1/28/2012

INFRASTRUCTURE - Tax benefits for Private Investment in Brazilian Infrastructure Projects


Private Financing of Infrastructure Projects

Aiming private funds to finance new infrastructure projects in key areas such as logistics and mass public transportation, urban mobility, energy, telecommunications, sewage, and irrigation, the Brazilian Government issued new regulations regarding Infrastructure Investment Funds (IIF). In this light, the Brazilian Government offered tax benefits and exemptions  for national and foreign IIF investors and extended these tax incentives to reach debentures issued by Special Purpose Entities (SPE) that are created to carry out infrastructure projects.
The main features of these stimuli package are the following:
  • IIF–Debentures
    • At least 85% of IIFDebentures’ net equity must be invested in SPE’s debentures issued by 12.31.2015.
    • Exemption of Income Tax for:
      • Individuals.
      • Foreign corporations, except from tax havens.
    • 15% Income Tax for:
      • Brazilian corporations.
  • IIF–Securities
    • At least 90% of IIFSecurities’ net equity must be invested in SPE’s shares, subscription bonds, debentures, convertible debentures, options and other derivative products.
    • Exemption of Income Tax:
      • Individuals. 
      • Foreign corporations.
    • 15% Income Tax for:
      • Brazilian corporations.
  • Debentures
    • Issued by SPEs created to carry out infrastructure projects
    • Exemption of Income Tax:
      • Individuals.
      • Foreign corporations, if debentures were subject of public offer.
    • 15% Income Tax:
      • National corporations.
Mauricio Jayme e Silva. Pontíficia Universidade Católica de São Paulo (PUC-SP) Law School (J.D., 2000). Universidade de São Paulo Law School (LL.M., 2011). Visiting Scholar at Columbia Law School (2011-2012). E: mjayme@law.columbia.edu P. 201-563-0516. T. @MauricioJayme. 

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