Doing Business in Brazil: taxes incentives on foreign investments
Doing business in Brazil: during the last crises, the country has been off the list of options for many investors. But recently, it has attracted new eyes.
Check out on this article what are the federal incentives for foreign investors who think about investing in Brazil.
The Brazilian government as a way of encouraging foreign companies interested in investing in Brazil favours them with various tax incentives at the municipal, state and federal levels. Most incentives granted by submitting a project indicating the minimum amount invested, also containing information on job creation and other relevant issues.
If you consider doing business in Brazil, see below five government incentives for foreign direct investment.
RECAP – Special Regime for the Acquisition of Capital Goods for Exporting Companies
Companies whose gross export revenue, in the previous calendar year, accounts for more than 50% of their total gross income from the sale of goods and services from that period and shipyards may qualify for exemption from PIS and COFINS in the acquisition of capital goods (imported or domestic). This tax exemption shall be valid for three years from the date on which was granted.
REIDI – Special Incentive Scheme for Infrastructure Development
The government grants exemption from PIS and COFINS to infrastructure companies participating in the Growth Acceleration Program (PAC). These companies may qualify to obtain incentives through this regime in the acquisition of products, construction services and inputs (both imported and acquired in the domestic market) for incorporation into their fixed assets. The exemption applies to transport, energy, irrigation and sanitation projects and expires within five years of the date on which was granted.
REPENEC – Special incentive regime for infrastructure development of the oil industry in the North, Northeast and Midwest regions
Infrastructure projects developed for the oil industry in the North, Northeast and Midwest regions of Brazil can benefit from a special tax regime. Qualified companies must have a base in these regions.
Tax incentives apply to the import and acquisition of new machinery, equipment, tools or devices, as well as building materials to be used or applied in infrastructure, to be incorporated into the fixed assets of such companies.
REPES – Special Taxation Regime for the Export Platform for Information Technology Services (IT)
This special tax regime designed to favour companies that exclusively engage in software development activities or the provision of information technology services. The acquisition of IT products and services is exempt from PIS and COFINS under the REPES regime. It is also possible to import IPI-free products as long as there is no similar domestic product. Companies that qualify for the scheme must commit to exporting more than 80% of their annual gross revenue related to the sale of products and services. Companies whose income have been submitted to the cumulative PIS and COFINS regime or operating under the simplified tax regime (known as Simples Nacional) will not be able to participate in REPES.
REPORTO – Tax Regime to Encourage modernization and expansion of the Port Structure
REPORTO is a customs procedure that grants exemption from Tax on Industrialized Products (IPI), contributions such as PIS, Pasep and COFINS. In certain circumstances, the Import Tax provided that the equipment purchased, which may have been imported or purchased in the domestic market, does not have a national equivalent. This tax regime designed to encourage port operators, concessionaires and tenants, as well as companies with permission to operate private port facilities. This benefit has recently extended to railway concessionaires and excavation companies.