The Brazilian Senate approved, in the month of July, the Legislative Bill no. PLS 764/201, amending the Law no. 11.508, of July 20th, 2007, which sets forth provisions on the tax, exchange and administrative regimes of the Export Processing Zones (ZPE´s).
ZPEs are free trade zones with foreign countries, set up in less developed regions of the country destined to installation of companies aimed at the production of goods to be sold abroad, and deemed as primary zones for customs control purposes.
The Companies authorized to operate in these free trade zones (ZPEs) will enjoy, during a term of up to 20 years, the following tax benefits:
- suspension of federal taxes (Customs Duty (II); Tax on Manufactured Products (IPI); Social Integration Program (PIS); COFINS; PIS-Import, COFINS-Import; and Freight Surcharge for Renovation of Merchant Marine (AFRMM) levied upon imports or acquisitions, in the domestic market, of brand-new or used pieces of equipment, machinery, apparatuses and instruments, as well as raw materials, intermediate products and packing materials necessary for industrial installation or intended to integrate the productive process or fixed assets;
- 75% reduction of the income tax and surcharges for a term of 10 years for Companies installed in the areas of SUDAM or SUDENE;
- reduction to zero of the income tax rate on remittances abroad destined to the payment of market research expenses for Brazilian export products, as well as revenues from participation in events related to the promotion of Brazilian products;
- reduction of up to 95% of the Tax on Manufactured Products (IPI);
- deductions and exclusions from the corporate income tax (IRPJ)´s and Social Contribution on Net Income (CSLL) ´s tax base;
- simplified customs procedure, with waiver of license or authorization from federal agencies in imports and exports, with the exception of health/sanitation related controls, national security interests and environmental protection;
- exchange freedom, with the possibility of keeping the totality of the export revenues in a financial institution abroad;
The law requires that for a company to obtain the benefits cited above, the company must keep a gross export revenue of at least 80% of its total sale of goods and services, once excluded the taxes and contributions.
Although there are 24 authorized ZPEs in Brazil, none of them are in operation.
Given that the provisions of the law were not sufficient to boost the Export Processing Zones (ZPEs)´s development, the Legislative Bill no PLS 764/2011 was created, whose primary measure attenuates the requirement of a minimum revenue of 80% in exports. As per the project approved by the Senate, the companies located in EPZs in the Northern, Northeastern and Central-western regions will be entitled to tax benefits, observing a gradual scale of commitment of revenue in exports. In the first year of operation, the commitment is only 20%. In the second year, the requirement increases to 40%, and in the third, to 50%, until reaching 60% as of the fourth year.
The bill will now be sent to be voted by the House of Representatives members. Session.