Brazil Believes Tax Cut Will Give Big Boost to Information Technology

Brazil is expecting to almost double its investments in the information technology sector. That would be possible thanks to the approval of the new Information Technology Law.

The Brazilian minister of Science and Technology, Sérgio Rezende, forecasts an increase in investment by sector companies, which may rise as high as 1 billion reais (around US$ 460 million) by 2007.

This year, according to the minister, the investment should total  600 million reais (US$ 275 million).

The law was approved in 2004 and regulated last Monday, September 25, in a decree signed by Brazilian President Luiz Inácio Lula da Silva, which extended the sectors tax breaks from 2009 to 2019. Around 300 companies should be benefited, a figure that, according to the ministry, represents the main companies in the sector.

According to a spokesperson for the Presidency of the Republic, the law forecasts, for example, exemption of the Industrialized Product Tax (IPI) up to 2014 for companies in the North, Northeast and Midwest of the country, and 95% reduction of the same tax for companies in the South and Southeast of Brazil.

To obtain the incentives, companies in development or protection of information technology goods and services or in automation will have to invest 5% of revenues with products benefited by the law.

"This makes the company’s investment more real," evaluated the minister. Those who do not invest will turn the 5% to the National Fund for Scientific and Technological Development, plus an extra 12%.

Rezende estimates that tax breaks due to benefits will be around 1 billion reais (US$ 460 million). However, the government forecast is that the reduction in revenues will be compensated by an increase in sector productivity.

A study by the ministry points out that between 1993 and 2003, the government lost 5.1 billion reais (US$ 2.3 billion – the fruit of previous information technology regulations that also forecasted tax breaks). However, sector revenues in the period totaled 10.9 billion reais (US$ 5 billion).

Current revenues of the national information technology industry total 30 billion reais (US$ 13.8 billion), of which 18.5 billion reais (US$ 8.5 billion) come from products that fit into the information technology law.


  • Show Comments (6)

  • ch.c.

    Is Brazil Not A Banana Republic !
    OF COURSE IT IS ! Here is the demonstration, an old fact coming back in the news, after having been hidden…..of course :
    “”Bank of America, which recently took a stake in BrazilÀ¢€™s Banco ItaÀƒº, has agreed to pay a fine of just US$7.5m to end a legal process in the US that has lasted nearly three years and investigated the bankÀ¢€™s involvement through a branch in New York in money laundering activities involving billions of dollars originating in Brazil. Bofa has of course denied knowing the origin of the money and admitted only to faults in its systems for detecting money laundering and illegal funds.
    It is amazing how easily and cheaply big corporations can wriggle out of punishment for direct or indirect involvement in criminal activities and sadly the ever-closer relationship between politicians and big business has resulted in an increase in mass crime, and assured impunity for both, or in this case, BofA.
    Thirty-four individuals and sixteen small companies are being indicted though and will face civil suits in the US, whilst the same 34 are already involved in criminal suits in Brazil. These individuals and companies were mainly Brazilian black market foreign exchange dealers who used the BofA branch to put through literally billions of illegal Brazilian money À¢€“ a company based in Uruguay for example put US$3 billion through an account at this branch between May 2002 and April 2004 alone. And remittances of illegal money from Brazil to New York are estimated to have totaled US$19 billion between 1997 and today, which at todayÀ¢€™s values is equivalent to an astonishing US$41.5b À¢€“ and BofA hadnÀ¢€™t noticed anything strange! Of that amount, a New York District Court dealing with the case has only managed to freeze US$17.4m.
    One of the accused, HÀƒ©lio Laniado, who has dated some famous Brazilian beauties, is in prison in Curitiba after having been extradited from the Czech Republic in August. In Brazil, he is accused of illegally remitting US$1.1 billion no less to the United States. It is quite astonishing how someone could achieve this without bank cooperation. The Congressional Hearings in Brazil investigating Banestado (State Bank of ParanÀƒ¡) calculated that one single branch of the bank, in Foz de IguaÀƒ§u (border of Brazil, Paraguay and Argentina) remitted an astonishing R$ 150 billion out of the country between 1996 and 2002, and nobody saw anything!
    It is to be hoped that some of these black marketers will spill the beans, not only about who aided them to send all this money abroad, but also about whose money it was. The Brazilian and New York authorities have been working closely together on this matter, which probably means it will go nowhere.
    Bank of America was not the only one of course. Valley National Bank was another bank allegedly involved and for sure there were many more. One, Beacon Hill allegedly then transferred funds to countries in the Middle East and some may have been funds used by terrorist organizations. Ironic though is that another bank involved was Israel Discount Bank of New York”””

    Hey hey…..and this just involve New York banks.
    Nothing yet from Miami banks and foreign banks !

    Funny that the Brazilian Central Bank and the Brazilian government….DID NOT see so much money flowing out of the country, DESPITE the high bureaucracy to control everything !!!!!
    How could they find out a Reais 30’000.- account in the Palocci scandal…..but not tens and tens of billions moving out of the country ?????

    The reality is that Brazil is far worse than a Banana Republic. Brazil is a Tropical Mud, a Tropical Hell, a Tropical Marsh, governed by the biggest criminals and crooks on this planet. Everything is rotten to the roots.From left to right wings ! From top to bottom !
    And when things turn bleak, you accuse the IMF or the USA and the EU !

    A little bit too easy !

