Brazil’s Ministry of Communications Introduces New Tax Regime

Brazil’s Ministry of Communications Introduces New Tax Regime

Brazil’s Ministry of Communications has introduced a tax regime targeted at the construction of telecommunication networks. The goal is to expand fiber-optic infrastructure and increase the reach of broadband in the country. The incentive is expected to generate BRL 6 billion (approximately US $3 billion) in tax breaks through 2016 and will apply to the purchase of goods and services used in building such networks until December 31, 2016. The Ministry expects that the measure will stimulate operators to invest up to BRL 18 billion by 2016.

Tarifica’s Take

Brazil’s regulating agency is an enlightened one, and we applaud this forward-thinking move. It is clearly aware that no nation can be a first-class economic power without a populace and a business community that are connected by a first-rate network, be it fixed line or mobile.

In terms of Brazil’s fixed-line infrastructure, this move is important because businesses, especially large enterprises, will remain reliant on these networks for years to come. In short, fixed line services remain essential to business operations despite the proliferation of mobile devices. In particular, the availability of wide-scale broadband via fixed line networks is a necessary and fundamental link to the rapidly evolving cloud-based universe in which we find ourselves.

On the mobile side, the new tax incentive will likely lead to growth in smartphone adoption, because higher-quality networks will encourage more people to subscribe to plans geared towards these devices. This is critical for the development of a communications-savvy workforce. Simply put, if a large enough proportion of employees have their own smartphones and tablets, employers will be able to tightly integrate them into workplace communications, including potentially via BYOD policies.

So we offer our praise to the Ministry of Communications. Its plan will certainly help Brazil’s fixed line and mobile operators, and equally important its people, contribute to the country’s development as a first-rate economic power, making it an even more attractive place to invest for multinational corporations around the world.