Brazil Issues Regulations for Taxation of Computer Manufacturers


Brazil Issues Regulations for Taxation of Computer Manufacturers


Originally published in the August 6, 2010 edition of World Tax Daily (Copyrights Tax Analysts)

Presidential Decree 7,243/2010, which regulates Brazil’s special tax regime for the acquisition of personal computers for educational use, was published in the official gazette on July 27.

The federal program — One Computer per Student (PROUCA) — was created by Provisional Measure 472/2009 (eventually converted into Law 12,249/2010). Computers for the PROUCA program should be acquired through a special incentive program (RECOMPE) that suspends the following taxes:

  • the IPI (federal excise tax) on domestic acquisitions of materials and intermediate products to be used in the manufacture of PROUCA computers;
  • the Program for Social Integration contribution (P.I.S.) and Contribution for the Financing of Social Security (COFINS) levied on gross income arising from domestic sales of materials and intermediate products to be used in the manufacture of PROUCA computers, and from sales of services rendered to RECOMPE companies;
  • the IPI, import tax, P.I.S., COFINS, and CIDE (10 percent royalty tax) on imports of goods and services to be used in the manufacture of PROUCA computers; and
  • the IPI on sales of computers made by RECOMPE companies under PROUCA.

Decree 7,243/2010 regulates the PROUCA and RECOMPE programs and establishes the basic production process that eligible taxpayers must follow to enjoy the RECOMPE tax breaks. It also regulates situations in which the benefits can be canceled by the tax administration because of a violation of the applicable rules and regulations by the taxpayer.

David Roberto R. Soares da Silva