  • sad

    to Michael
    Come on……is Michael a nickname to hide your real first name….to appear smarter and better eduacted than you really are ?

  • ch.c.

    Just scroll the news on this site !
    Not so long ago there was an article on Brazilian PC and smuggling.

    Quite sad for you that it is not me that say that those who smuggle the most PCs are the various administrations…..but Brazilians stats in the article !!!!!

    As to your reasoning, a valuable software with millions and millions of programming lines cannot be produced cheaply if not sold by millions and millions of copies.
    It is like cars. To make it worthwile, cars must be produced in the millions, otherwise it wont be a profitable investment. And without a profitable investment there is simply no investments.
    Same for drugs and everything humans produce.

    As to my English, right it is not perfect, but not worse than 98 % of participants in this forum. This said, how many other languages do you speak and write as good or bad than my English ? from my side it is 5 languages. Therefore go back to languages schools instead of watching several hours per day your famous TV SOAP OPERAS !

    I understand that telling the truth to you is not something you appreciate. But afterall the truth and my sources always come from Brazilians stats or from recognized International Agencies rankings and/or comparisons.

    If you disagree with them, send your complaints to those that published the reports or the rankings.

    But STOP hiding with lies ! Simple

    No country of reasonable size on this planet ever came wealthy due to the natural resources in their ground.
    Just look at the ranking of the wealthiest countries, none have significant natural resources, most have NO natural resources.
    Therefore believing that you will become a developed country in 2 or 50 decades based on your vast natural resources is simply an heresy. Because you always said the same for the last 500 years…..and see where you stand by now !

    Enjoy your life in your dirty Tropical shit….since this is what you expect !

    Definitely, Brazil is a banana Republic governed by crooks….and you know it, just read your own frontpage newspapers.There is not a week without new revelations on new corruptions or Justice scandals involving the highest levels politicians.

    By the way my love partner is Brazilian. Not only does she agrees with me, but she hopes to never be obliged to return in Brazil, except for vacations….once every five years to see her family. Not more !

  • leiazao

    Comments of ch. c
    Your stupid guy what do you mean by

    Brazil is truly a banana republic ! Nothing works smoothly except crime rates and corruptions where you truly excel !

    How can you be that stupid by stating shut moronic bullshit. What happend with you before?? Did a Brazilian woman cheat on you, loser?

    Of course does anyone know that Brazil is not doing as well as they should!! But to say something about banana repulic, goes to far, even for you, an American loser whose wife cheated on with all your friends.

    Your conclusion is backed up with reasons made by yourself. Next time you start saying bullshit, please name your sources, which does not exist! Execpt the one about the Economic forum ranking. Something everyone could tell you.

    You are so stupid that you criticize all the writers from this page (newsroom in this case) when they write something good about Brazil!!!

    Your shithead, let me explain something to you: All Brazilian citzens now that Brazil could do far better than they are doing now, that is no secret LOSER!!! Hence it is not the aim of this site to state that under every article on this site.

    What you should do, is to comment on the article above, giving your conclusion, reasons and sources. Only then WE (reasonable people on this site) can give you some credit. Till now I can assure you that youÀ‚´re looking increasingly stupid by every comment you write, repeating the very same argument every time.

    Your are so STUPID that I discovered many FALLACIES in your reasoning. I am not a expert, so I can only name a few:
    – Searching for the perfect solutions: Thus why would IT producers creates good and cheap products.

    – Appeal to Popularity (Ad populum): Obviously that they can then ask a higher billing, include a high tax rate. The only problem is that since these computers are smuggled

    – Red Herring: 80% of your argument

    I just named a few fallacies in your reasoning: To give the good example I will say where you can find all this information to prevent being a incredible mule every time you write a comment:

    I really hope you will learn from me this time and will stop stating such bullshit which you can not back up with the right reasons and its sources!!!


  • Michael

    boy i’m tired of your useless comments
    you have to be one of the biggest losers I’ve ever had the displeasure of listening too…most of the time your rants have nothing to do with the article and you can’ t even write in proper English…you are embarrassing…shut up.

  • ch.c.

    strange calculations !
    Providing tax break to IT producers but not to IT end users is just worthless since IT producers will create products than they can sell to the most people. The more products are sold, the lowest the cost is….by simple maths.

    But taxing a PC with 100 % import tax doesnt make the computer affordable to 90 % of your population. Thus why would IT producers creates good and cheap products.

    In my country, the most productive in the world as per the recent World Economic Forum ranking, the VAT is 6,5 % and knowing that our average income per capita is at around 8 times your average national monthly wage of Reais 1036.-, you should understand that even an illegal part time maid can afford to buy a poweful PC provided she is litterate enough. While in Brazil only the middle class or higher can afford the same PC.
    By reducing the cost to the end user is the only way for success. No need to reduce taxes to the producers.
    Therefore once more you tackle a problem from the wrong side.

    Finally it is very curious that those who buy the most smuggled computers are not private citizens or corporations but Your Official Administrations from Municipalities/States and Federal government.
    Obviously that they can then ask a higher billing, include a high tax rate. The only problem is that since these computers are smuggled….the price difference and the tax rate charged but not paid….goes into the pockets of your corrupted bureaucrats and high levels politicians who obviously weant their slice of the cake. You just end up with high PC prices even in your administrations.

    You just put a voluntary autogoal….to yourselves !

    Brazil is truly a banana republic ! Nothing works smoothly except crime rates and corruptions where you truly excel !

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