01/10/2017 16h39

Governor signs decrees that benefit Investe São Paulo projects

Economic and tax measures announced this Friday will stimulate 40 of the Agency’s projects

Investe São Paulo
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    Incentives are to harmonize the tax rules in the state

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  • Download Vanessa Portes/ISP

    Investe SP assists many projects that may benefit from the incentives

  • Download Divulgação

f the entire portfolio of 174 investment projects currently assisted by the export and investment promotion agency of São Paulo State Government, Investe SP, 40 may benefit from the tax measures announced on December 16 by Governor Geraldo Alckmin, at Palácio dos Bandeirantes, in the state capital.
These are projects related to the automotive, hygiene and beauty, and machinery and equipment industries. Combined, they have the potential to generate R$ 8.9 billion in investments and create 11,784 new jobs. Some of these projects had already been made public by the Agency over the last few years – these can be seen on the institution’s customer portfolio.

“One of the main consulting services we provide is bridging the relations between companies and the Ministry of Finance, helping those companies with tax-related matters or providing strategic information regarding the incentives available to investors. These measures announced today are also the result of our work,” explained the president of Investe SP, Juan Quirós.

Among the changes that will be introduced next week is the increase in the revenue limit to include a higher number of companies under the FDA, the State Surety Fund – associated with Desenvolve SP –, which will now accept companies that earn up to R$ 16 million/year, instead of R$ 3.6 million. With this, the government hopes to make access to credit easier. “Sometimes small businesses struggle to get the surety [to obtain credit], so this fund will provide guarantees to these businesses,” said Alckmin.

The vice governor and secretary of Economic Development, Science, Technology and Innovation, Márcio França, highlighted the importance fiscal stability has for maintaining jobs and investments. “Investors will seek out legal certainty. In São Paulo, they know the agreements they sign won’t change, and that our incentives benefit entire industries, not just individual companies,” he said.

“These decrees are responsible benefits that will increase revenue and, mainly, create jobs,” said Helcio Tokeshi, São Paulo State Finance Secretary.

Measures announced on Friday, December 16

Alckmin signed a series of decrees that harmonizes tax rules and reduces the burden on producers to encourage investments and bring operational costs down in the capital goods, automotive, agribusiness, and recycling industries.

With this the state government intends to improve the competitiveness of the state economy and support the chains consisting of thousands of companies with great potential for expanding business and opening new jobs.
“These measures include from agribusiness and poultry farming, which create many jobs, to the automotive industry. One such measure, Pró-Veículo, where accumulated ICMS tax credit can be used for investments, has led many large car manufacturers to open new factories in the state,” explained Alckmin.
Included in the set of changes are adjustments and mechanisms designed to protect the machinery and equipment industry against unlawful tax war incentives, while maintaining actions that aid the poultry farming, automotive, computer, and technology industries.
These acts signed by Governor Alckmin also introduce improvements in the tax legislation to prevent credit balances concerning ICMS on operations involving imports of raw materials, domestic trade of finished goods and interstate operations.

Business environment
One of the most important deliberations passed by Governor Alckmin is that the Department of Finance now can level the tax burden variation – between 18% and 25% for import operations, 12% and 25% for domestic operations, 12% for interstate operations, and as set forth by Resolution 13 of the Federal Senate, which established a 4% tax on imported products distributed to other states.

By analyzing specific cases, the Department of Finance may also, among other things, suspend part of the taxes in the clearance of raw materials or finished goods to prevent ICMS credit.

This will improve the overall business environment and make operations simpler and more efficient for industries with units supplied by São Paulo-based suppliers and companies that work with integrated chains that combine imported goods, local supply, and interstate trade, like the chemical, auto parts, and cosmetics industries, for instance. This improvement means an important incentive for concentrating and expanding the production lines within the state.

Capital goods
Governor Alckmin, in one of the acts geared towards the production sector, extended until April 30, 2017 the granting of ICMS credit to reduce taxes on the manufacture of wheel loaders, backhoe loaders, hydraulic excavators, and graders. This extension was given to preserve the competitiveness of the capital goods industry, which is up against unfair competition due to benefits offered to companies by other states engaged in tax wars.

Poultry farms operating in the state will have additional time to obtain working capital credit lines from Desenvolve SP, using their accumulated ICMS credit as surety. The government decree will extend the benefit until December 31, 2017. These companies will keep being competitive in a high-pressure environment where the costs with raw materials keep increasing and companies obtain benefits in tax wars.

The period for using ICMS credit to invest in assets in the automotive, computer, and technology sectors was extended until December 31, 2107. The Investments Incentive Programs for the Automotive (Pró-Veículo) and the Computer and Data Processing (Pró-Informática) industries, along with the São Paulo Technology Parks System (SPTec), all of which are aided by the measure, will allow companies in these sectors to use ICMS credit to modernize and expand their factories, develop new products, and build new plants in São Paulo State.

Recycling tires and rubber waste will be encouraged with the decree establishing a discount in the ICMS levied on carbon black (material used to reinforce rubber products) substances and fuel oil supplied to the industry. The recycling of tires and waste will bring many positive results to the environment and the shift in the payment of taxes will be an incentive for this sector. “We are encouraging tire recycling to prevent pollution,” said Alckmin.