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INVESTIMENTOS EM INFRAESTRUTURA NO BRASIL

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Elapsed=00:00:00.0665293

12/3/2013 10:00 PM Demarest News

 A. Introduction
1. In order to enhance fund raising mechanisms for long-term financing, special securities providing beneficial tax regimes were created as a result of Federal Law No. 12,431/2011, as amended by Federal Law No. 12,715/2012, and regulated by Presidential Decree No. 7,603/2011.
2. Federal Law No. 12,431/2011 was amended by Provisional Measure No. 601/2012, mainly to include receivables funds ("FIDC") shares as securities subject to the tax benefits provided by this regulation. Nevertheless, the effectiveness of the Provisional Measure No. 601/2012 expired, considering that it was not analyzed by the National Congress within the term required for its conversion into law.
3. Meanwhile, Federal Law No. 12,844/2013, recently published, amends Federal Law No. 12,431/2011, in order to implement, mostly, the changes originally proposed by Provisional Measure No. 601/2012, as well as new provisions, in particular (i) to define the applicable tax benefits for investments made by sovereign wealth funds; (ii) to include the certificates of real estate receivables ("CRI") in the list of securities of article 2 of the Federal Law No. 12,431/2011; (iii) to establish the terms for the compliance with portfolio requirements by investment funds regulated by Federal Law No. 12,431/2011; and (iv) to define the earnings subject to the income tax benefit described in article 3 of the Federal Law No. 12,431/2011.
4. Considering the amendment proposals and changes mentioned above, below is a summary of the main aspects governing the securities regulated by Federal Law No. 12,431/2011, highlighting the amendments arising from Federal Law No. 12,844/2013.
B. Securities for Long-Term Financing - Description
5. Introduction. The securities created by Federal Law No. 12,431/2011 (jointly referred to as "Long-Term Securities") comprise
(i) investment project securities ("PS"), including typical securities from securitization transactions: (a) certificates of real estate receivables (“P-CRI”)[1]; and (b) shares issued by FIDCs incorporated as closed-end condominiums, which acquire receivables from non-financial institutions ("P-FIDC")[2];
(ii) securities to finance investment projects qualified as priorities by the Federal Government (priority project securities, jointly referred to as "PPS"), issued until December 31, 2015, including: (a) priority projects bonds (including infrastructure bonds) (“PP-Bonds”); (b) shares issued by FIDCs incorporated as closed-end condominiums ("PP-FIDC"); and (c) certificates of real estate receivables ("PP-CRI").
(iii) PPS funds ("PP-Fund"), authorized to operate by the applicable regulation, as issued by the Brazilian Securities and Exchange Commission (in Portuguese, Comissão de Valores Mobiliários, or just "CVM").
PS, P-CRI and P-FIDC
6. PS. Securities issued by non-financial institutions for public offering, as regulated by the CVM, are qualified as PS, provided the following requirements are complied with:
(i) Predetermined interest rates only, linked to a price index or referential rate, not being permitted any adjustment of interest at post-fixed rate;
(ii) Weighted average maturity term higher than 4 years;
(iii) Interest payment within intervals of, at least, 180 days;
(iv) No repurchase option by the issuer or its related parties in the first 2 years after the offering, nor call option or prepayment by the issuer, except as provided for in a regulation to be enacted by the National Monetary Council (in Portuguese, Conselho Monetário Nacional, or “CMN”);
(v) No provision requiring the investor to resell the securities;
(vi) Evidence of registration of the PS with systems duly authorized by the Central Bank of Brazil or the CVM, as applicable[3]; and
(vii) Simplified procedure evidencing commitment to allocate the proceeds in future payments related to the investment projects or reimbursement of expenses, costs or debts related to investment projects, incurred up to 24 months prior to the closing of the securities offering[4].
