​On December 28, 2018, the State of Rio de Janeiro enacted Decree No. 46,543, repealing the tax exemptions for software in an attempt to increase state revenues from the digital economy.

The main change refers to assessment of ICMS tax on (i) sale of custom software; and (ii) electronic transfer of software, in its multiple ways such as download, licensing and others.

As the State of Rio de Janeiro is already a signatory to ICMS Conventions Nos. 181 of 2015 and 106 of 2017, the state tax authorities may begin claiming the mentioned ICMS taxes from taxpayers.

In this scenario, taxpayers should analyze the tax aspects regarding their own activities and verify whether state tax authorities could levy ICMS tax on those digital transactions.

Finally, it should be stressed that when the State of São Paulo made a similar move last year, several taxpayers and their respective trade associations brought suit and a number of preliminary injunctions were issued against the state’s right to collect.