Investment Incentive Policies

In order to stimulate economic growth and attract investments to the State, the laws of the state of São Paulo provide tax incentives for various sectors, as well as instruments to enable the creation of public policies with the same objectives. Among them are:

  • Acquisition of machinery and equipment for fixed assets: Suspension of ICMS (Tax on Distribution of Goods and Services - similar to Sales Tax or VAT) levied on the import of goods with no locally manufactured equivalents and full credit of this tax at once in the acquisition of these goods from São Paulo state manufacturers, for the development of the activities listed in the law (Article 29 of the Transitory Provisions of the ICMS Regulations in the São Paulo - RICMS/SP);
  • Programs for the use of accumulated credit from ICMS in investment projects: These programs allow for the use of accumulated ICMS credits for the acquisition of any assets or goods, except consumption material, intended for the implementation of the investment project. These initiatives must comprise the modernization and expansion of industrial plants, the construction of new plants, development of new products and expansion of the business within the state. Also, there is the possibility of a special regime for the suspension or deferral of the tax due on the import or domestic acquisition of fixed assets. Below, we highlight some of these programs:
  • Incentive Program for the Railway Sector (Pró-Trens): This program simplifies and harmonizes the import and trade operations within the state of São Paulo with electro-diesel locomotives with maximum power of up to 3,000 HP, as well as their parts, elements and components, when made by businesses that provide repair services in these goods (Decree 55,901/10);

    1) Incentive Program for Investments Made by Automotive Manufacturers (Pró-Veículo): For manufacturers of automotive vehicles, machinery and equipment classified in Chapters 84 and 87 of the MERCOSUR Common Nomenclature (NCM), the program allows the usage of at least R$ 5 million of accrued credits and whose amount to be invested is at least R$ 30 million (Decree 53,051/08).

    2) Pró-Parques: Companies who possess accumulated ICMS credits of at least R$ 100 thousand and whose investment project is equal to or greater than R$ 500 thousand are allowed to use the credits when investing in projects based within one of the technological parks that are part of São Paulo Technological Parks System (SPTec) (Decree 53,826/08);

    3) Incentive Program for Investments made by Manufacturers of Electronic Data Processing and I.T. Products (Pró-Informática): This program is intended for manufacturers of electronic data processing products, contemplated by Article 4 of Federal Law 8,248/91 (Federal Information Technology Law); holders of accumulated credit in the amount equal to or greater than R$ 1 million and whose investment project is equal to or greater than R$ 5 million (Decree 54,904/09).
  • Incentive Program for the Railway Sector (Pró-Trens): This program simplifies and harmonizes the import and trade operations within the state of São Paulo with electro-diesel locomotives with maximum power of up to 3,000 HP, as well as their parts, elements and components, when made by businesses that provide repair services in these goods (Decree 55,901/10);
  • Computer Industry: Manufacturers of I.T. and Technology products listed in the Decree 51,624/07 may take a credit of 7% on interstate sales of such products. In the case of sales within the State of Sao Paulo, they may take a credit in the amount of the tax levied on this transaction, thus turning the tax burden to zero (Decree 51,624/07).

    The products listed in the Resolution N. 14/2013 of the Treasury Secretariat are benefited by a reduction in the tax base of ICMS on domestic sales so that the tax burden is lowered to 12% (Article 27 of Annex II of RICMS/SP);

    Also, there is the suspension of ICMS levied on customs clearance of pieces, parts, components and raw materials or deferral of ICMS in the acquisition of such items when the acquisition is made by manufacturers of electronic data processing products covered by Federal Law 8,248/91 who are established in the State of Sao Paulo;Reduction of ICMS tax base: Annex II to RICMS/SP lists various sectors and products who may benefit from a reduction of the calculation basis of the ICMS, including agricultural supplies, medicines, food products, textiles, home appliances and biogas and biomethane, among others;
  • Credits: Annex III to RICMS/SP lists various products and sectors who may benefit from ICMS credits that lower the tax burden, including transportation, wheat flour, dairy products and steel pipes, among others;
  • Rate of 12% in domestic transactions of various products, including wood boards, transportation services, stone and sand, agricultural implements and tractors, industrial machinery and equipment and generic medicine articles (Article 54 of RICMS/SP);
  • Special Simplified Export System: granted to taxpayers accredited in the Treasury Secretariat who comply with the legal requirements. The intention of this system is to allow for the deferral of ICMS in the domestic acquisition and suspension of the tax on the import of raw materials, intermediate products and packaging materials to be integrated into the manufacturing of goods intended for export (article 450-A et seq. of RICMS/SP);
  • São Paulo State Committee for the Evaluation of the Economic Development Policy: created by a Joint Ordinance of the Secretaries of Economic Development, Science, Technology and Innovation, Treasury and Planning in 2007, it is responsible for analyzing and proposing measures for: a) the expansion of investments and the demand for industrial and agro-industrial jobs; b) increasing competitiveness, improving management, product quality and technological development in the manufacturing sector of São Paulo; c) the adoption of parameters and criteria for granting and revoking tax incentives and benefits; d) proposing the modification and update of the legislation.

 

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