The Brazilian aerospace industry is still small and fragile. That's why the Brazilian Government created Retaero, a tax incentives regime turned to increase and incentivate the production of aerospace national goods.
The Brazilian Normative Instruction RFB 1.186/2011 talks about Rataero – the Special Regime for the Brazilian Aviation Industry. A sectoral regime established by Articles 30 to 34 of the Provisional Measure 472/2009, strengthening incentives for the aviation industry in Brazil.
The regime aims to stimulate this national industry in order to increase the national production and get rid of the foreign dependence. In the country just a few companies operate in this sector, reflecting the low level of nationalization of aircraft produced in the country; main components and even simpler pieces are generally imported from abroad.
Tax Reduction Benefits
The legal entities accepted in Retaero will be exempt of the exigency of:
PIS/Pasep and Cofins
The PIS/Pasep and Cofins charged upon the revenue of a seller company are deferred when their transactions involve:
- Sales in the internal market of parts, pieces, instruments, components, equipments, systems, subsystems, inputs, and raw materials, when acquired by a member of Retaero to be used in the maintenance, preservation, modernization, repair, overhaul, conversion, and industrialization of aircraft classified in the 88,02 position of the NCM. These companies will be classified in Retaero as direct suppliers.
- Providing services of basic technology industrial, developing and technology innovation, technical assistance, and technology transfer services by a legal entity established in Brazil to a company accredited by Retaero.
- Rent of machines, appliances, instruments, and equipment when hired by a legal entity accredited by the Retaero.
Tax Over Industrial Products (IPI)
The IPI incident in the outcome of the industrial establishment will be deferred when the goods acquired in the internal market were performed by an industrial establishment of a legal entity accredited by the regime.
PIS/Pasep and Cofins Over Imports
Beneficiaries by Retaero won't have to pay PIS/Pasep and Cofins charged over the following imports/transactions:
- Parts, pieces, tools, components, equipment, systems, subsystems, inputs, and raw materials, or when providing services to be used in the maintenance, preservation, modernization, repair, overhaul, conversion, and industrialization of aircraft classified in the 88,02 position of the NCM. This companies will be classified in Retaero as direct supplier.
- Payment for basic technology, industrial, developing and technology innovation, technical assistance and technology transfer services designated to a company accredited by Retaero.
IPI Over Imports
The IPI incident over importation of the goods mentioned above is deferred for imports performed by industrial establishments of legal entities accredited by Retaero.
Who is Benefited?
A legal entity that produces one or more of the items comprised above are allowed to apply for an Retaero regime accreditation:
- Parts, pieces, tools, components, equipment, systems, subsystems, inputs, and raw materials, or providing services to be used in the maintenance, preservation, modernization, repair, overhaul, conversion, and industrialization of aircraft classified in the 88,02 position of the NCM. This companies will be classified in Retaero as direct supplier.
- Provide goods or services used as inputs in the production of the goods or services mentioned above, which means, that these companies must be suppliers only. These companies will be classified as Retaero non-direct supplier.
To be considered a legal entity that is predominantly a supplier, the company should have 70% or more of its sale of goods and services – in the calendar year immediately preceding the application - derived from sales to the following:
- legal entities referred to in the first item above.
- corporate aircraft manufacturers classified in the 88,02 position of the NCM.
- Exportation abroad.
To have access to Retaero benefits, the interested legal entity must:
- Accomplish the aeronautic homologation rules in the terms of the Security System for Flights.
- Previous empowerment in the Federal Revenue Secretariat (RFB).
- Fiscal regularity regarding taxes and contributions due to the RFB.
Asking for Application
The Retaero application must be requested in the RFB through the proper forms contained in Annexes I and II of the Normative Instruction. The forms must be filled and submitted to the Delegacia da Receita Federal do Brasil (DRF) or to the Delegacia Especial da Receita Federal do Brasil de Administração Tributária (DERAT) with jurisdiction over the establishment of corporate headquarters.
The forms must be accompanied by:
- Description of their business people in the public record of commercial companies or the articles of association in force, duly registered. In the case of business associations, as well as, in the case of business company incorporated as a joint stock company, the documents attesting the mandate of its managers must also be presented.
- Indication of the relationship between the business and its proprietor or partners, individuals, as well as directors, managers, administrators, and attorneys. Further, the registration number in the Register of Individuals (CPF) and their addresses should be indicated.
- List of corporate partners, indicating the registration number in the National Register of Legal Entities (CNPJ), as well as their respective partners, individuals, directors, managers, administrators, and prosecutors, including the number of CPF and addresses.
Besides this documentation, the legal entity to apply for the indirect supplier profile in Retaero must submit declarations proving that such entity meets the quota of 70% or more mentioned earlier in the article. The tax regularity of the applicant will be checked in an internal procedure by RFB, in relation to the taxes administered by it, before being dispensed other documents in the process.
End of the Process
The application will be formalized through the Executive Declaratory Act (ADE) issued by the Federal Revenue Service of Brazil and published in the Official Gazette (DOU). ADE will be issued for the CNPJ number of the matrix establishment and applies to all establishments of the legal applicant.