Brazil's Congress approved a measure providing tax incentives for microprocessors. The measure exempts microprocessors worth less than R$11,000 from industrial product taxes in 2003, with the tax exemption amount gradually decreasing until it ends in 2009. To qualify for the incentives, companies must meet technical and production requirements and invest at least 2.5% of their net domestic revenue in research and development. The measure aims to stimulate growth in Brazil's information technology sector, continuing the government's history of using tax breaks for that purpose.

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I June 04 2003 - Brazil
I Congress rants tax incentives for mlcroprocessors.
Aok,A"ogouo, ""OC"OO; I
The Brazilian Congress has approved Provisory Measure 100/02, which provides that industrial I
product tax will not be charged on microprocessors worth less than R11 ,000 in 2003, The proposal
foresees that after 2003, the amount of tax levied will continue to be reduced, by 95% in 2004 and
2005, and by 70% between 2006 and 2009 (when the tax relief will cease).
In arder to be able to take advantage of this incentive, companies wifl need to (i) meet certain
technical and production requirements, and (ii) invest at least 2.5% of the;r net domestic revenue in
research and development.
This provisory measure amends Laws 8248/91, 8387/91 and 10176/01, ali ofwhich oversee the
competitiveness of the information technology sector. The government has a history of using tax
incentives to stimulate growth in the IT sector, granting tax relieffor computers and electronic goods
in 2000.
Erica Aoki, Aoki e Farias Advogados Associados, Sao Paulo
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