Brasília – Infrastructure projects in seven different sectors will soon be able to count on incentives on the stock exchange. A decree issued by president Dilma Rousseff and the Finance minister, Guido Mantega, regulates the procedure for companies to raise funds for initiatives regarded as priorities, considerados prioritários, with discounts off the Income Tax (IR).
The decree ascribes priority to the fields of logistics and transport, urban mobility, energy, telecommunications, radio broadcasting, basic sanitation, and irrigation. The projects must be submitted to the ministries in each sector, which will then issue directives listing the works eligible for the benefit.
Through the benefit, companies in charge of the projects will be able to issue debentures (private bonds) to raise funds. Buyers will pay less tax income. Natural persons and foreigners will pay no tax. Domestic companies will pay 15% on the debentures’ dividends, instead of 34% on net profit.
The discount off the IR is only valid for four-year-term debentures or longer, are adjusted by inflation, by prefixed rates (set in advance) and if the issuer company is unable to repurchase the debenture. As with any bond, the issuer borrows money from investors, uses the fund to a specific end, and commits to paying it back with interest.
Passed through a provisional measure (MP) issued in December last year, the fiscal incentive took nearly a year to be regulated. According to the joint executive secretary at the Ministry of Finance, Dyogo Oliveira, the delay was due to the fact that the National Congress only passed the MP in August.
The secretary also informed that the businessmen themselves requested for each ministry to be in charge of passing the projects. “They want to be safer on issuing [debentures] and prevent the market itself from deciding which projects are a priority,” he explained.
*Translated by Gabriel Pomerancblum