7. P-CRI. CRIs are securities issued by securitization companies, backed by the corresponding real estate-related receivables. Federal Law 12,715/2012 amended Federal Law 12,431/2011 to include P-CRI within the beneficial tax regime for Non-Resident Investors (as defined and described below). Each PS-related requirement above also applies to P-CRI - and the restriction referred to in item 6(iv) above encompasses the assignor or originator of the receivables backing the P-CRI.
8. P-FIDC. Federal Law 12,844/2013 established that shares issued by P-FIDC are subject to the tax benefits, for Non-Resident Investors, granted by Federal Law No. 12,431/2011. For such purposes, the P-FIDC must comply with the following requirements:
(i) Shares profitability must refer to a predetermined interest rate and linked to a price index or referential rate;
(ii) Fund's minimum term of six years;
(iii) No share-repurchase option by the receivables' assignor or originator, nor by their related parties, except for subordinated shares;
(iv) Mandatory provision in the fund's documents (receivables assignment agreement, fund's by-laws and offering's prospectus, as applicable), according to CVM's regulation, regarding the following:
(a) purposes of the beneficiary projects;
(b) estimated term for start-up and termination of related projects or, for on-going projects, description of the current phase and estimative of termination;
(c) estimated amount of funds necessary to implement the project or additional potential projects necessary to conclude the on-going project; and
(d) estimated percentage expected from the assignment of receivables, compared to the total demand of funds by the beneficiary projects;
(v) At least eight five percent of its net equity must be represented by receivables and the remaining part must be invested directly in federal government bonds, transactions backed by federal government bonds or shares issued by investment funds that invest in federal government bonds.
9. Originator Concentration. Federal Law No. 12,844/2013 clarified that FIDCs and P-CRI may acquire receivables from only one assignor or debtor, or companies belonging to the same economic group.
PPS, PP-Bonds, PP-CRI and PP-FIDC
10. PPS. As per Federal Law No. 12,844/2013, resident and non-resident investors which acquire shares issued by PP-FIDC and the PP-CRI may also be beneficiary of the tax regime applicable to PP-Bonds, described below.
10.1. PP-Bonds. PP-Bonds issuers must be qualified as: (i) a special purpose company ("SPC") dedicated to implement a priority investment project; or (ii) a holding company having one or more SPCs as subsidiaries; or (iii) a utility company (in Portuguese, concessionária, permissionária, autorizatária and arrendatária[5]) (“Issuer”).
10.2. PP-CRI. As previously mentioned, Federal Law No. 12,431/2011 was amended by Federal Law No. 12,844/2013 to extend to PP-CRI, incorporated as described in item 9, above, the tax benefits applicable to PP-Bonds.
10.3. PP-FIDC. As previously mentioned, Federal Law No. 12,431/2011 was amended by Federal Law No. 12,844/2013 to extend to shares issued by a PP-FIDC, incorporated as described in item 9, above, the tax benefits applicable to PP-Bonds.
10.4. Investment in Priority Projects. Funds raised by offerings of PP-Bonds, PP-CRI or PP-FIDC shares need to be used by the PP-Bonds issuer or receivables assignor, as applicable, for (i) future financing of priority investment projects in infrastructure or research, development and innovation, or (ii) reimbursement of expenses, costs or debts related thereto, incurred up to 24 months prior to the closing of the securities offering (“Priority Investment Projects”).
10.5. Use of proceeds. Accordingly, eligibility to a priority status depends on the presentation of a request for approval of the investment project by the competent Ministry, as set forth in Decree No. 7,603/2011 and the regulation enacted by each Ministry described below.
 
