Brazil State Governors Suggest Taxing Games Sold Over the Internet

RIO DE JANEIRO, BRAZIL – The National Forum of Governors gathered this week in Brasília, where the heads of the Executive Branch of 25 of Brazil’s 27 federative units discussed ways to increase revenue. One of the proposals involves the taxation of e-games sold over the Internet.

The Governors estimate that the measure would raise R$18 billion (US$4.5 billion) and help allocate more resources to public safety. The suggestion was submitted by the governor of Piauí, Wellington Dias, and was endorsed by the governor of São Paulo, João Doria.

“We thought it was a well-received suggestion, since e-games over the Internet are not now taxed. All (other) games pay tax, it is unreasonable that e-games through the Internet, particularly those played outside Brazil, occur without the levying of taxes,” said Doria, according to O Globo newspaper.

Also according to the newspaper, the governor of Rio de Janeiro, Wilson Witzel, did not endorse the proposal. He stated that the problem of public safety is one of management, not lack of resources, and advocated more effective investments.

The governors called for an increase in the federal government’s share in financing the National Public Safety Fund. The forum also submitted demands for federal funding for education and to discuss ways to transfer pre-salt oil exploration revenue to states.

The suggestion of taxing electronic games sold over the Internet runs counter to the position of President Jair Bolsonaro, who advocates a reduction in taxes. In August, he lowered IPI taxes on consoles and accessories to 16 percent.

Another matter that goes against the interests of governors is Proposed Amendment to the Constitution (PEC) 51/2017, which entirely eliminates IPI taxes on consoles and games produced in Brazil. The agenda was approved by the Senate’s Committee on Constitution, Justice, and Citizenship (CCJ) and has been waiting since August to be discussed in plenary.