Senate passes bill authorizing tax breaks for IT companies

Friday, November 25, 2011

Brazil's Senate has passed a bill authorizing tax breaks for software and IT companies, among others, ICT association Brasscom said in a statement.

The bill now goes for presidential sanction, as it has also been passed in a plenary vote by the country's lower house.

The bill is derived from a government provisional decree (MP) issued under the Brasil Maior industrial plan and favoring the development of the IT sector in particular as a key requirement as the country prepares to host the 2014 World Cup and the 2016 Olympic Games.

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The tax breaks include social security tax (FGTS) relief on clothing, leather, footwear, information technologies (ICTs) and call center companies' payroll costs. Concerning the IT sector, instead of contributing with 20% of their payroll, contributions will be limited to 2.5% of their revenues. Call center companies do even better with a 1.5% tax rate.

All the concessions will be in force until 2014.

According to senator José Pimentel, the bill aims "to integrate government actions concerning industrial, technological and foreign trade policies and to boost the growth of productive investment and technological and innovation efforts of national companies, as well as increase the competitiveness of domestic goods and services."