 
Area
Governmental Entity
Regulation
Airports
National Bureau of Civil Aviation
Rule No. 18/2012
Transportation & Logistics
Ministry of Transportation
Rule No. 9/2012
Ports
Department of Ports
Rule No.9/2012
Evergy
Ministry of Mines and Energy
 
Rule No.47/2012 e 282/2013
Gas
Ministry of Mines and Energy
 
Rule No. 206/2012
Irrigation
Ministry of National Integration
 
Rule No.76/2012
Telecom
Ministry of Communication
 
Rule No. 330/2012
Technology, Innovation and Research
Ministry of Science, Technology and Innovation
Rule No.868/2012
Basic Sanitation and Urban Mobility
Ministry of Cities
 
Rule No.481/2012 e 482/2012
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
PP-Fund
11. PP-Fund. Shares issued by a PP-Fund are also subject to a special regulation and taxation regime established by Federal Law No. 12,431/2011, as amended.
11.1. Portfolio requirements. A PP-Fund needs to be incorporated by asset managers authorized to operate as such by the CVM, and to comply with specific portfolio requirements, until 180 days as from the first payment of subscribed PP-FIDC shares, to wit: (i) at least 67% of its net equity must be invested directly in PPS, subject to the regulation applicable to each type of investment fund, within two years following the first payment of subscribed PP-FIDC shares; and (ii) at least 85% must be invested in PPS after the first two years mentioned in item (i), above[6].
11.2. Correction. The maximum term for correction of non-compliance with the portfolio requirements above below is 90 days. In addition, Federal Law No. 12,844/2013 amended the 5th paragraph of article 3 of Federal Law No. 12,431/2011, to establish that the breach of rules regarding the PP-FIDC's portfolio requirements for three times, for no maximum or minimum term, would have the same effects as the lack of compliance with such rules during 90 days, namely, the applicability of a different income taxation regime, liquidation or transformation of the PP-Fund, pursuant to paragraph 6 of article 3 of Federal Law No. 12,431/2011.
11.3. Reframing. Considering the terms and penalties described above, Federal Law No. 12,844/2013 included the paragraph 5-A wording in article 3 of the Federal Law No. 12,431/2011 to establish that, after the reframing conditions are complied with and the fund's portfolio requirements referred to in article 3 and described above are corrected, such fund shall be reframed as a PP-FIDC and, therefore, subject to the tax regime referred to in article 3 from the first day of the calendar year following the event of default mentioned in item 11.2, above.
C. Securities for Long-Term Financing - Taxation
12. Introduction. Federal Law No. 12,431/2011 created a special tax regime for investments in Long-Term Securities.
12.1. PS, P-CRI and P-FIDC
Exclusive for Non-Resident Investors.
The taxation described below to non-resident investors applies to those registered as per CMN Resolution 2,689, not located at a jurisdiction that does not tax income, or taxes it at a maximum rate lower than 20% (Low Tax Jurisdictions – "JTL"), as well as to sovereign wealth funds from any country[7] (“Non-Resident Investors”).
(i) Income tax ("Income Tax"):
(a) 0% rate on interests produced by: (1) PS, P-CRI and shares issued by P-FIDC; and (2) shares of local investment funds, when such funds are exclusively designed to non-resident investors and invest, at least, 85%[8] of their portfolio in PS, and this minimum threshold is of 67% within the terms established in item 11.1, above.
(b) 0% rate on capital gains related to the trading of PS, P-CRI and/or shares issued by P-FIDC on local exchanges or OTC-markets.
(ii) Tax on foreign exchange transactions ("IOF-FX"): 0% rate.
12.2. PP-Bond, PP-CRI, PP-FIDC and PP-Fund[9]
Applicable to Domestic and Non-Resident Investors.
(i) Income Tax:
(a) 0% rate on interests produced by PP-Bonds, PP-CRI, shares issued by PP-FIDC and shares issued by PP-Fund applies to resident individuals and Non-Resident Investors;
(b) 15% rate on interests produced by PP-Bonds, PP-CRI, shares issued by PP-FIDC and shares issued by PP-Fund[10] applies to Brazilian companies;
(c) rate of: (1) 0% on capital gains made by Non-Resident Investors and individuals related to the trading of PP-Bonds, PP-CRI and shares issued by PP-FIDC; and (2) 15% on capital gains made by companies related to the trading of PP-Bonds, PP-CRI and shares issued by PP-FIDC.
(d) rate of: (1) 0% on capital gains made by Non-Resident Investors and individuals related to the trading of shares issued by PP-Fund on local organized securities markets; and (2) 15% on capital gains made by Brazilian companies related to the trading of shares issued by PP-Fund[11].
(ii) IOF-FX: 0% rate.
13. Comparative Chart. Below is a comparative chart of taxation rates applicable to Long-Term Securities and other fixed-income investments in Brazil:
 
 
General rule - fixed income investments
Government bonds
Investment Project Securities (PS)
Priority projects securities (PPS)
PPS Funds
(PP-Fund)
Investor
Income tax
IOF/
FX
Income tax
IOF/
FX
Income tax
IOF/
FX
Income tax
IOF/
FX
Income tax
IOF/
FX
Non resident (non-LTJ)
15%
6%
0%
6%
0%
0%
0%
0%
0%
0%
Non resident (LTJ)
22.5% to 15%
6%
22.5% to 15%
6%
22.5% to 15%
0%
22.5% to 15%***
0%
22.5% to 15%***
0%
Individual
22.5% to 15%
N/A
22.5% to 15%
N/A
22.5% to 15%
(CRI-exempt)
N/A
0%
N/A
0%
N/A
Company
22.5% to 15%*
N/A
22.5% to 15%*
N/A
22.5% to 15%*
N/A
15%
N/A
15%
N/A
 
 
 

 

 

 

 

 
 
 
 
 
 
