This Monday the Regime for the Promotion of the Economy of Knowledge was published in the Official Gazette, so the law, which had been passed earlier this month by the Chamber of Deputies, was finally enacted. The standard promotes strong incentives for companies that invest in improvements in services and technology products, in training their employees and research and development, or that increase exports.
Legislation benefits the software industry, audiovisual production, biotechnology, bioinformatics, genetic engineering, nanoscience, aerospace and satellite industry, and nuclear engineering. In a timely manner, the law reaches “professional services, only to the extent that they are exportable” and within the legal sectors; general ledger; management consultancy; management and public relations; audit; compliance; tax and legal advice; translation and interpretation; management of human resources, or advertising, creation and conduct of advertising campaigns. Also to those of user experience design, product, user interface, web design, industrial design, textile design, clothing and footwear, graphic design, editorial design, interactive design; architectural and engineering. In order to access the incentives, the employee must be up to date on the “compliance with his tax, labor, trade union and forecast obligations duly accredited with the respective entity’s debt-free certificate”.
In the case of “micro-enterprises less than three years old from the beginning of activities, to access the scheme they must only prove that they carry out in the country, on their own account and as their main activity, some of the activities mentioned”.
The project was approved in Deputies on October 8, after returning from the Senate, with 133 positive votes, 5 negatives and 88 abstentions. The initiative was delayed by changes to the upper house, including a tax bond that is given to cancel debts, which will be non-transferable, and a segmentation between companies. This bond consists of a tax credit of up to 70% of employer contributions actually paid by employers to Social Security systems and subsystems, which “may be used for the term of twenty-four months from their issuance for the cancellation of national taxes”, except “income tax”.
As an additional incentive, this percentage will amount to 80% “in the case of new duly registered labour incorporations”, women, transvestite, transgender and transgender persons; professionals with postgraduate studies in engineering, exact or natural sciences; disabled; residents of “unfavourable areas and/or provinces of less relative development” or who, “prior to their recruitment, would have been beneficiaries of social plans, among other stakeholders to be incorporated”.
Also, the standard established “a reduction of one percentage from the total amount of income tax corresponding to the activity(s) promoted, determined in each financial year”, which will be between 60 and 20 per cent, depending on whether the company is micro and small, medium or large. In addition, for those “carrying out export operations” they shall not be “taxable subjects of withholdings and perceptions of value added tax”. In this way, all beneficiaries of this law “may consider as deductible expense” for the payment of profits, the amount “equivalent to similar levies actually paid or withheld abroad, on the occasion of income earned in consideration of activities”.
The subjects reached by the scheme “shall enjoy the stability of the benefits established by the scheme, in respect of its activity(s) promoted, from the date of its registration in the National Register of Beneficiaries of the Regime for the Promotion of the Economy of Knowledge, and for the term of its validity”, provided that they meet the necessary requirements.
