Tax Breaks for Telecom Companies: Daily

By Leo Byrne, Contributing Reporter

RIO DE JANEIRO, BRAZIL – The federal government of Brazil yesterday announced plans to allow telecommunications companies tax breaks provided they make additional infrastructure investments totaling R$16 billion to R$18 billion before 2016. However in order to qualify for the waivers, the telecom firms will have to meet certain criteria.

The proposal will exempt any companies wishing to extend the service of 3G and develop 4G networks from the PIS (Social Integration Program), COFINS (Contribution for the Financing of Social Security) and IPI (Industrial Products) taxes.

Brazil’s Secretary of Telecommunications, Maximiliado Martinhão, said that companies qualifying for such exemptions from the PIS/COFINS and IPI will save 9.25 and 17 percent respectively. According to government figures this will equate to savings between R$3.8 billion and R$6 billion by 2016.

To take advantage of the incentives, companies must submit telecommunication network projects to the Communications Ministry by June 30th this year. Companies that submit plans that cater for the sharing of infrastructure with another company in the industry will have priority in the ministry’s analysis.

Any projects wishing to qualify will also have to be completed by December 31st, 2016, with government inspections being carried out to identify the status of the projects. The construction of 4G networks will also need to meet criteria outlining where the technology is manufactured.

It will be mandatory that fifty percent of equipment and components used in the next generation networks are manufactured in Brazil and that another twenty percent of the items used in the installation of the network will need certification by the MCT (Ministry of Science and Technology) to prove that they are domestic technologies.

Although by no means perfect, Brazil’s telecommunication infrastructure is expanding rapidly. Last year there was significant increase in 3G coverage in Brazil, while plans are also in motion to bring high-speed internet to the Amazon region.

Read more (in Portuguese).

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