Investor
Income tax
IOF/
FX
Income tax
IOF/
FX
Income tax
IOF/
FX
Income tax
IOF/
FX
Income tax
IOF/
FX
Non resident (non-LTJ)
15%
6%
0%
6%
0%
0%
0%
0%
0%
0%
Non resident (LTJ)
22.5% to 15%
6%
22.5% to 15%
6%
22.5% to 15%
0%
22.5% to 15%***
0%
22.5% to 15%***
0%
Individual
22.5% to 15%
N/A
22.5% to 15%
N/A
22.5% to 15%
(CRI-exempt)
N/A
0%
N/A
0%
N/A
Company
22.5% to 15%*
N/A
22.5% to 15%*
N/A
22.5% to 15%*
N/A
15%
N/A
15%
N/A
The income will be subject to additional corporate taxes at a 34% rate (or 40% in case of financial institutions and other similar corporate entities). Withholding income tax will be deducted, subject to the provision of paragraph 2-B of article 3 of the Federal Law No. 12,431/2011.
The income will be subject to a social contribution on net income (CSLL) at a 9% rate (or 15% in case of financial institutions and similar corporate entities).
*** Taxation under discussion.
14. Penalty. Considering that attractiveness for Long-Term Securities are tax-related, the respective fund raiser[12], and not investors, are subject to penalty in case the funds are not allocated to the related project, as provided for Federal Law 12,715/2012 and Federal Law No. 12,844/2013. Such penalty equals to 20% of the total amount of funds raised and not invested in the related project, and is due to the Brazilian Federal Revenue Service (in Portuguese, Receita Federal do Brasil).
* * *
For additional information, contact our professionals.
Contact details:
Thiago Giantomassi Catarina Rodrigues
tgiantomassi@demarest.com.br carodrigues@demarest.com.br
+55 (11) 3356-1656 +55 (11) 3356-1619



 
[1] CRI were originally included in the new regime by Federal Law No. 12,745/2012. As mentioned below, such securities were also included in the regime applicable to PPS, by Federal Law No. 12,844/2013.
[2] Shares issued by FIDCs were recently included in the PS and PPS regimes by Federal Law No. 12,844/2013.
[3] Federal Law No. 12,431/2011 – prior to being amended by Federal Law No. 12,715/2012 – required trading of such securities on regulated securities markets for the beneficial taxation to apply. Now the beneficial taxation is available as a result of the registration of the securities for trading with local registering systems.
[4] One of the main amendments brought by Federal Law No. 12,715/2012 is to expressly authorize use of funds raised by means of an offering of PS and PPS for reimbursement of expenses, costs or debts related to investment projects, incurred up to 24 months prior to the closing that of the securities offering. Federal Law No. 12,844/2013, in addition to complementing the list above with the PP-CRI, sets forth that, regarding P-FIDC and PP-FIDC or the receivables related to P-CRI and PP-CRI, the use of funds raised upon the public offering, as legally established, must be complied with by the assignor of the receivables acquired by the respective fund or by the issuer of the P-CRI or the PP-CRI.
[5] Utility companies which operate under lease conditions (arrendatárias) were included as issuers of PP-Bonds by the Federal Law No. 12,844/2013, provided all other requirements set forth in Federal Law No. 12,431/2011 are complied with.
[6] Federal Law 12,715/2012 introduced the 67% requirement for the first two years, counted as of the first payment of subscribed PP-FIDC shares, as amended by Federal Law No. 12,844/2013. Prior to that, the requisite was 85% throughout the fund’s existence. The 180-day grace period referred to herein exists since Law 12,431/2011 initial wording, also counted as of the first payment of subscribed PP-FIDC shares, which was amended by Federal Law No. 12,844/2013.
[7] Federal Law No. 12.844/2013 included sovereign wealth funds of any country in the tax regime of article 1 of Federal Law No. 12.431/2011, classifying them as "investment vehicles incorporated abroad, whose heritage is exclusively composed of resources from the sovereign savings of the respective country and that, additionally, comply with the following requirements: (i) present, for public access, an accurate investment policy; (ii) present, for public access, at least annually, its funding sources, and (iii) disclose, for public access, the procedures for redemption of funds by the government".
[8] Federal Law No. 12,431/2011 – prior to being amended by Federal Law No. 12,715/2012 – required a 98% minimum allocation.
[9] Tax regime for PP-Fund also eligible to local investment funds which invest at least 95% of their net equity in PP-Fund.
[10] Federal Law No. 12,844/2013 included paragraph 2-B on article 3 of Federal Law No. 12,431/2011 to provide that the withholding tax rule provided for in article 3 of Federal Law No. 10,892/2004 does not apply to PP-Fund.
[11] Federal Law No. 12,844/2013 included the paragraph 2-A on article 3 of Federal Law No. 12,431/2011 to provide that, for purposes of this article: "any amounts that constitute return on capital invested, including gains realized on the sale of shares, shall be qualified as earnings", which means that the tax benefit granted by article 3, also applies to the negotiation of PP-Funds' shares in the secondary market.
[12] For example, the penalty is imposed on: (i) issuers, when the funds are raised upon the issuance of bonds; or (ii) on receivables assignors, when the funds are raised upon the issuance of certificates of real estate receivables or funds shares backed on such receivables.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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