Brazil’s president, Dilma Rousseff, has signed a decree (7291) establishing a special tax regime for telecom networks. Part of the National Broadband Plan (PNBL for Programa Nacional de Banda Larga), the measure provides tax exemptions for equipment and work required for the deployment of telecommunication networks.
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The decree has been expected for the past five months—ever since the law (12715/12) that expanded the Brasil Maior plan was enacted in September of last year. President Rousseff signed the decree on Friday, and it was published in the Official Gazette on Feb. 18.
Decree 7291 covers telecommunication networks focused on fixed and mobile telephony, Internet and pay-TV. The government estimates that the tax breaks could reach U.S.$3.04 billion (R$6 billion) by 2016 and are expected to increase industry network investments to U.S.$8.12 billion (R$16 billion).
The measure provides an exemption for equipment, services and building materials related to the deployment, expansion and modernization of broadband networks. The benefits are detailed in the law 12715/2012 (read related story),
Under the decree, telecom companies can build new networks, acquiring domestic machines, appliances, instruments and new equipment as well as construction materials and labor, and the associated Brazilian taxes will be suspended including IPI (tax on manufactured products), PIS/PASEP (contribution to the social integration plan) and COFINS (contribution for social security financing).
But according to the decree, the suspension of taxes and social contributions will take effect only “after the completion of the project’s implementation and provided the goods or building materials have been used or incorporated into the work.”
Those interested in receiving these tax incentives have until June 30 to submit projects to the Ministry of Communications which in turn, has yet to specify the equipment that can be included under this new special tax regime.
The government also requires that the equipment be certified by the Anatel.
Smartphone incentives
According to the government, President Rousseff could sign the expected smartphone tax relief measure sometime in the next few days. It still depends on the backlog at the Ministry of Finance, which is evaluating the measure’s fiscal impact.
