Taxes in Brazil Reach R$64B on Telcom, Internet, Cable TV

By Jay Forte, Contributing Reporter

RIO DE JANEIRO, BRAZIL – The total taxes paid in the telecommunications sector last year totaled R$64 million, according to the Brazilian Telecommunications Association (Telebrasil). The amount is six percent higher than in 2015, despite a drop in user base in Brazil.

Among taxes, what has the greatest impact on telecommunications services accounts is the Tax on the Circulation of Goods and Services (ICMS), collected by the state governments.

Last year, R$34 billion in ICMS were collected from the industry, equivalent to 8.4 percent of all states’ revenues from this tax across segments.

In 2016, taxes accounted for 47 percent of net revenue in fixed, broadband cellular and pay TV services, compared to 43 percent in the previous year. For Telebrasil, tax relief, especially ICMS, could contribute to the increased access to telecommunications services, especially in broadband.

“With less taxes, services would be more accessible to citizens and micro-enterprises, allowing the faster social inclusion of more Brazilians and thereby increasing the potential of production and better distribution of national wealth,” says the entity.

In March, it was reported that the number of active cell lines in Brazil fell by 5.38 percent in January, compared to the same month last year, according to the National Telecommunications Agency (ANATEL), mainly due to the country’s economic crisis.

Billy D. Aldea-Martinez, Regional Director for Latin America of technology provider Piano Software Inc., shares that since the crisis, “The only industry that has shown growth is online and it’s really the only place the Brazilian Government can tax to support itself and other key private industries such as media, at the expense of making internets services accessible to all Brazilians.”

The economy also contributed to the a decline in the number of pay-TV customers in country. Data from ANATEL released last month shows that pay-TV subscriptions fell by 1.91 percent between January of 2016 and January of 2017, with a reduction of 364,400 subscribers.

At the time the country has 18.69 million pay-TV customers, with satellite technology being the medium with the largest number of subscribers, 10.6 million customers, followed by cable TV with 7.7 million.

In December the ABTA (Brazilian Association of Paid TV Services) reported that not only is the number of Pay TV subscribers decreasing, the rate of non-payment of monthly fees by current subscribers is also rising.

“Clearly, the activity [Pay TV] is being affected by the economic scenario and expectations,” said Oscar Simões, president of ABTA told a government news agency.