Software in Brazil Regulatory Changes Analysis¶
Potential Regulatory Changes¶
The Brazilian software industry, a significant force in Latin America, operates within a continuously evolving regulatory landscape. Several potential regulatory changes are on the horizon or are currently being implemented, which could significantly impact the software value chain from research and development to support and maintenance. These changes stem from broader governmental initiatives aimed at modernizing the economy, enhancing digital security, and ensuring fair competition in the digital realm.
A major transformative change is the ongoing Tax Reform, initiated by Constitutional Amendment No. 132 in 2023 and further regulated by PLP 68/2024 and PLP 108/2024. This reform aims to simplify Brazil's notoriously complex tax system by replacing five existing taxes (PIS, Cofins, ICMS, and ISS) with a dual VAT model consisting of the Contribution on Goods and Services (CBS) and the Goods and Services Tax (IBS), along with a Selective Tax on specific products. The transition period is structured to occur progressively between 2026 and 2033. This reform represents a fundamental shift in tax logic, reporting obligations, and system compliance frameworks. It will impact not only companies operating within Brazil but also those outside Brazil conducting business with Brazilian entities, including through digital transactions. Key aspects include a broad tax base covering goods, services, and digital goods, destination-based taxation, a full input credit system, and a shift towards real-time compliance embedded in electronic fiscal documents.
Another area of significant regulatory focus is the Regulation of Digital Platforms. The Brazilian government is actively discussing and formulating a regulatory framework for digital platforms, partly inspired by the European Union's Digital Markets Act (DMA). A public consultation was launched in January 2024 to assess the regulation of digital platforms and consider amendments to the Brazilian Competition Law. Proposed legislation, such as Bill 2768/2022, aims to establish a Brazilian Digital Market Act and could grant regulatory powers to entities like ANATEL. Discussions include the potential designation of systemically relevant economic agents in digital markets based on qualitative and quantitative criteria, which could subject these platforms to general and specific obligations to ensure fair competition and transparency. Regulation of online platforms is being recommended as a legislative priority in 2025, alongside discussions on artificial intelligence legislation. There is also a push for a clear liability regime for digital platforms regarding illegal content.
Enforcement of the General Data Protection Law (LGPD) (Law No. 13,709/2018) remains a key focus for regulators. The LGPD establishes stringent guidelines for personal data processing, emphasizing transparency and safeguarding data subject rights. Regulators are increasingly vigilant in enforcing data privacy standards, requiring digital businesses to implement robust data management and security protocols. This includes requirements for obtaining explicit consent for data processing and providing individuals with rights regarding their personal data. The LGPD applies to any organization processing the personal data of residents in Brazil, regardless of the organization's location.
Specific sectors are also seeing new or evolving regulations. The gaming industry, for example, has entered a new era with the full regulation of the iGaming market in January 2025, following the enforcement of Law No. 14.790 in 2023 and the establishment of the Secretariat of Prizes and Bets (SPA/MF) in 2024. This includes a demanding compliance framework with rigorous requirements for licensing, technical standards (like mandatory geolocation tools and identity verification), and stringent anti-money laundering (AML) measures effective from January 2025.
Additionally, customer communication regulations, particularly concerning Application-to-Person (A2P) messaging, are seeing increased focus on data privacy and require businesses to stay updated on evolving compliance frameworks led by ANATEL. Key aspects include mandatory opt-in, clear opt-out mechanisms, time restrictions for marketing messages, and content restrictions.
The Brazilian government is also actively promoting digital transformation and has initiatives focused on the domestic market, including providing tax incentives for R&D activities in IT and supporting startups. There are recommendations to update the Brazilian ICT procurement policy to promote a shift towards digital commissioning and to update the existing open source software policy in line with digital government needs. These initiatives, while supportive, may also introduce new requirements or standards for software providers engaging with the public sector.
Potential Impact of Regulatory Changes¶
The potential regulatory changes in Brazil will have varied impacts across the software value chain:
| Regulatory Change | Impacted Value Chain Steps | Potential Impacts |
|---|---|---|
| Tax Reform (CBS, IBS, etc.) | Development/Production, Distribution, Implementation/Deployment, Support & Maintenance | Development/Production: Need to update software, especially ERP and fiscal management systems, to handle the new tax logic, reporting, and electronic fiscal documents. Distribution: Changes in pricing strategies, tax calculation, and invoicing. Implementation/Deployment: Significant work required to adjust existing ERP and business systems to the new tax framework. Increased demand for implementation services related to tax compliance. Support & Maintenance: Ongoing support needed for updated tax-compliant software. |
| Digital Platform Regulation | R&D, Development/Production, Distribution | R&D: Potential impact on data access for AI and other data-intensive R&D if regulations impose restrictions. Development/Production: Need to build compliance features into platform software (e.g., related to data sharing, transparency, content moderation). Distribution: Potential for new fees or obligations for platforms and software distributed through them. Changes in how platforms operate and interact with third-party software providers. May impact market access for some software types. |
| LGPD Enforcement | R&D, Development/Production, Implementation/Deployment, Support & Maintenance | All Steps: Increased need for robust data protection and privacy measures in software design, development, and operation. Development/Production: Development of features supporting data subject rights (access, deletion, portability). Implementation/Deployment: Ensuring systems are configured for LGPD compliance during deployment. Support & Maintenance: Handling data subject requests and ensuring secure data handling in support processes. Increased demand for privacy management software and services. |
| Gaming Industry Regulations | Development/Production, Implementation/Deployment, Support & Maintenance | Development/Production: Need to develop software compliant with new licensing, technical standards (geolocation, identity verification), and AML requirements for gaming platforms. Implementation/Deployment: Implementing and configuring compliant gaming software. Support & Maintenance: Providing support for regulated gaming platforms and ensuring ongoing compliance. |
| A2P Messaging Regulations | Development/Production, Distribution | Development/Production: Development of software with mandatory opt-in/out features, time restrictions, and content compliance for messaging services. Distribution: Ensuring marketing and communication campaigns using A2P messaging comply with regulations. |
| Government Digital Initiatives | R&D, Development/Production, Distribution, Implementation/Deployment | R&D: Potential for funding or incentives related to specific technologies (e.g., AI, open source). Development/Production: Potential need to adhere to open source policies or standards for public sector software. Distribution & Implementation/Deployment: Changes in public sector procurement processes could create opportunities or require adjustments in how software is sold and implemented for government clients. |
References¶
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