Decree extends tax reduction on investments
O Estado de S. Paulo - 04/01/2008
The companies that produce and process gas, the energy distributors, and the operators of privative ports and ducts will be entitled to tax reduction on their investments. According to the decree published in the Federal Official Gazette yesterday, these undertakings may be enrolled in the Special System of Incentives for the Development of the Infrastructure (Reidi) that currently benefits other areas, such as hydroelectric plants and roads. The modifications were made after meetings of the Federal Revenue Service with representatives of the Association of the Infrastructure and Capital Goods Industries (Abdib). "I believe the investments will now increase a little", evaluated the entity's president Paulo Godoy. The purpose of the Reidi is to encourage investments in infrastructure. The power plants of the Madeira River, and the federal roads concessions have already undergone public tenders counting on the program. It suspends for five years the collection of the Contribution for Financing Social Security (Cofins) and the contribution to the Social Integration Program (PIS) taxed on the purchase of construction material, as well as for the procurement of services. If, at the end of the period, the equipment or material is incorporated to the work, PIS and Cofins do not need to be collected. However, in eight months of existence, the Reidi was only able to benefit five projects, all of them in the area of electricity. The Ministry of Mines and Energy was the only Ministry to issue, up until now, the rules that the entrepreneurs must follow to be able to enroll their project in the Reidi. The Ministry of Transports and the Ministry of Cities, other possible ministries to be benefited from the program, are still elaborating their regulations. The decree issued yesterday aims at making some de-bottlenecking in the use of the program. One of the bottlenecks was the validity of the time frame. The previous rule said that the suspension of PIS/Cofins would have to be good for five years from the moment of the enrollment in the project at the Reidi on. Thus, long-term works, such as hydroelectric plants, would not be able to entirely disencumber the investments. With the wording of the new decree, the time frame starts counting from the purchase of the equipment or procurement of the service on. Another change was the inclusion of privative ports and ducts in the Reidi. The new wording also included the production and processing of gas, the co-generation and the distribution of energy, in addition to the acquisition of railway wagons and locomotives. The rule according to which a company that had problems with any project would lose the right to the disencumbering in the other works under its responsibility was also eliminated. Now, the control becomes to be made per project, instead of per company.