Page 93 - InvestmentGuideBrasilEng

Tax Incentives

In addition to the benefits described above, imports. State VAT tax suspension may also be
the Manaus Free Zone in the state of Amazonas granted by the state government. They also en-
The Brazilian government, at the federal, state The Brazilian government is also focused on has a specific incentive packages to encourage joy exchange freedom, which means they are not
and municipal levels, offers several tax-related fostering the creation of a competitive environ- the creation of an industrial center to foster eco- obliged to convert the foreign currency obtained
incentives to companies interested in investing in ment for R&D and innovation in Brazil. This con- nomic and social development in the Amazon in the exports into reais (Brazilian currency), pro-
the country. Usually the incentives are directed to cern is reflected in the creation of certain fiscal forest, preventing natural extraction activities. In vided they send most of their products abroad.
sectors the government has an interest in devel- incentives mechanisms to promote investments the Manaus Free Zone an investor may enjoy the Companies may sell 20% of their production to
oping, such as infra-structure, IT, oil and gas, elec- in R&D by domestic and foreign companies estab- following benefits: the local market, with collection of all federal and
tronics, shipbuilding and export sectors. Foreign lished in Brazil. The main tax instruments to sup- state taxes are suspended.
and domestically-owned companies enjoy the port R&D and innovation are: ? Reduction of up to 88% of Import
same benefits in terms of incentives provided by Duty on inputs for a manufacturing Import incentives
government authorities. Most of the incentives ? Lei do Bem (Good Law) allows corporate or industrial investment.
are granted upon presentation by the investor of a tax reduction, tax reduction on the ? “Ex tarifario”: allows for temporary
project and its counterparts, such as a minimum acquisition of equipment allocated to ? Exemption from excise duty reductions in import tariffs, often to very
amount invested and job creation. R&D and accelerated depreciation of new on industrial goods. low levels (between 0% and 2%), to facilitate
At the federal level, there are several incentive machinery. It also allows accelerated investment in capital goods and IT and
packages in effect intended to support the devel- amortization of certain R&D expenses. ? Reduction of up to 75% on corporate telecommunications goods for industrial
opment of strategic sectors within the country. income tax for legal entities development and key investment projects. The
They include: ? Lei de Informatica (IT Law) grants benefits for ex tarifario system is available only for machinery
the IT sector. It encourages the manufacture ? Exemption from social security taxes and equipment not produced in Brazil.
? PADIS - Brazilian Semiconductor and Display of IT and automation equipment in Brazil.
Industry Development Support Program ? Reduction of state VAT (ICMS) of between ? Companies can request inclusion in the ex
55% and 100%, depending on the project. tarifario system by applying to the Production
? PADTV - Brazilian Digital TV Industry Development Secretary (SDP) at the Ministry
Development Support Program Regional Export Processing Zones (EPZs) of Development, Industry and Trade.
Incentives
? RECAP - Special Tax Regime for Capital Goods Additionally, Export Processing Zones (EPZs) are State-level incentives based on the ICMS tax
Acquisition by Export Companies and Shipyards characterized as free trade areas aimed at attract- Although the Brazilian government has proposed
ing the implantation of companies engaged in the
? REIDI - Special Tax Regime for production of goods to be traded worldwide. They the harmonization of the ICMS tax throughout
Infra-structure Development Foreign investors willing to establish a presence are considered primary zones for purposes of cus- Brazil, for the time being state governments con-
in Brazil will also find specific incentive packag- toms control. tinue to grant investment incentives on the ba-
? REPENEC - Special Incentive Regime for the es created to foster the economic growth of less The objectives of EPZs are: sis of the ICMS tax. Local state governments will
Development of the Oil Industry Infrastructure developed regions in the country. These packag- be happy to provide investors with information
in the North, Northeast and Midwest Regions es include federal, state and municipal benefits. ? Attracting foreign investment; on their state’s incentive program upon request,
Investors willing to establish operations in the which can be made directly to the appropriate de-
? REPES - Special Tax Regime regions below may receive significant corporate ? Reducing regional disparities; partment of the local state government.
for IT Services Export tax reductions (up to 75%), among other benefits.
These specific regional packages are coordi- ? Strengthening the balance of payments; Municipal-level incentives
? REPORTO - Special Tax Regime for nated by regional development bodies, such as:
Port Infra-structure Modernization ? Promoting the dissemination of technology; There are two main taxes under municipal juris-
? SUDAM (Amazon Region Development diction in Brazil: Service Tax (ISS) and Property Tax
? REPETRO - Special Import and Export Agency) – responsible for the states ? Creating jobs; (IPTU). Municipal authorities may concede tax
Customs Regime Intended for the of Acre, Amapa, Amazonas, part of reductions on these according to the amount in-
Exploration and Production of Oil and Gas western Maranhao, Mato Grosso, Para, ? Promoting the economic and social vested and jobs created by an investment project.
Rondonia, Roraima and Tocantins. development of the country; Local authorities may also give land grants, de-
? RETAERO – Special Regime for the pending the on importance of the project in terms
Brazilian Aeronautics Industry ? SUDENE (Northeastern Brazil Development ? Increasing the competitiveness of local economic and social growth impact.
Agency) – responsible for all states in the of Brazilian exports.
Northeast, as well as some municipalities Companies installed within an EPZ will bene-
in Minas Gerais and Espirito Santo. fit from excise duty on industrial goods and social
security tax suspension on local acquisitions and
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