Brazil has a natural gift for being a great host. The 2014 World Cup, the 2016 Summer Olympic Games and the Para Olympics World Games are wonderful opportunities to show international investors that Brazil has a strong and growing economy making it an attractive place to invest and do business.

Brazil’s federal government estimates investments of more than U$ 35 billion for the 2014 World Cup and U$ 14 billion for the 2016 Olympics. This amount is going to be invested primarily in infrastructure, including projects related to: civil construction, energy infrastructure, tourism, transportation systems, technological development, and enhancement of telecommunication systems.

The federal government has taken the first step toward securing these investments with the creation of the Special Tax Benefits Regime for Investments in Infrastructure - REIDI. REIDI allows eligible companies to avoid social contributions (PIS and COFINS) on purchases of new fixed assets (machinery, instruments, equipment, and construction materials) as well as on services used in infrastructure projects. REIDI also benefits investors by waiving PIS and COFINS on goods and services imported directly by the company for use in infrastructure projects.

On the state level, three ICMS Agreements (108/08, 133/08 and 39/09) authorize states to provide sales tax (ICMS) exemptions for transactions of goods that will be used in construction or modernization of World Cup stadiums. The same exemption was granted to national and imported goods for the Olympics and for the Para Olympics of 2016.

Cities including Rio de Janeiro, São Paulo, Belo Horizonte, Porto Alegre, Recife and Salvador have already enacted legislation providing tax benefits for services contracted by FIFA or the IOC. Property taxes are also suspended for specific projects.

Brazilian authorities want to make these international events a win-win situation for Brazil and international investors. Brazil will score a modern infrastructure that will support its aim to grow. Investors will find in Brazil impressive opportunities for profit, a wonderful opportunity to do business in one of the world’s most promising emerging markets and an open door to expand their business throughout South America.

For information on doing business in Brazil please contact João Paulo Fogaça de Almeida Fagundes (joao.fagundes@rfor.com.br) at Rayes, Fagundes & Oliveira Ramos Advogados Associados

Article Date: 1st July 2010

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