Four tips for expanding companies’ access to the Good Law

An innovation specialist says that despite the need for new structural policies, knowledge of special tax exemption mechanisms contributes to higher R&D investments.

A Law of the Good (11,196) is a special tax exemption mechanism created in 2005 to stimulate technological development and increase the competitiveness of domestic industry. Despite being 18 years old, this law – which should be seen as a stimulus to research, development and innovation (RD&I) activities in Brazilian companies – is still underused. In 2020, this benefited from the tax incentive 2,564 domestic companies that invested BRL 14 billion in RD&I and got BRL 3.87 billion tax exemption. In 2021, 3,012 companies joined the benefit, 15% higher than the previous year.

At the end of 2022, the Science and Technology, Communication and IT Commission of the Chamber of Deputies approved a proposal that makes several changes to the Law of the Good. One of the changes proposed by the rapporteur, deputy Vitor Lippi (PSDB-SP), would be to allow investments in innovation to generate tax credits that companies will be able to use in periods following their realization – as currently the discount is granted in the year in which the expenses are calculated.

“The company that invests in RD&I is not sure whether it will be able to calculate the accounting profit that year. Under the current rule, the company loses the advantage when it has a loss, which is a big disincentive for investment “, says the deputy. Another change proposed by the rapporteur broadens the scope of the Lei do Bem for startups, as defined by Legal framework of startups. In this sense, Lippi proposes a new article of law to regulate the discounts to which companies are entitled on the basis of investments in innovation-oriented Equity Investment Funds (FIP).

According to the innovation specialist and director of operations of the international consultancy firm GAC Brazil Rodrigo Miranda, while the proposed changes are worked out definitively, it is important that companies become more aware of the Lei do Bem. “Companies that are developing and implementing projects related to digital transformation, digitization, green economy, sustainability, as well as new products, processes or systems, can have their RD&I activities covered by this very important tax advantage”.

Miranda recognizes the need for new structural policies as he expands access to the Lei do Bem, knowing that the number of companies enjoying the tax exemption should be much higher. “Today, this incentive is underutilized nationwide. Only five thousand companies have used it in the last 17 years – whereas last year there were only three thousand. With the changes under discussion, there could be an almost immediate increase from 150% to 200%. number of companies benefiting annually from this tax reduction. As a result, all would be encouraged to invest even more in innovation.”

Next, points out the innovation specialist four points to facilitate companies’ access to the Lei do Bem:

1. Public-private partnership. “When it comes to Lei do Bem, there is a great incentive for companies and universities to establish cooperation agreements, with complementary actions. The research environment must be totally conducive to innovation. The partnership between the private sector and academia further facilitates and strengthens innovation, and can also generate disruptive factors”.
2. Description of the project. “In addition to participating in public notices, filling in the application form it’s quite thorough. The requesting company must be very attentive to the information requested and the project description must be very detailed so as to leave no doubts about the necessary requirements for an RD&I project”.
3. Expense mapping. “It is essential that the company is organized and clear in detailing the expenses, investments and human resources involved in the RD&I project. The more transparent these requests are, the easier it will be to understand the right to tax relief provided for by the Lei do Bene” .
4. specialized support. “The legislation has several peculiarities. Having professionals with technical and practical knowledge can help identify investment opportunities in innovation, and prepare and present projects accordingly.”

Website: https://group-gac.com.br

Source: Terra

Rose

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