Analysis

Tax and financial incentives

What are and how companies can benefit from these stimulus?

Federal incentives

Special tax regimes are provided by Brazilian legislation to benefit some specific economic activity sectors. In most cases, taxpayers must comply with the application requirements due for each special tax regime, as well as other special requirements and ancillary obligations.

Regional incentives

In the 1960s – Brazilian government implemented policies to counterbalance the Regional development by stimulating investments, consequently, economic growth on the lagging regions. As a result of these policies, Development Agencies were established in the North (Superintendence for the Development of the Amazon - SUDAM) and Northeast (Superintendence for the Development of the Northeast) regions with the purpose of coordinating the development funds and granting tax incentives.

State incentives

Statewide, tax incentive programs can reach up to 95 percent reduction on the ICMS (State Value Added Tax - VAT) due. These incentives, managed by the Finance or Economic Development State Departments, are granted differently by each state to investments in industries considered relevant to local economic development.

Municipal incentives

Several municipalities offer tax and non-tax incentives in order to promote investments. In return for the tax relief, the beneficiary must offer investments, jobs and the development for the municipality.

Long-term funding

In accordance with current investment incentive policies for economic and social development, Brazil has development agencies that provided approximately R$165 billions in 2014. Investment project financing is granted under special terms and conditions, at reduced interest rates that vary according to region, company size, and industry.

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