Originally published in the April 28 edition of World Tax Daily (Copyrights Tax Analysts)
Brazil’s Chamber of Deputies is reviewing a law project that would reduce by 75 percent the 9 percent social contribution on net income (CSL) for new projects implemented in northern and northeastern Brazil.
Law 4,554/2008, presented to the chamber on December 12, 2008, by Deputy Marcelo Teixeira, would extend to the CSL the same tax reduction (of 75 percent) currently applicable to corporate income tax for new projects located in northeastern or northern Brazil under the jurisdiction of the Superintendence for the Development of Northeastern Brazil (SUDENE) or the Superintendence for the Development of the Amazon (SUDAM).1 The CSL reduction would be effective during the first 10 years after implementation.
According to Teixeira, the new CSL tax break could general millions of job positions in the SUDAM and SUDENE regions by making the regions more attractive to new investments. Teixeira said that the 75 percent tax break is one of the few corporate income tax breaks that has not been automatically extended to the CSL, which has a tax base similar to the corporate income tax, and that there is no reason not to extend it to the CSL.
The project has been under review by the chamber’s Commission for the Amazon, National Integration and Regional Development since March 10 and will also be reviewed by the Finance and Taxation Commission and the Constitution and Justice Commission.
The commissions have conclusive powers, meaning that if all three approve the law project, it will be forwarded directly to the Senate with no need for a vote by the chamber.
FOOTNOTE
1 The SUDAM and SUDENE regions include the states of Acre, Amapá, Amazonas, Mato Grosso, Rondônia, Roraima, Tocantins, Pará, Maranhão, Piauí, Ceará, Rio Grande do Norte, Paraíba, Pernambuco, Alagoas, Sergipe, Bahia, and several municipalities in the southeastern states of Minas Gerais and Espírito Santo.
END OF FOOTNOTE