Patrick Bruha

Patrick Bruha

Staff Writer
The Brazil Business


Introduction To Rouanet Law

Patrick Bruha

Patrick Bruha

Staff Writer
The Brazil Business


Among the many incentives that Brazil gives to national cultural production, the Rouanet Law is the most important one, attracting private initiative’s donations or sponsorships due to the benefits it grants. In this article, we will take a closer look at how Rouanet Law works.

Overview of the Rouanet Law

The Federal Law for Cultural Incentive - most commonly known as Rouanet law - was named after Sérgio Paulo Rouanet, the Secretary of Culture who proposed the law in 1991 to the Brazilian Congress. The Rouanet Law settles public policies for fostering national culture. The guidelines for what would be encouraged in the area of national cultural production were established in its first articles. Its main objectives are the promotion, protection and valuation of all expressions of national culture.

The law was created in order to encourage individuals and companies to donate or sponsor national culture activities.The main feature of the Rouanet Law are the tax incentives that enable legal entities and individuals to invest a part of their payable income tax in cultural activities. The tax relief for individuals who contribute to the Rouanet Law can be up to a maximum of 6% of their Income Tax. As for legal entities who contribute to the Rouanet Law, the tax relief can be up to a maximum of 4% of their payable Income Tax. This is beneficial not only because of the income tax relief but also allows them to sponsor a cultural event that can promote the company’s brand.

According to a survey from 2009, Brazilian governmental incentives for culture accounted for BRL 310 million: BRL 30 million to the Funarte, a governmental foundation which develops public policies relating to cultural production in Brazil; and BRL 280 million to the Rouanet Law. Meanwhile, the same survey accounted that the tax benefits given to those donating or sponsoring the Rouanet Law are near BRL 1 billion.

Who can apply to receive benefits

The following individuals and legal entities can apply to receive resources from the Rouanet Law:

  • Individuals who work in the cultural area, such as artists, producers and technicians
  • Legal entities with cultural ends such as autarchies and foundations
  • Private legal entities acting in the cultural area, profit or non-profit, such as cooperatives and non-governmental organizations

The following activities are considered cultural:

  • Theater
  • Dance
  • Circus
  • Music
  • Literature
  • Visual and graphic arts
  • Prints
  • Crafts
  • Cultural heritage (museums, collections of art and historic buildings preservation)
  • Audiovisual (radio and TV programs, websites and national festivals)

Programa Nacional de Apoio à Cultura

The Programa Nacional de Apoio à Cultura, PRONAC, is a set of public policies set under the Rouanet Law. It aims to stimulate the production, distribution and access to cultural products, the protection and conservation of historical and artistic heritage and promote the dissemination of Brazilian culture and regional diversity. The program includes:

  • Fundo Nacional de Cultura, also known as FNC, and Portuguese for National Fund of Culture, which comprises of funds for the execution of cultural related actions, programs or projects
  • Fundos de Investimento Cultural e Artístico, Portuguese for Cultural and Artistic Investment Funds, which has yet to be implemented, consists of gathering resources for implementing cultural and artistic projects that are profitable, with investors participating in the profits made
  • Patronage

Investing in Cultural Projects

The mechanisms available for investing in Cultural Projects are through the FNC and through Patronage.

With the FNC’s resources, the Ministry of Culture may grant awards to support the conduct of cultural exchanges and other proposals that do not fit into specific programs, but are close and relevant to the cultural policies of the area in which they are being held. These initiatives are called cultural proposals of spontaneous demand.

To receive support from the FNC, the cultural proposals of spontaneous demand are chosen by a selection processes conducted by the Secretaria de Fomento e Incentivo à Cultura, which is portuguese for Department of Incentive and Promotion for Culture, a Department under the Ministry of Culture.

Patronage is a form of attracting private initiative’s donations or sponsorship in the cultural sector. The applicant must submit a cultural project proposal to the Ministry of Culture. If the application is approved by the Ministry of Culture the applicant can start fundraising from individual or legal entities, who are called supporters.

It is important to distinguish two types of patronage:

  • Sponsorship, which can be given to individuals or legal entities that seek profit as well as admitting promotional and institutional advertising
  • Donations, that can not be handed to individuals or entities that seek profit and may not be used for advertising.

Individuals supporting FNC projects or Patronage can deduct from their Income Tax:

  • Up to 60% of the value invested as sponsorship
  • Up to 80% of the value invested as donation

The tax relief for these individuals can represent a maximum of 6% of their Income Tax.

Companies supporting FNC projects or Patronage can deduct from their Corporate Income Tax:

  • Up to 30% of the value invested as sponsorship
  • Up to 40% of the value invested as donation

The tax relief for these companies can be up to a maximum of 4% of their Corporate Income Tax. Moreover, companies can declare their donations or sponsorship as operational expenses which will reduce the amount of tax payable.

