Tax Reduction for Renewable Energy
Brazil is a country with a huge capacity for producing renewable energy. This article outlines a program created by the government to encourage the development and the usage of renewable energy in the country.
Brazil has a huge unexploited potential for alternative sources of power generation, such as wind, solar, and tidal, among others. With wind energy alone, the country has about 140,000 MW to exploit and has about 105,000 MW of currently installed capacity.
With the huge global appeal for increasing alternative sources in the primary energy matrix, there's an urge for the strengthening the effort for to develop and produce clean energy resources for everyone, including Brazil.
The country has a primary energy matrix with the almost 50% of renewable sources, but Brazil still needs to be part o this global effort for the preservation of the planet. Given this, the Brazilian government started to create reductions in taxes charged over alternative sources in order to promote their development and exploration in Brazil.
Brazilian Program: REINFA
That's why the Infrastructure Services Committee of the Senate approved a law project that establishes the Regime Especial de Tributação para o Incentivo ao Desenvolvimento e à Produção de Fontes Alternativas de Energia, which is the Special Taxation Regime of Incentives for the Development and Production of Alternative Energy Sources, most known as REINFA. It also establishes measures to encourage the production and consumption of clean energy in Brazil.
Companies Benefited by the Reduction
According to the proposal, companies dedicated to the following activities are benefited with tax reductions by REINFA:
- Researching, developing and producing equipment used for the generation of alternative energies – such as solar, wind or sea – or other energy storage technologies or materials.
- Produce electrical energy by wind, solar and sea power.
Companies that deal with the production of vehicles powered by an electric motor – hybrid or not – are also eligible for benefits. To be eligible for benefits, however, they will have to stay on time with the taxes and contributions administered by the Federal Revenue Service and not participate in the National Simple Regime.
Tax Exemption for Beneficiaries
The companies benefited by REINFA are exempted from a number of taxes:
- PIS/Pasep and Cofins. Charged over their gross revenue.
- PIS/Pasep-Importation and Cofins-Importation. Charged over goods without a similar services that are necessary to these companies' activities when imported directly by the benefited company.
- Import Tax (II). Charged over goods, without a national similar that are fundamental to the realization of these companies' activities when imported directly by the benefited company.
- Tax Over Industrialized Products (IPI.) Charged over goods without a national similar that are fundamental to the realization of these companies' activities when purchased directly by the benefited company, as well as, vehicles pulled by electric motor – hybrid or not.
In addition, beneficiaries of REINFA have special financing conditions and priority along with official entities for projects to be developed and executed in the country, regarding the activities related to the activities comprised by REINFA.