As part of a regional development plan, Law 9,440/97 of 14 March 1997 grants several tax incentives to qualifying enterprises established in certain regions (e.g. northern, north eastern) of Brazil and engaged in the assembly and manufacture of specified items, such a qualifying vehicles for transporting passengers and cargo by land, farm and excavation tractors, trailers for transporting cargo and spare parts and other implements in connection with the above items.
The incentives include, among others:
- 100% relief from import duties on qualifying equipment or machinery and 90% relief on raw materials;
- exemption from excise tax (IPI) on the purchase of qualifying equipment or machinery;
- 45% relief from IPI on the purchase of raw materials, finished and semi-finished products;
- exemption from the financial transactions tax on exchange operations (IOF) in connection with the payment for imported goods; and
- exemption from income tax and surtax (AIR).
The incentives are granted until 1999, but they can be extended by decree until 2010.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Carlos S Romero, Deloitte Touche Tohmatsu, Sao Paulo, Brazil on Tel: +55 11 257 0122, Fax: +55 11 258 8456