International Tax Review is part of the Delinian Group, Delinian Limited, 8 Bouverie Street, London, EC4Y 8AX, Registered in England & Wales, Company number 00954730
Copyright © Delinian Limited and its affiliated companies 2023

Accessibility | Terms of Use | Privacy Policy | Modern Slavery Statement

Brazil to offer tax incentives for manufacturers of IT and communication products

Sponsored by

Brazil has stepped up its investment in technology

Diego Caldas Rivas de Simone and Renato Henrique Caumo of Pinheiro Neto outline how a newly enacted law in Brazil will reward technological excellence and innovation for businesses.

Brazilian manufacturers of products used in IT and communication businesses that decide to invest in research, development, and innovation activities will soon be allowed to enjoy an incentive in the form of financial credits that may be deducted from various federal taxes.

According to the recently enacted Law no. 13,969/2019, qualifying taxpayers will be granted an amount of financial credits calculated on determined investments made in research, development, and innovation activities (generally, amounting to the expenditure multiplied by a factor of 2.39 to 3.41, but limited to a variable cap).  Alternatively, taxpayers may elect for a yearly appropriation of credits based on an equation described in the law.

Obligations attributable to taxpayers interested in claiming the financial credits include, among others, (i) enrollment with applicable authorities in Brazil,  (ii) a requirement to expend at least 5% of the adjusted income derived from the sale of certain IT and communication products and services described in Article 16-A of Law no. 8,248/1991 in determined research, development, and innovation activities; (iii) a duty to register and report certain financial and operational information, and (iv) the commitment to carry out business in Brazil according to a pre-approved plan (processo produtivo básico).

Financial credits themselves shall be virtually tax free, from a Brazilian perspective, and may be used to either (i) substantiate a refund claim (ressarcimento) from the Brazilian Treasury; and/or (ii) liquidate various federal taxes and social contributions.

Failure to comply with applicable obligations may lead to various penalties that include the return of refunds already paid by the Brazilian Treasury (plus interest and a 75% fine), the disallowance of the liquidation of federal taxes (plus interest and 50-75% fines), and the termination of the taxpayer’s right to use the incentive.

The new incentive is still pending regulation by various Brazilian agencies but rules and forms are forthcoming.

Everything considered, this new incentive may play an important role in the fostering of IT and communication businesses in Brazil and, at the same time, trigger a positive cycle of research, development, and innovation in the country, benefiting various players in addition to the taxpayers that decide to apply under Law no. 13,969/2019.

Diego Caldas

T: +55 11 3247 8759 


Renato Caumo

T: +55 11 3247 8448


more across site & bottom lb ros

More from across our site

Premier League football clubs are accused of avoiding paying up to £470 million in UK tax, while Malta is poised to overhaul its unique corporate tax system.
Bartosz Doroszuk of MDDP offers insights on Poland’s new tax legislation on shifted profits, as the implementation deadline looms nearer.
Four tax specialists preview the UK’s transfer pricing requirements, which come into effect on April 1.
The rise of the QDMTT will likely change how countries compete on tax and transfer pricing policy, but it may not reverse decades of falling corporate tax rates.
ITR’s latest quarterly PDF is going live today, leading on the EU’s BEFIT initiative and wider tax reforms in the bloc.
COVID-19 and an overworked HMRC may have created the ‘perfect storm’ for reduced prosecutions, according to tax professionals.
Participants in the consultation on the UN secretary-general’s report into international tax cooperation are divided – some believe UN-led structures are the way forward, while others want to improve existing ones. Ralph Cunningham reports.
The German government unveils plans to implement pillar two, while EY is reportedly still divided over ‘Project Everest’.
With the M&A market booming, ITR has partnered with correspondents from firms around the globe to provide a guide to the deal structures being employed and tax authorities' responses.
Xing Hu, partner at Hui Ye Law Firm in Shanghai, looks at the implications of the US Uyghur Forced Labor Protection Act for TP comparability analysis of China.