President Luiz Inacio Lula da Silva approved Law No. 14801/24, without veto, establishing infrastructure bonds for public service concessionaires. This new text, published in the Official Gazette of the Federation, redefines the rules for investment funds in this sector.
How do infrastructure bonds work?
This new law comes as a result of Rep. Arnaldo Jardim (Cidadania-SP) replacing Bill 2646/20 with João Maia (PP-RN). Concessionaires, permit holders and companies licensed to operate public services are allowed to issue bonds to finance investments in infrastructure. The resources obtained from the bonds must be used in investment projects or intensive economic production in the field of research, development and innovation until December 31, 2030.
Regulation is still waiting
Sectors and areas where resources from bonds can be used still await regulation by the executive. This regulation must establish criteria for classifying projects into sectors considered priority.
Regarding income tax (IR) taxes for Brazilian investors, bonds will follow the same rules as fixed income investments. Current schedule is progressive: 22.5% up to 180 days; 20% from 181 to 360 days; 17.5% from 361 to 720 days; and 15% from 721 days onwards.
Foreign investors will pay 15% of the internal return on the gains from the stimulus bonds. If the investor is resident in a country with favorable taxes, the internal rate of return will be 25%, according to international agreements to which Brazil is a party to prevent tax evasion.
The incentive bonds, which are tax-exempt, were created about ten years ago to finance infrastructure and also obtain tax benefits. However, unlike infrastructure bonds, these benefits apply to bond buyers, not the issuing companies. With the way Congress set it up, the advantage accrues to companies that issue bonds, which may be seeking private resources, such as energy and sewer concession holders or those who directly or indirectly control them.
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