The measures include incentives to increase financing lines; reduction of payroll costs in some industry sectors which foresees the substitution of the 20% social security contribution with a 1,5% tax on gross revenue; cash refunds for exporters based on export revenue, potentially up to 4%; cash refunds of PIS/Cofins (federal contribution tax) credits and their payment within 60 days; incentives for the automotive industry; and excise tax reductions, among others. While the relevant legislative provisions have been issued, some are still subject to formal regulation and are expected to be issued in the next few months. Notwithstanding, a number of regulatory provisions have already been issued, and the benefits are:
PIS/Cofins credits on the value of new capital assets may now be offset at gradually reduced rates, allowing for a 1/11 offset for goods acquired in August 2011 to a full offset for goods acquired from July 2012. This applies to new assets bought or received from August 3 2011.
Companies who qualify for the government's digital inclusion programme are exempted from income tax. Further, costs incurred in scientific research conducted in private, non-profit, qualifying institutions are now deductible for calculating the profit and social contribution tax base.
From December 2011 to December 2012, payroll costs are to be reduced in certain industries including information technology, clothing, leather, footwear and furniture manufacturers. In place of existing employer contributions to social security (20% on payroll), a fixed rate of 1.5% (2.5% for information technology services) will apply to the companies' gross revenue.
As a disincentive to imports of the aforementioned goods, the rate of Cofins on import has been increased from 7.6% to 9.1%.
Foreign administrators – permanent visa – minimum investment
Companies wishing to appoint a foreign administrator, manager, director or executive in Brazil must comply with the requirements established by the National Immigration Council. The foreign national must be resident in Brazil, for which a permanent visa is required, conditioned to a minimum capital investment. Until recently, this was set at the equivalent of R$200,000 (US $122,399) for each requested visa, duly registered with the Central Bank. Alternatively, a lower investment of R$ 50,000 ($30,599) was permitted, provided that at least 10 new positions were created for a period of at least two years. A new resolution issued by the Council (no 95 of 2011) raises these values to R$600,000 ($366,837) and R$150,000 ($91,709) respectively, keeping the requirement of creating 10 new position for at least two years following entry of the administrator.
Nélio Weiss (nelio.weiss@br.pwc.com) and Philippe Jeffrey (philippe.jeffrey@br.pwc.com), São Paulo
PwC
Tel: +55 11 3674 2271
Fax: +55 11 3674 2040
Website: www.pwc.com
