Chamber approves new taxation for streaming services such as Netflix and YouTube

The Chamber of Deputies approved this Tuesday, 4th, the basic text of the bill that regulates streaming services in Brazil and institutes changes in the collection of the Contribution for the Development of the National Cinematographic Industry (Condecine).

Under the rapporteurship of the PP leader, Dr. Luizinho (RJ), the proposal had 330 votes in favor and 118 votes against.

Deputies will also analyze the highlights made to the text – requests for certain sections of the proposal to be analyzed separately, with a view to adding or deleting items from the proposal. Such a vote will only be held in the plenary session this Wednesday, 4th, as announced by the president of the House, Hugo Motta (Republicanos-PB).

The text determines the charging of up to 4% Condecine for video on demand services, that is, audiovisual streaming services whose contents are selected by the service provider and organized in a catalog. The approved version reaches companies such as Netflix, Prime Video, Globoplay and Disney+.

The maximum contribution applies to companies with annual revenues above R$350 million. In the previous opinion, the maximum incidence would already occur in the range starting at R$96 million.

Furthermore, the report does not foresee charges on revenue up to R$4.8 million. There is a 0.5% tax rate on revenue up to R$24 million; 1% up to R$100 million; 2% up to R$250 million; and 3% up to R$350 million.

The rate is lower than the 6% that appeared in the proposal presented by the previous rapporteur, André Figueiredo (PDT-CE).

The reduction caused dissatisfaction among sectors of the artistic class, who demanded higher taxes on these services. “We changed its maximum rate from 6% to 4%, in order to make the promotion compatible with the economic sustainability of the services”, says Luizinho in the opinion.

On the other hand, streaming companies complain about an increase in Condecine charges, compared to the 3% rate provided for in a similar project already approved in the Senate, under the report of Eduardo Gomes (PL-TO).

However, in practice, according to Luizinho’s opinion, the effective contribution rate can go from 4% to 1.6%, if a platform reaches the maximum deduction percentage (60%) through direct investments.

The project approved by the Chamber also establishes the incidence of 0.8% of Condecine on audiovisual content sharing services, that is, audiovisual streaming platforms through which third parties can host, manage and share content that the provider is not responsible for selecting. In this case, platforms such as Youtube, Instagram and Kwai are affected.

The rapporteur also justifies a lower percentage for content services shared by third parties, because “these services are supported by the activity of content creators, or digital influencers, who add value to the economy and generate employment and income”.

See other points of the project:

Quota of Brazilian content – ​​The provider must maintain in the catalog, on an ongoing basis, a minimum of 10% of Brazilian content, and half of this percentage must correspond to independent Brazilian content;

Condecine Deduction – Condecine taxpayers may deduct, up to 60% of the amount due, expenses that were incurred in the calendar year prior to the tax collection;

Deduction conditions – Expenses may be deducted when used in the contracting of commercial exploitation rights, licensing or pre-licensing of independent Brazilian content, in the own production of Brazilian content and in the training and training of labor focused on the country’s audiovisual ecosystem;

Deduction from production – 40% of the deduction can occur from the own production of Brazilian content, in the event that the taxpayer qualifies as a Brazilian producer registered with the National Cinema Agency (Ancine), part of the project that affects Globoplay;

Staggered validity – The streaming regulatory framework would come into force in three stages: “essentially administrative provisions” coming into effect immediately; within 60 days, with the obligations related to the new Condecine in force; and other obligations, considered to involve “greater complexity and effort on the part of streaming providers in terms of development and adaptation of their platforms”, within 180 days.

Allocation of Condecine-Streaming – Revenues from Condecine must be allocated: at least 30% to independent Brazilian producers established in the North, Northeast and Central-West regions; at least 20%, to independent Brazilian producers established in the South region and in the states of Minas Gerais and Espírito Santo; and at least 10%, to independent Brazilian producers established in the states of São Paulo and Rio de Janeiro, and excluding their capitals.