Fighting fiscal São Paulo generates double taxation software firms

The Sao Paulo city has shown a voracious appetite for fines to monitor and arbitrate technology companies that serve customers in their territory but are headquartered outside the city, even in other states. In other cases is required to withhold taxes for their clients, creating double taxation. It has also provoked assessments conclude that where there is the provision of service, without any proof that without consistent and truly understand how their representatives actually operates the segment.

When you think of traditional service delivery, it is thought a person in a specific place designated by the contractor performing an activity. The municipal
tax to be collected where the service is rendered. But in software development can be carried anywhere, or in many places at once, by many different people, making up a project team or a virtual classroom.

It is of note that the delivery of a software solution or service contract can occur in one or several different places so remote or technical visit. When a company consolidates a solution or technology platform that resembles a replicable product, is even more difficult to control this activity, for a given software application, which may have been produced collaboratively by professionals in many different places scattered or concentrated in a single establishment, to answer a few or thousands of customers also scattered in thousands of destinations, or even attend to all through a single point with the supplied software as a service (SaaS), using the internet as a communication vehicle and sales channel.

There are many possibilities from development assistance to the end of a client for someone to arbitrate where the service is provided and in which city should be collecting the tax. The exception to this reality are the services contracted hours or on demand, with allocation of staff in place determined by the client. This represents a less important portion of this market. But even in these cases, a client can be serviced by a remote software factory in India or Chile, for example.

What's happening in Sao Paulo and some other municipalities is not correct, nor fair to the serious companies, which collect their taxes. Affect the national software industry, which is being forced to collect more taxes, which prevents it from being globally competitive. But this time, there is a refinement of malice, because companies are required to collect the same tax in duplicate in different towns, and subject them to a bureaucracy of registration to operate in the city may take over a year without a solution .

It is unacceptable that companies that collect your taxes on time should be required to further fund the government and undermining his business and focus on the market because the authorities of that country are not in agreement about which city should be taken in the ISS which focuses about an activity in which teams are mobile, the projects are short-term, customers are scattered and all that develops may be an intangible - produced anywhere and multiplied in thousands of deliveries or service to the market, also remotely.

Rather than disrupt the competitive life of enterprises, the government should fulfill its share, which is to provide quality basic education, to enable companies to help train skilled manpower for the required amount. Instead of fulfilling their mission, they add to the already high cost Brazil the arbitrary tax that makes companies pay taxes twice.

Meanwhile, the federal government gives knowledge and intelligence produced by national companies and with public funds through the public portal software, which records more than 50% of the downloads by international companies, and future competitors suffered from weak domestic software industry. For these and other situations is that about 70% of software used in Brazil is imported.

When the industry is hopelessly internationalized and sprayed or Brazilian businessmen IT with greater competence to seek support from other countries, as occurs with offerings from Asia, Uruguay, Paraguay, Argentina and others will be too late for the Brazilian government to recognize that played out a great opportunity to be a leading information technology company, giving up a high sustainability sector, generating value jobs, and this great fundraiser strategically in productivity gains in all segments of the economy.

We will thus inherit a stupendous growth of the traditional trade deficit in IT and see the country's future be issued to holders of the field of technology to control it. When the industry truly be heard? When we have a serious country and focus on what matters, producing wealth, employment and intelligence in place of red tape and one of the largest tax burdens in the world?

Gershon Schmitt, President of ABES