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4 years ago
Brazil extends tax breaks to new sectors, electricity compensation
April 5, 2013 / 1:46 PM / 4 years ago

Brazil extends tax breaks to new sectors, electricity compensation

2 Min Read

BRASILIA, April 5 (Reuters) - Brazil extended tax breaks to new sectors and also reduced taxes on compensation to be paid to electricity companies, according to a presidential decree published in the official diary late on Thursday.

The decree changes the tax structure for infrastructure construction firms and engineering firms, which will move to a tax system based on 2 percent of gross revenue, as opposed to 20 percent of payrolls under the current structure.

Since last year, President Dilma Rousseff's government has given tax breaks to dozens of industries, such as carmakers and other durable goods manufacturers, in an effort to revive an economy that is struggling to regain the red-hot growth rates that made it an emerging market star.

News organizations, airport infrastructure companies and port services companies will also benefit from the new tax structure, the decree said.

Last year, Rousseff's government enacted legislation to cut power rates by renegotiating the terms of electricity concessions. Companies that declined to accept sharply-lower government-mandated rates had the option of giving up their concessions in exchange for compensation.

The government will also pay billions of dollars to companies that signed new concession deals to compensate for their previous investment. Under the terms of the decree, those companies will not be subject to federal taxes on that compensation.

Last month, Trade and Industry Minister Fernando Pimentel said Brazil's government plans to extend payroll tax exemptions to all Brazilian manufacturing industries to boost investment and growth.

Representatives from Brazil's finance ministry declined to comment.

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