In this article you will find information about two measures adopted by the Brazilian Government that provide tax reduction for technology business: Lei da Informática and Regime Especial de Tributação para a Plataforma de Exportação de Serviços de Tecnologia da Informação, also known as REPES.
Lei da Informática
Lei da Informática is a Brazilian law related to the IT sector of the economy. It concedes fiscal incentives to companies that operate in this sector, such as in hardware and automation areas, and that usually provide investments to Research and Development. The incentive is the IPI reduction of some products until 2019 and are used by the Federal government as a mechanism for encouraging innovation investments in the hardware and automation sectors in Brazil.
The fiscal benefits of Lei da Informática are designated to:
- computing industry
- automation industry
- technical services.
Benefits of the Lei da Informática
The reduction or exemption of IPI until 2019 is designated to all IT, automation and telecommunication goods produced in the country. All Brazilian regions are benefited by it, with the exception of Zona Franca de Manaus, that has a specific legislation. The percentage of reductions by region is mentioned below:
For IT and automation goods in general, the percentages of IPI reduction are:
|Period|| South and Southeast|| North, Northeast and Mid-West|
|2004 to 2014||80||95|
For IT and automation goods developed in the country, the percentages are:
|Period||South and Southeast||North, Northeast and Mid-West|
|2004 to 2014||95||exemption|
Requirements to Apply for the Lei da Informática Benefits
To receive the advantages of this legislation, companies must:
- invest in research and development
- present proof of fiscal regularity
- be a producer of any of the items whose production is encouraged by this law.
The company must submit its application for Lei da Informática benefits to the Ministry of Science, Technology and Information, which will analyse the proposal and concede or not the incentive. The application must present:
- information about the product
- details of the research and development project
- general information about the company
- general information about the production process
- the company must prove their investments through the Relatório Demonstrativo de Resultados, which is the Demonstrative Report of Results. It must contain all company data about company billing and investments.
Making Investments in Research and Development
The investments in Research and Development are known in Brazil as Investimentos em Pesquisa e Desenvolvimento or P&D. They must be made according to the revenue of the participating company on Lei da Informática. For companies that have an annual revenue inferior to BRL 15 million, the investment can be done internally. However, companies that have annual revenue above BRL 15 million must invest 4% of the revenue derived from products with incentive, from which:
- 2,16% shall be invested internally
- 1,84% shall be invested externally. The external investments are directed to researches, universities, regional superintendence and any other type of institution accredited by the Brazilian Government. The external investments will also be delivered to technical colleges in order to develop the technology industry in the country.
The Regime Especial de Tributação para a Plataforma de Exportação de Serviços de Tecnologia da Informação, known as REPES, is the special taxation regime for exporting of technology and IT services.
Who is Benefited by REPES
According to the Brazilian legislation, any company authorized by the Secretariat of the Federal Revenue can benefit from REPES. To have this authorization the company must:
- develop, exclusively, activities connected to the development of software or to IT services
- commit to export the equivalent of at least 60% of its annual gross revenue derived from the company sales or services.
The REPES exempts the company from the following taxation:
- PIS/Pasep and Cofins related to gross revenue derived from the sale of goods or services towards the internal market
- PIS/Pasep and Cofins related to imported goods and services
- IPI related to imported goods that don't have a similar produced locally.
Requirements to Apply for the REPES Benefits
According to the legislation, the aplication of REPES must be requested by the company through a form that must filled out and delivered to Delegacia da Receita Federal, also known as DRF, which is the Federal Revenue Police Station or to the Delegacia da Receita Federal de Administração Tributária, known as Derat, which is the Federal Revenue Police Station of Tax Administration. The form must contain:
- statute or articles of association
- indication of the company owner or the list of company's partners, presenting CPF and address of all of them
- list of shareholder companies, including CNPJ and address of all of them
- documents proofing fiscal regularity.
The REPES benefits will be conceded by the Ato Declaratório Executivo, also known as ADE, which is the Executive Declaration Act. This is issued through DRF or Derat and is published in the Official Journal of the Union.