Originally published in the July 7 edition of World Tax Daily (Copyrights Tax Analysts – www.taxanalysts.com)
Brazil’s official gazette of July 1 published Law No. 11,732/2008, which introduces a new tax regime applicable to the country’s special export processing zones (ZPEs).
The law is the result of conversion into law of Provisional Measure 418, which was published in the official gazette February 15.
The text of the law does not include some proposals added by Congress during the legislative process, such as a full corporate income tax exemption and subsequent income tax reductions for ZPE companies. President Luiz Inácio Lula da Silva vetoed these additional tax breaks on signing the law.
Lula da Silva also vetoed a restriction created by Congress that subjected foreign-owned ZPE companies that enjoy tax breaks to a withholding tax of 25 percent on profits and dividends remitted outside Brazil.
David Roberto R. Soares da Silva