Some incentive modalities can be a great option for research and development and innovations subsidies, with deductions of up to 35% reduction in IPI brazilian tax and 50% in IR brazilian tax.
Achieving more productive processes and reducing resource and personnel costs requires constantly seeking new, more efficient ways to solve problems. In an increasingly decentralized and competitive market scenario, what was once considered a differential has now become essential.
One of the challenges faced by those who wish to innovate is the uncertainty of financial, accounting, and investment risks, which are often unclear. In these cases, it is common hiring consulting firms or specialists to implement processes or obtain guidance on the best investment conditions.
Despite the lack of clarity in some information, there are modalities with greater incentives that allow subsidizing innovative projects or equipment acquisitions aimed at improving productivity.
HVEX has over ten years of experience in R&D projects and develops products that fit into this investment model. To provide additional information, we have prepared this article addressing the main doubts on the subject to help you make assertive decisions.
Flowchart for accessing incentives for technology and innovation: Phases diagram of technology and innovation development processes
Technology and innovation promotion programs
With the aim of boosting economic development in Brazil, several innovation incentive programs have been created, each with its own characteristics and specific directions. The following technology and innovation incentive programs stand out:
1. ANEEL Research and Development
The Technological Research and Development Program in the electric power sector aims to foster and enable the entire cycle of research, development, and innovation (R&D&I). The program requires companies in the electric sector to allocate a minimum percentage of their Net Operating Revenue (NOR) to relevant projects aimed at improving services and products, seeking to enhance service delivery and safety.
This program is aimed at energy utilities, including generators, transmitters, and distributors. Companies have the possibility to submit R&D projects to ANEEL at any time, but only after the agency's approval will these projects be recognized as investments.
According to ANEEL, it is possible to invest in the following themes:
Alternative sources of electricity generation
Thermoelectric generation
Basin and Reservoir Management
Environment
Safety
Energy Efficiency
Electric Power System Planning
Electric Power System Operation
Supervision, Control, and Protection of Electric Power Systems
Quality and Reliability of Electric Power Services
Measurement, billing, and combating commercial losses
Program benefits:
Development of new products and services;
Technological development of processes and equipment;
Combating system losses;
Greater efficiency of networks;
Connections with new disruptive business models;
Improvement of energy quality and consumer life.
There are 3 groups of companies and institutions that can be part of ANEEL R&D:
Proposers: Generators, transmitters, and distributors; project proposers;
Project Executors: R&D institutes, higher education institutions, consulting firms, technology-based companies, or incubated companies;
Partners: Industries or other institutions interested in providing resources for project execution. More up-to-date information on ANEEL R&D norms can be found in the Technological Research and Development Program Manual for the electric power sector.
Source: https://www.gov.br/aneel/en/subjects/programa-de-pesquisa-desenvolvimento-e-inovacao
2. ANEEL Energy Efficiency Program
The Energy Efficiency Program, provided for in Law No. 9,991, aims to encourage and promote the energy efficiency in all sectors of the economy. This program also provides for the allocation of revenue by concessionaires and distributors of energy to R&D&I. Developed energy efficiency projects must demonstrate the relevance and economic viability of energy efficiency in the final use of energy, equipment, and processes. The EEP is also a program aimed at energy utilities.
Advantages:
mprovement in the quality of networks, systems, and installations;
Combating losses and efficiency of electrical systems;
Encouragement of the adoption of renewable energy sources;
Requirements:
Call for proposals from the concessionaire;
Demonstrate the importance and economic viability;
Present improvements in energy efficiency;
Evaluation of its results is done by the Superintendence of Research and Development and Energy Efficiency (SPE).
Source: https://www.gov.br/aneel/en/subjects/programa-de-eficiencia-energetica
3. FINEP
FINEP's mission is to promote Brazil's economic and social development through public funding for Science, Technology, and Innovation in companies, universities, technological institutes, and other public or private institutions.
Through FINEP, it is possible to finance new solutions to implement your Strategic Innovation Plan, which is divided into 5 project innovation modalities according to the institution's directives:
Critical Innovation: Aimed at strategic actions of interest to the country. It will apply to proposals demanded by the government expressing the need for technological development to meet national priorities of strategic interest. They qualify as strategic innovation plans resulting in the development of critical innovations.
Pioneering Innovation: Aimed at Strategic Innovation Plans that show a high degree of innovation and relevance to the benefited economic sector. Proposals must result in innovations through the development of new products, processes, or services unprecedented for Brazil.
Innovation for Competitiveness: Aimed at Strategic Innovation Plans focused on the development or significant improvement of products, processes, or services that also have the potential to impact the company's competitive positioning in the market.
Performance Innovation: Aimed at Strategic Innovation Plans that result in innovations of products, processes, or services within the company. These plans qualify as an organization's initiative to adopt an innovation strategy, although they may have a limited impact on the economic sector in which they are inserted. They can be focused on technological updates, through technology absorption or acquisition, impacting the company's productivity, cost structure, or the performance of its products and services.
