Brazil Shelves Big Tech Tax, Shifts Focus to Digital Platform Regulation

The Brazilian government has decided not to pursue a tax on large tech companies, instead prioritizing legislation to regulate competition among digital platforms. This move follows concerns about potential trade issues with the U.S. The proposed legislation aims to address anti-competitive practices such as 'killer acquisitions' and biased search results.

The Brazilian government has decided to abandon a proposed tax targeting major tech companies. Concerns have arisen that such a move could be construed as retaliatory in light of U.S. President Donald Trump's threats to impose tariffs, according to two sources familiar with the situation.

Instead, the focus will be on advancing legislation to regulate competition among digital platforms in Brazil. This new bill, open to public consultation since January 2024, seeks to counteract business practices that hinder competitors, such as 'killer acquisitions' and the preferential treatment of a company's own products in search results.

There had been plans to introduce a tech company tax to Congress if revenue forecasts for the latter half of 2024 were not met. However, the Brazilian government is cautious about the timing, particularly given ongoing trade negotiations influenced by Trump's tariff proposals. While Trump has suggested flexibility in his tariff plans, Brazilian officials are preparing for protracted discussions over issues like sugar and ethanol tariffs.

(With inputs from agencies.)