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Tax Reduction for IT Companies Extended
On August 11, the official gazette confirmed that the 80% reduction in IPI tax currently enjoyed by the IT industry due to expire at the end of this year is to be extended to 2024, after which a 75% reduction will be applied between 2025 and 2026 and a 70% reduction from 2027 until 2029.
IPI tax is a value added tax that is applied to all goods imported or manufactured in Brazil. The rate of IPI applied depends on the product, but averages around 10% of the assessed worth of the product (applied on an ad valorem basis).
The gazette also confirms that IT companies are required to invest at least five percent of their gross sales in research to develop the sector.
Additionally, the gazette confirms that the free trade areas of North Brazil will continue to provide additional tax benefits until the end of 2050, and the Manaus Free Trade Zone will be extended until 2073.