BRAZIL INCENTIVE PROGRAMS
Foreign companies interested in investing in Brazil count on numerous tax incentives
granted by the Brazilian government on the municipal, state and federal level. Most
incentives are granted upon the submission of a project comprising the minimum invested value, addressing job creation and other relevant matters. Some of these incentives are:
PADIS – Program for the Development of the Industry of Semiconductors and Displays.
This program was designed for the companies that invest in R&D and production in the strategic sector of semiconductors, displays and LEDs. These companies may benefit from the exemption of IPI, PIS and CONFINS incident on the acquisition of raw-materials, goods and software used in their manufacturing and research activities. The same type of exemption may apply to the sale of their manufactured products.
PADTV – Program for the Technological Development of the Industry of Equipment for Digital TV
Companies that invest in R&D and in the manufacturing of equipment for Digital TV may benefit from the exemption of IPI, PIS and COFINS incident on the acquisition of raw-materials, goods and software used in their manufacturing and research activities. The same type of exemption may apply to the sale of their manufactured products.
RECAP – Special Tax Regimen for the Acquisition of Capital Goods by Exporting Companies and Shipyards Companies whose exports revenues account for more than 60% of their annual sales in comparison to the previous year and Brazilian shipyards may qualify for the exemption of PIS and COFINS on acquired capital goods (imports or domestic products). This exemption shall expire within three years counted from the date it was granted.
REIDI – Special Incentive Regimen for the Development of Infrastructure
The government grants the exemption of PIS and COFINS to infrastructure companies participating in the Growth Acceleration Program (PAC). These companies may qualify to benefit from this regimen in the acquisition of goods, construction services and materials (either imported or domestically purchased) which are to be incorporated in their fixed assets. The exemption applies to transport, energy, irrigation and sanitation projects and expires within 5 years counted from the date it was granted.
REMICEX – Special Tax Regimen for Export Packaging
Brazilian manufacturers’ revenues which result from the sales of packaging material to foreign buyers are exempt from PIS and COFINS under the REMICEX. The benefit must be required at Brazil’s Federal Revenue Service in compliance with specific regulations and applies to products exported within 180 days.
REPENEC – Special Incentive Regimen for the Development of Oil Industry Infrastructure in Brazil’s North, Northeast and Central-West
Infrastructure projects developed for the oil industry from Brazil’s North, Northeast and Middle-West rely on a special tax regimen. Eligible companies must be located at these regions.
Tax incentives apply to the import and acquisition of new machinery, equipment, tools and devices as well as to construction materials to be used or applied to infrastructure which is to be incorporated to the fixed assets of such companies.
- Suspension of PIS and COFINS charged on the sales of goods and services to companies that benefit from REPENEC.
- Suspension of PIS and COFINS charged on the import of goods and services to projects that benefit from REPENEC.
- Suspension of the federal duty charged on imports and domestic acquisitions (IPI).
- Suspension of import duty.
- Suspension of PIS and COFINS charged on leasing revenues related to machinery, equipment, tools and devices to be used in REPENEC projects should the lessee benefit from REPENEC.
REPES – Special Tax Regimen for the Export of Information Technology (IT) Services
This special tax regimen was formulated to benefit companies that exclusively work on software development and on the provision of information technology services. The acquisition of IT goods and services is exempt of PIS and COFINS within the REPES system. It is also possible to import goods exempt from IPI for which no similar national product exists. Eligible companies should commit to export more than 80% of their gross annual revenue related to the sale of goods and services. Companies whose revenues have been submitted to the accumulated PIS and COFINS regimen or which operate under the simplified tax system (known as Simples Nacional) are not entitled to participate in the REPES.
REPORTO – Tax Regiment with Incentives for Modernizing and Amplifying Brazil’s Port Structure
REPORTO is a special customs procedure which provides for the exemption of the Tax on Industrialized Goods (IPI), of contributions like PIS, Pasep and COFINS and, in certain cases, of Import Duty, as long as the acquired equipment, which may have been imported or purchased domestically, has no national equivalent. This tax regimen was formulated to benefit port operators, concessionaires and lessees as well as companies with permission to explore private port facilities. This benefit has been recently extended to railroad concessionaires and dredging companies.
Source: Apex Brasil – Brazilian Trade and Investment Promotion Agency