Technological Diffusion for Innovation: Aimed at supporting the acquisition of machines, equipment, services, computer goods, and automation that provide modernization and increased productivity for the company, bringing relevant impacts on its performance and its innovation capacity.
Advantages:
FINEP operates its programs and products through reimbursable and non-reimbursable financial supports (which do not need to be repaid) and investment.
Eligibility:
The institutional arrangement must be composed, necessarily, of at least one Scientific, Technological, and Innovation Institution (ICT) and a Brazilian company;
The ICT will be the Executive Institution, responsible for the coordination and technical execution of the project carried out in Brazil;
The Proposing Institution, responsible for the managerial and financial execution of the project carried out in Brazil, may be the ICT itself or the Support Foundation
Find up-to-date information on FINEP financing conditions for innovation:
Source: http://www.finep.gov.br
4. FINAME
FINAME is the name of a type of financing that micro, small, and medium-sized companies can request from BNDES (Brazilian Development Bank), a public financial institution whose focus is to provide long-term capitalization.
In this loan modality, companies have the intermediary of a financial institution, which will make the request to BNDES, as shown in the flow explanation below. The focus of this financing is on acquisitions related to a company's machinery and equipment, which can include buses and trucks. FINAME focuses on domestic production, thus serving as a stimulus for the local economy.
Advantages:
A significant advantage of this financing modality refers to the terms, which can extend up to 10 years of financing, with a grace period of up to 02 years. BNDES participation rate can reach up to 100%.
Who can apply:
Companies headquartered in the country;
Foundations, associations, and cooperatives;
Entities and public bodies.
To be financed by BNDES FINAME, the machines and equipment must be accredited by BNDES.
Source: https://www.bndes.gov.br/wps/vanityurl/bndes-finame/
5. Law of Good (Lei do Bem)
Law No. 11,196, of November 21, 2005, known as the Law of Good (Lei do Bem) grants tax benefits to companies established in Brazil that develop projects of R&D in Technological Innovation.
It aims to stimulate private investment in projects of innovation, competitiveness, and protection in investments in projects with phases of uncertainties.
Among the definitions are characterized technological innovation of projects that ensure some requirements such as productivity gains, quality improvements, and competitiveness.
According to Decree No. 5,798/2006, the company can use the tax incentives for technological research activities and technological innovation development within the following modalities:
Technological Innovation
Directed Basic Research
Applied Research
Experimental Development
Basic Industrial Technology
Among the benefits offered by the Law of Good are:
Deduction of the invested value
Reduction of up to 50% of IPI
Accelerated depreciation
Accelerated amortization
Reduction to 0 (zero) of the IR rate on remittances abroad
Requirements for the company to access the benefit:
Make expenditures and investments in technological research activities and technological innovation development (R&D&I);
Be taxed under the Real Profit regime;
Have made a profit in the period in which it intends to use the benefit;
Prove tax regularity.
Source: https://www.gov.br/mcti/pt-br/acompanhe-o-mcti/lei-do-bem/paginas/o-que-e-a-lei-do-bem
6. Informatics Law (Lei da Informática)
The Informatics Law allows companies with local production of computer and automation goods according to the PPB (Basic Production Process) to acquire financial credit from federal taxes.
The benefits generated by participating in these programs, such as tax reductions, can facilitate the conversion of values into internal reinvestment, allowing the company to increase its investment in other sectors of the company, achieve greater competitiveness, and improve its market positioning. Interestingly, projects that involve some type of telecommunications can also benefit.
Advantages:
Possibility of reduction of ICMS brazilian tax, depending on the state of operation and registered product;
For companies that invest in R&D, granting financial credits related to the amount invested;
Reduction of PIS for companies that supply parts and components to industries covered by the informatics law.
Requirements:
Tax regularity;
Be in the real or presumed profit regime;
Certification 9001;
Comply with the PPB requirements in the manufacture of incentivized goods;
Profit-sharing program (PLR);
Have the NCM, in the list of incentivized products, NCM is the common nomenclature of Mercosur.
Which program is ideal for my company?
As you can see, each project fits into an appropriate context, which can be used in the development of new solutions or acquisition of machinery, at different characteristics and moments. The important thing is that you know what the options are and what the requirements and characteristics of each innovation promotion program are.
In order to facilitate your understanding, we have created a flowchart for you to have a better understanding of the programs and which can be used in the context of energy utilities and also in the case of electrical equipment industries. To access this material, click on the download button below.
We certainly believe that this information will be very useful in your decisions to find solutions that help your company stand out in innovation processes and reduce costs using one of these programs. If you liked this content, don't forget to subscribe to our newsletter to receive more articles like this and to share this guide on your social networks.
If you are interested in learning more about how to acquire one of our products through these financing modalities or to learn about our R&D projects, you can schedule a meeting with one of our consultants, where we can provide you with more information about these programs.