Congress Grants Incentives To The Events Sector By Overturning Vetos

• Published date: 01 April 2022
• Subject Matter: Corporate/Commercial Law, Tax, Corporate and Company Law, Income Tax
• Law Firm: Koury Lopes Advogados
• Author: Mr Henrique Lopes, Victor Polizelli, 'lvaro Lucasechi, José Fl'vio Pacheco, Juliana Nunes, Luís Fl'vio Neto, Felipe Omori and Jefferson Souza

On March 18, 2022, Law 14,148 of May 3, 2021 was republished, to introduce certain provisions that had been vetoed in the original publication.

This law introduced the Emergency Program for Recovery of the Events Sector ("Perse"), which originally stipulated two mechanisms for protecting the events sector:

• The possibility of negotiating tax obligations with discounts of up to 70% of the total outstanding amount, for payment in up to 145 months;
• Creation of the Program for Guarantees for Critical Sectors, to be managed by the Fund for Guarantee of Investments (PGSC-GFI).

The reversal of the vetos by the Congress and publication of the originally vetoed provisions has brought new benefits for companies in the events sector, namely:

• Reduction of Corporate Income Tax and Turnover Taxes (PIS/COFINS) rates to zero for 60 months for eligible companies;
• Indemnification for payroll expenses with an amount to be stipulated by regulations, for companies that suffered a reduction in revenues exceeding 50% between 2019 and 2020;
• A special credit program for companies that are eligible for both Perse and the National Program for Support of Small and Medium Enterprises ("Pronampe").

This special credit program is exclusive for companies eligible for the Pronampe, and indemnification for payroll expenses is exclusive for companies that suffered reduction in revenues, subject to further regulations.

The Corporate Income Tax and PIS/COFINS zero rate benefit for 60 months, however, is only subject to the eligibility for the Perse program. Considering that this law entered into force on the date of its publication (March 18), the rate reduction is already in effect and applicable, at least in theory, for taxable events occurring in March 2022. In prior situations where a change in legislation was introduced in the middle of a taxable period, the Brazilian Federal Revenue issued regulations to address the timing of these changes. It is possible that regulations will be published to address this situation.

Law 14,148 has employed broad language to define the companies eligible for the Perse, being those "belonging to the events sector, including non-profit organizations, that develop said activities directly or indirectly:

1. organization of congresses, fairs, sports, social promotional or cultural events, trade fairs, shows, parties festivals, symposiums, or events in general, event venues, social and child buffets, clubhouses or concert halls;
2. hospitality in general;
3. ...