Under Provisional Measure* 563 announced in early April, a program offering reduced employer social security contributions (INSS) previously available to companies on a small list of industries has been expanded to include eleven new industries. Until December 31, 2014, companies in the hospitality, IT and ICT, call center, and computer chip industries, as well as those involved in auto parts, textiles, clothing, leather and footwear, furniture, plastic, electrical goods, buses, shipyard, and aviation sectors, may benefit from reduced social security contribution rates of 1 to 2% on gross sales, excluding cancelled sales and unconditional discounts granted.
Another tax incentive (reduced Income Tax, IPI, Pis and Cofins rates) has been extended for companies involved in the manufacturing process of semiconductors, electronic devices, and various displays.
Provisional Measure 563 also introduced amendments to Transfer Pricing rules and a special tax regime for participants in Brazil’s National Broadband Program. Companies involved in expanding and supporting telecom and broadband, and those in related hardware and software production may qualify.
For a perspective on the potential impact of the stimulus package on the information and telecommunications sectors, which currently employs a high percentage of workers who were not hired under labor law rules, please see this RCR Wireless/Americas article.
* A Provisional Measure in Brazil is issued by the President, with the authority of law until approved by Congress (which must occur within a 120-day period). If Congress does not approve a Provisional Measure within 120 days, it is no longer valid.
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