In some areas the supporter can deduct up to 100% of the value they invested as sponsorship or donation, but these amounts may not be declared as operational expenses and may not exceed 6% of deduction in Income Tax for individuals and 4% of deduction in Corporate Income Tax for companies. These specific areas are as follows:

  • Performing arts
  • Books of artistic, literary or humanistic values​​
  • Classical or instrumental music
  • Circulation of arts exhibition
  • Donations of collections for public libraries and museums

Applying to receive resources through Rouanet Law

In order to apply for resources through Rouanet Law, the interested individual or legal entity carrying out cultural activities is required to submit a proposta cultural, which is a cultural proposal or a cultural program through an online system, the Sistema de Apoio às Leis de Incentivo à Cultura, Portuguese for Support System for Cultural Incentive Laws, SALIC.

The proposal should contain programs, plans or actions set in order to achieve specific goals within the previously set limits of budget and time. The proposal must then be analyzed by the Ministry of Culture and, if approved for the Rouanet Law, reaches the status of Cultural Project. The project is then forwarded to the Comissão Nacional de Incentivo à Cultura, Portuguese for National Commission for the Promotion of Culture (CNIC), which will recommend approval or rejection of the project to the Ministry, relating to it being able to receive resources.

How to present a cultural proposal

The cultural proposal should be submitted exclusively through the SALIC, which can be accessed here. Upon registering the proposal, the applicant is required to prove its cultural objectives, and in cases of individuals attach the following documents:

  • Resume or portfolio, with emphasis on cultural activities in the area
  • Copy of a document containing a photo and signature, as well as the numbers of the Registro Geral - which is the Brazilian Identification Number, and of the CPF. In cases for foreigners applicants, the Cédula de Identidade do Estrangeiro issued by the Federative Republic of Brazil

In the case of a legal entity registering a cultural proposal, the following documents are required:

  • Report of cultural actions held by the entity
  • In the case where the entity was created less than two years before the application, a resume or portfolio should be attached to the cultural proposal, proving the cultural activities of its directors
  • Updated copy of the bylaws or articles of association duly registered
  • Copy of the minutes of the board of directors election meeting or copy of the term of office of its directors, duly registered, or copy of the act of appointment of its directors
  • Copy of the director’s document containing a photo and signature, as well as the numbers of the Brazilian Identification Number and of the CPF

It is important to mention that the period for registering cultural proposals starts on the 1st of February and ends on the 30th of November of each year. Moreover, no cultural proposals are accepted if registered less than 90 days from the date set for the start of project implementation.

For every cultural proposals the following documents are required:

  • Basic plan of promotion
  • Distribution plan, as well as the description of products to be distributed, including free ones, specifying the destination and values
  • Educational project with resume of the one responsible for the project, in cases of proposals which foresee lectures of cultural or artistic activities, intended for training or qualification of personnel in the culture area
  • Implementation plan containing workload and program content, in the case of workshops and other such activities of short duration
  • All intended sources for fundraising
  • Statement of obtaining the permission of the copyright holders in relation to the collections, works and images of third parties used in the project
  • Statement of obtaining license or equivalent authorization issued by the competent public body, in the case of events or cultural and artistic interventions in public spaces
  • Statement that the project will destine to cultural activities all good or permanent material to be purchased or produced with the resources coming from tax incentives, upon completion of the project or dissolution of the institution, as well as submission of receipts to accountability, in cases of targeting materials or resources to another cultural entity

The complete application process to receive resources through the Rouanet Law may last a maximum of 90 days.

It is noteworthy to mention that additional documents may be required depending on the nature of the project.

Fundraising for a Cultural Project

Cultural Projects that have already been approved by the Ministry of Culture can start fundraising. These projects are announced by the Ministry of Culture, and companies and individuals interested in sponsoring or donating to them can do so if they wish. But Cultural Project managers can present their projects to companies and other individuals in order to attract their investments also.

Critics of Rouanet Law

The main critic of the Rouanet Law consists in the government, instead of directly investing in culture it leaves the obligation of investing in culture to the private initiative, but then has the power to decide on which forms of culture deserve to be sponsored. The law has been criticized also because, instead of teaching companies to invest in culture, it has become a way of advertising for free. Other critics include the possibility of funds being diverted inappropriately.

Concerns are also raised whenever famous and already wealthy and successful artists are approved to receive funds through the Rouanet Law. Claudia Leitte, Rita Lee, Detonautas, Humberto Gessinger, and even The Brazilian Pink Floyd projects’ were approved to receive funds through the Rouanet Law.