Exemptions from ICMS
In 2014 and 2016, Brazil will be hosting major events and so the states have instituted exemptions from ICMS. Discover what the exemptions are, and which sectors will benefit from them.
The next three years will be extremely important to Brazil as it will host FIFA's Soccer World Cup in 2014, and the Olympic Games in 2016. These events will take place over many states and will stimulate the national economy.
For the past few years the Brazilian government has been running against time to prepare the country for these events. Gymnasiums and stadiums are being built and the transportation infrastructure is being modified. The whole country is trying to adapt in order to stage the events.
ICMS Exemptions
While the country is physically making preparations, it is also undergoing a reduction in taxes. ICMS is one of these taxes. It is a tax that pertains to the circulation of goods, and providers of transportation and communications.
As a state tax, ICMS can vary from state to state. With the upcoming events, some states decided this tax would be made exempt for some sectors.
The 2014 FIFA World Cup
The government of Minas Gerais published a decree exempting ICMS from all operations and services developed by major companies involved in the World Cup. The incentive will be valid until December 31, 2015 - a year and a half after the end of the world's biggest football event.
The tax advantages are part of the requirements assumed by the presidential palace to make the World Cup happen in Brazil. The commitment was extended to the states, and they could also make their own tax adjustments.
With Decree 46.250 – from May 29, 2013 – entities linked to the International Football Federation (FIFA) and its subsidiaries, are subject to exemption from ICMS on the importation of goods and durable equipment valued at over 5 thousand BRL.
Benefits from the Exemptions
The decree is only valid if the imports are to be used exclusively by an organization for the competitions, and if the importations were promoted by:
- FIFA.
- A subsidiary of FIFA in Brazil.
- Asian Football Confederation – AFC.
- African Confederation of Football – CAF.
- Confederation of North, Central American and Caribbean Association Football – CONCACAF.
- South American Confederation of Football – CONMEBOL.
- Union of the European Associations of Football – UEFA.
- Foreign associations accredited to FIFA.
- Commercial partners of Fifa domiciled abroad.
- FIFA media stations.
- Service providers of Fifa domiciled abroad.
- Direct Public Administration bodies of state or local municipalities, hosts of the competitions and official training centers of the foreign teams.
- Any representative of the private or legal entities mentioned above.
The application of benefits is conditional to operations and services – except for the communication sector – that are exempt by at least one federal tax levied on them, such as:
- Import Tax (II)
- Tax over industrial products (IPI)
- PIS/PASEP
- Contribution to Social Security Financing (COFINS)
Olympic Games in Brazil
The National Council of Finance Policy (CONFAZ), signed two agreements with ICMS to encourage the 2016 Olympic Games in Brazil. The Brazilian states and the Federal District are already authorized by CONFAZ to import tax free - sports equipment and sailing boats for use in competitions.
Exemption Agreements
These are Agreements No.54 and No.55 published in 2013 in the Official Gazette. Agreement No.54 provides the exemption for sailing boats, for transactions that have their import duty and IPI rates exempted or reduced to zero. In addition, the use of the boat in Brazil should be exclusively for the Olympics and Paralympics Games.
ICMS Agreement No. 55 clarifies the exemption on the importation of sports goods that will be used in the Games, as well as for national training and the preparation of athletes and Brazilian teams. The operations that will benefit are the ones performed by:
- Organisations - of the Union, of states, of the Federal District, and of municipalities and their agencies and foundations.
- Athletes for Olympic and Paralympic sports.
- Olympic (COB) and Brazilian Paralympic (CPB) committees.
- National entities of sports administrations that are affiliated to COB.