Brazil proposes further service taxes on banking

Wed 27th Aug 2014

Brazil is reviewing extending the existing Imposto sobre servicos (ISS) munipal tax to current accounts and other banking services.

ISS is generally charged from 2% to 5%, but there are variations across the municipalities. There are over 5,000 taxing municipalities in Brazil of the purposes of ISS.

The bank ISS move would close a number of loopholes banks and investment companies have been using to avoid ISS charges.

By contrast, 10 members of the European Union have failed so far in their attempts to introduce a similar Financial Transaction Tax (FTT) due to ongoing debate around the extra-territorial reach of the tax to other EU and non-EU member states.  Korea recently decided to switch to levying VAT on banking instead.