ISS on franchises ranges from 2% to 5% in the 21 state capitals whose rule was read

The franchise contract is a service taxable by ISS (municipal service tax), under subitem 17.08 of the list annexed to Complementary Law 116/2003, and each municipality sets the rate within national limits, with a minimum of 2% (Article 8º-A) and a maximum of 5% (Article 8º, II). The legislation of 21 of the 27 state capitals was read on an official website through October 30, 2026. Of these, 15 apply 5%, and the others set 2% in Campo Grande, Curitiba, Rio de Janeiro and São Paulo; 3% in Belo Horizonte and Porto Alegre. Adding 21 other cities, among the 50 largest non-capital cities, there are 42 municipalities with a rule read, with 6 municipalities at 2%, 7 at 3%, 1 at 4% and 28 at 5%, a simple mean of 4.21%, a median of 5.0% and a standard deviation of 1.17 percentage points.

On the general repercussion page of the Federal Supreme Court (STF), Theme 300 bears the title "Levy of ISS on franchise contracts", with RE (extraordinary appeal) 603136 as the leading case, general repercussion recognized on September 3, 2010 and a final and unappealable decision on September 30, 2022. The statement of reasons of PLP 163/2020, a complementary bill introduced in the Chamber of Deputies on June 10, 2020, states that the court, in May of that year, "ultimately established that the levy of the tax is constitutional". The text of the thesis was not read on the court's portal. It does appear, however, in a headnote of the Superior Court of Justice, STJ (AgInt nos EDcl no AgInt nos EDcl no REsp 1.719.189), transcribed in the indicator on franchising at the STJ, according to which the levy of ISS on franchise contracts is constitutional, under subitems 10.04 and 17.08 of the list of Complementary Law 116/2003.

The tax reform changes the horizon of this tax. Constitutional Amendment 132/2023 abolishes ISS as of 2033, and Complementary Law 214/2025 added to Complementary Law 116/2003 Article 8º-B, which reduces the rates set in the municipal legislation in force on December 31, 2028 by 10% in 2029, 20% in 2030, 30% in 2031 and 40% in 2032. Article 127 of the Transitional Constitutional Provisions Act provides for IBS (the tax on goods and services that will replace ISS) at a municipal rate of 0.05% in 2027 and 2028, and Complementary Law 227/2026 establishes the Managing Committee of this tax. The consolidated text of Complementary Law 214/2025 does not mention the franchise contract, and the classification of the service is left to regulation.

How we calculate

For the 27 state capitals and the 50 largest non-capital cities by IBGE's 2025 estimate, the municipal rule was sought on city government, city council or official gazette portals, after reading the robots.txt of each domain. Domains that bar artificial intelligence agents, respond with a block or require image verification were not read, and private legislation portals were not used. Each record shows the rule, provision, rate, link and date of consultation, as well as the literal excerpt, compared automatically with the downloaded text. The service was identified by its description in the laws, which pair the Portuguese term with the word franchising, because 12 of the 42 laws read number it differently, usually as 17.07, and it was not confused with subitem 10.04, on agent services for franchise contracts.

In 22 municipalities the rule cites franchising or its subitem when setting the rate. In 20, the general rule for other services applies, adopted after checking that franchising is not among the exceptions of the provision read. In 3 municipalities (Boa Vista, João Pessoa and Rio Branco) the rule is in an image PDF, and the text was extracted by optical character recognition, with the excerpt and, in tables, the column checked against the page image. The 4 official tables without a reading of the corresponding law appear in a separate block and are left out of the distribution and the averages. The weighted mean uses the 2025 population and results in 3.57%.

Calculated on November 8, 2026. Method version 1.0. Sample: 21 of the 27 state capitals with a rule read, plus 21 other cities, out of a total of 77 municipalities researched.

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