where transactions are e-commerce goods shipped across a state, city or other taxing jurisdiction’s border, the tax of the merchant (origin) will apply. This tax will be ICMS (Imposto sobre Circulação de Mercadorias e Serviços de Tranporte Intermunicipal, Interestadual e de Comunicação), the local equivilant of Value Added Tax.

The case arose when 18 Brazlian states signed a pact to charge ICMS based on the location of the consumer.  The Supreme Court has now struck this down as unconstitutional.

VP Global Indirect Tax
Richard Asquith
VP Global Indirect Tax Richard Asquith
Richard Asquith is VP Global Indirect Tax at Avalara, helping businesses understand their compliance obligations as they grow globally. He can be contacted at: He is part of the European leadership team which won International Tax Review's 2020 Tax Technology Firm of the Year. Richard trained as an accountant with KPMG in the UK, and went on to work in Hungary, Russia and France with EY.