At the end of last year Law 13,969 was published, regulating the industrial policy for the sectors of information technology and communications (ITC), as well as semiconductors, changing the legislation in force since the 90´s.
In general terms, the new legislation, which will be in force, as of April this year, for the next ten years, replaces the IPI incentives for ITC products and the PIS and COFINS incentives for the semiconductor products, which were invalidated by WTO, for financial credits which correspond to certain multiples of the expenses of the companies with activities of research, development and innovation. The resulting credit is limited to certain percentages of the gross revenues in the domestic market derived from the sales of ITC products defined in the legislation, produced in accordance with the respective PPBs (Basic Productive Processes). These percentages vary between 13.65% and 9.56%, depending on the location of the company, origin of the technology and period to which the benefit refers.
The same gross revenues will be the basis for the consideration required from the companies enjoying the benefits, which corresponds to investments in activities of research, development and innovation of at least 4% of that basis, a portion of which necessarily directed to investments specified in the law (agreements with scientific institutions, contributions to FNDCT – a federal development fund, and investments in programs and projects of national interest, as defined by the competent Ministry).
There is still an alternative system to determine the financial credits, based on points expected and achieved in the execution of certain PPBs, applied over the minimum required investment amount referred to above.
The financial credits may be used to offset federal taxes within a term of up to five years, or may be refunded in cash (there are some specific limitations to the offset of such credits, in addition to those provided for in the general legislation that regulates the offset of federal taxes). In any case, the financial credits will not comprise the taxable basis of the corporate taxes, PIS and COFINS (these last two, taxes on gross revenues).
Any litigation regarding the offset of the credits in question will follow the general procedure applicable to assessments of federal taxes, with the possibility of appeals to the Administrative Tax Court (CARF).
The companies already enrolled for the benefits of the prior IT legislation are considered automatically enrolled for the benefit of the financial credit, in replacement for the incentives revoked.
Our team is available to clarify any aspects of this new legislation, which is still pending further regulation of some of its provisions.