The Federal Government enabled the extension of sector-specific ICMS tax incentives enacted by state agreements under Complementary Law n.º 160/2017, as a means to foster national economic recovery. Port and airport activities are among the extension.
The Federal Government sanctioned Complementary Law n.º 186/2021, amending Complementary Law n.º 160/2017 to enable Brazilian states to postpone the fruition period of fiscal and financial incentives related to the ICMS tax (state-level tax on the circulation of goods) jointly agreed upon, applicable to specific activities. The extension of the validity of ICMS tax incentives is designed to foster national economic recovery.
Complementary Law n.º 160/2017 provides that Brazilian states may establish agreements that grant ICMS tax exemptions, reductions, and financial benefits to specific sectors or economic activities when such agreements are approved by a two-thirds majority of states plus a one-third approval from each national region.
The fruition period of such benefits, according to which the states may grant the tax incentives and unilaterally postpone their validity, varies according to sector and economic activity, defined in the second article of the law. More specifically, such agreements can provide ICMS tax benefits to any sector under a fruition period limited to 1-to-2 years (i.e., their effects may be valid until the end of the following year the agreement is adopted – in practice, between 1 and 2 years of validity). Specific sectors and activities are granted longer fruition periods, which were provided further extensions by new legal amendment (Complementary Law n.º 186/2021):
- Agriculture and industrial activities, and investments in transport infrastructure (article 3, paragraph 2, item “I”): the fruition period of benefits agreed by the Brazilian states may be valid until the end of the 15th year following the establishment of the agreement – no change provided by the new legal amendment;
- Port and airport activities related to international trade, including post-import operations (article 3, paragraph 2, item “II”): fruition periods may be valid until the end of the 15th year following the establishment of the agreement – the previous legal provision was limited to the 8th year post-establishment;
- Commercial activities in which the delivering company is the benefited company (article 3, paragraph 2, item “III”): fruition periods may be valid until the end of the 15th year following the establishment of the agreement – the previous legal provision was limited to the 5th year post-establishment; and
- Inter-state provision of in natura goods from the agriculture and extractive industry sectors (article 3, paragraph 2, item “IV”): fruition periods may be valid until the end of the 15th year following the establishment of the agreement – the previous legal provision was limited to the 3rd year post-establishment.
Existing agreements have 180 days to adapt to the amendments, otherwise the new provisions will be automatically incorporated.
