THE VIRTUAL BRANCH AS A NEW LEGAL-TAX NEXUS: SIGNIFICANT ECONOMIC PRESENCE AND TAXATION OF BIG TECHS IN BRAZIL

Abstract

The digitalisation of the economy has made exclusive reliance on physical nexus insufficient to identify the business presence of foreign digital platforms operating in the Brazilian market. This article examines whether the Virtual Branch may operate as a legal-tax nexus category for taxing Big Techs in Brazil. The research problem is to determine to what extent the continuous exploitation of data, users, advertising, revenues and the national market may reveal significant economic presence without violating legality, legal certainty and the international allocation of taxing powers. The study adopts a qualitative approach, deductive reasoning and bibliographic-documentary procedures, based on tax scholarship, Brazilian legal sources and institutional documents from the OECD, the European Union and the United Nations. The results indicate that the Virtual Branch does not create a tax or replace formal legislation, but may serve as a conceptual framework for legislation, tax administration and judicial debate. The article concludes that significant economic presence, when legally defined by objective criteria, may support a new tax nexus compatible with ability to pay, free competition, tax justice and Brazilian fiscal sovereignty.