Tax Reduction for the Digital TV Industry in Brazil
The Brazilian government has a program of tax reduction for the digital TV industry named PATVD, which grants fiscal advantages to companies in order to encourage and increase the national development of this industry. Here we will outline the advantages of PATVD and who can take part on the program.
The Programa de Apoio ao Desenvolvimento Tecnológico da Indústria de Equipamentos para a TV Digital, also known as PATVD, is the Program of Support to the Technological Development of Equipments for the Television Industry. The companies that join the program will be benefited by the reduction of the following taxes:
The PIS/Cofins aliquot over the gross revenue will be reduced to zero when applied over new machines, devices, instruments and equipments used in the digital TV industry in Brazil. The sale of radio transmitter devices to digital television, incorporating radio broadcast receivers, sound or video recording or reproducing devices will also be included in the PATVD reductions: the aliquot of PIS/Cofins and IPI will be reduced to zero over these products.
The acquisition of capital goods and remittance to abroad over the payment – made by companies registered in the PATVD - will have the CIDE reduced to zero as well.
Companies Benefited by PATVD
Companies developing and producing radio transmitter devices to digital television will be benefited by the PATVD program. Set top boxes are not included in the list of products benefited by PATVD, because they take advantage of Zona Franca de Manaus incentives.
In order to take part of the PATVD, companies must:
- Take part of the Processo Produtivo Básico, also known as PPB, which is the Basic Productive Process.
- Invest in research and development inside the Brazilian territory.
Basic Productive Process
The Basic Productive Process is combination of production steps that companies must accomplish to produce a certain type of good in order to acquire fiscal benefits. The PPB is established by the Ministry of Development, Industry and Foreign Trade and by the Ministry of Science, Technology and Innovation. In this case, the PPB isrelated to the production of digital TV industrial goods.
Research and Development – P&D
The legal entity benefited by PATVD must invest annually at least 2,5% of its gross revenue in research and development of the digital TV industry in Brazil; 1% of this amount must be directed to centers or institutes of research or Brazilian educational entities.
These places must be accredited by the Comitê da Área de Tecnologia da Informação, known as CATI, which is the Committee Technology and Information, or accredited by the Comitê das Atividades de Pesquisa e Desenvolvimento na Amazônia, also known as CAPDA, which is the Committee of Activities of Research and Development in Amazônia.
The intellectual property developed by the research and development must be protected in the Brazilian territory by the proper government organization, in order to guarantee that the results generated by the benefited companies will stay in Brazil, improving the national economy, as the PATVS aims.
Applying for PATVD
The Federal Revenue Secretariat will perform the following process to allow the company to join the PATVD, the:
- collect data of the interested Company and the CNPJ
- verify that the company has no outstanding taxes related to Federal Revenue Secretariat
- decide if the company will or not be allowed to join the program
- inform the decision to the legal entity
Once the company is approved to join the PATVD, the Ato Declaratório Executivo, known as ADE, which is the Executive Declaratory Act, will be published in the Official Journal of the Union and in the Federal Revenue web page.