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The Registration of Service Providers of Other Municipalities (CPOM) was an initiative of the prefectures of several Brazilian states in order to guarantee the correct payment of the service tax (ISS) in typical cases in which the provider has an EIN in a municipality other than where the service will be provided. This measure aims to combat tax evasion practiced by some companies that use fictitious addresses to pay less taxes.

How this evasion works:

By the Complementary Law no. 116/03, ISS must be collected at the service provider’s establishment (rule that includes numerous exceptions). The municipalities have the autonomy to define the ISS rate between 2% and 5%. Some business owners, in face of this fact, register companies in addresses from municipalities where the rate is lower than that of the municipality where the business is actually established.

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