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.



You May Also Like

Piranha: Deadly and Delicious

Larry M. Lynchby: Terry Caesar They had it even before we knew what was ...

U.S. Coast Guard to Check Brazil’s Ports for Security

As part of new security measures implanted by the International Maritime Organization (which has ...

Chinese Goods Grow 229% in Brazil. Sanctions Only After Talks with Beijing.

Brazil’s Minister of Development, Industry and Foreign Trade, Luiz Fernando Furlan, says that the ...

Brazil: Mercosur Opens Up to Arab World

Negotiations for the preference treaty between the Mercosur, the customs union between Argentina, Brazil, ...

In Guinea Bissau Brazil’s Interest Is Only Political

Brazil intends to effectively influence the democratization process in Guinea Bissau, country that was ...

Brazil Plane Bursts into Flames upon Landing. 200 Plus Feared Dead

An Airbus A320 from Brazilian TAM airline caught fire after landing in the airport ...

For IMF, Brazil is Reaping Fruits of Discipline

In 2004 there was a marked pickup in activity in most of Latin America, ...

Cafechocolat Café in China has Brazilian capital

Brazilians and Chinese Find Out How Tasty Brazil’s Coffee Is

Brazil is the world’s second largest consumer market for coffee. Last year, Brazilians drank ...

Brazil to Push Its Sweets in Asia and Eastern Europe

Brazilians are talking about increasing exports of chocolates and sweets to markets with great ...

For Lula and Brazil There’s No Salvation Outside the Left

The serious mistakes committed by the PT (Partido dos Trabalhadores – Workers Party), both ...