The aforementioned rule comes into force upon its publication as a way of curbing the tax war between municipal entities, ratifying the minimum tax rate imposed (already in force since 2002), in addition to expanding the list of services on which ISS is levied and changing the place of collection with regard to some specific services.
Among the main changes proposed by LC nº 157/2016, the following stand out:
► The formalization in Complementary Law of the minimum 2% ISS rate previously set by article 88 of the Act of Transitional Constitutional Provisions (inserted into the legal system through Constitutional Amendment No. 37/2002), in order to prevent Municipalities and the Federal District from establishing lower rates to attract new service providers, taking advantage of the general rule for charging the tax that considers the location of the provider's establishment or, in its absence, the provider's domicile, which in the case of a legal entity corresponds to the address of its headquarters;
► The prohibition of granting exemptions, incentives and tax or financial benefits related to the ISS, including reduction of the calculation basis or presumed credit, considering null and void any law or municipal act that does not respect the above provisions, except for civil construction services and municipal public road, subway, rail and water passenger transport;
► The expansion of the list of services contained in the list attached to Complementary Law No. 116/2003, to include, among other services:
(i) the processing, storage or hosting of data (cloud computing services falling into this category);
(ii) the development of electronic games developed not only for computers, but also for tablets, smartphones and similar devices;
(iii) the provision of audio, video, image and text content via download and streaming;
(iv) surveillance and monitoring of livestock (which includes hotel and boarding services for domestic animals, among others);
(v) any and all municipal transportation services, which, in our view, includes transportation services requested through mobile applications; and
(vi) the insertion of texts, drawings and other advertising and publicity materials, in any media (including internet pages), except in books, newspapers, periodicals and in the modalities of sound broadcasting services and free and free reception of sounds and images, in exchange for advertising and publicity services, which were already taxed by the ISSQ and presuppose creative activity.
The provisions introduced by LC No. 157/2016 must be internalized in the legislation of the Municipalities and the Federal District, and those that imply the institution or increase of taxes will only come into effect in the following fiscal year and after 90 (ninety) days from the date of their publication. Regarding the provisions that address the revocation of tax exemptions and benefits by the Municipalities and the Federal District, LC No. 157/2016 granted a one-year period for adaptation of their internal legislation, so that any penalties resulting from such non-adaptation will only take effect from January 2018.
