Estimate is from the Brazilian Association of the Machinery and Equipment Industry; entity states that the law was an “old demand”
Sanctioned on Tuesday (May 28, 2024) by the President of the Republic, Luiz Inácio Lula da Silva (PT), the new law for the modernization of the country’s industrial park, also known as the law for accelerated depreciation, should leverage investments of R$ 20 billion, estimates the Abimaq (Brazilian Association of the Machinery and Equipment Industry).
“This is a long-standing demand from the sector. It will be very good because you end up giving competitiveness to those who invest, you are reducing Income Tax, anticipating the Income Tax refund. In some way, you guarantee cash flow for companies, this is very positive and should influence investment decisions”declared the director of Competitiveness, Economics and Statistics at Abimaq, Cristina Zanella.
Accelerated depreciation is a mechanism that works as an anticipation of revenue for companies. When a capital asset is acquired, the industry can deduct its value from future IRPJ (Corporate Income Tax) and CSLL (Social Contribution on Net Profit) declarations.
Under normal conditions, this reduction is gradual, carried out over up to 25 years, as the asset depreciates. With the depreciation determined in the new law, the reduction in the value of machines acquired until 2025 can be done in just two stages: 50% in the year in which it is installed or goes into operation and 50% in the following year.
The program will initially allocate R$3.4 billion in financial credits for the purchase of new machinery, equipment, devices and instruments.
“One criticism we make is that the resource ended up being little, R$3.4 billion, which should leverage a number of around R$20 billion in investments. We would like it to be even more, given the country’s need for investment today. We now hope that the government publishes the regulations soon, so that we know which sectors will benefit most”said Cristina.
Rio Grande do Sul
Abimaq also estimated that the floods in Rio Grande do Sul are expected to reduce national sales in the sector by up to 5%. The State is responsible for 10% of all sales of machinery and equipment in the country, and locally, according to the entity, it should suffer a decline of up to 50% in product sales.
“We have not yet calculated exactly what the [o impacto das enchentes]it will depend a lot [de] what initiatives in the Safra Plan now would the federal government do specifically for Rio Grande do Sul”said the president of the Abimaq Agricultural Machinery and Implements Sector Chamber, Pedro Estevão.
According to the entity, the flooding affected around 140,000 farmers, mainly in the eastern region of the state. “We expected it to be a 5% drop. As the government is doing something, we understand that this will be somewhat mitigated”said Estevão.
April balance sheet
According to Abimaq, the machinery and equipment sector sold R$18.4 billion in April – a drop of 20.1% compared to the same month in 2023.
In the year to date, the amount, up to April, is R$74.9 billion – which represents a decline of 21.2%. According to Abimaq, the falls are associated with the drought, which hit a large part of the country at the beginning of the year, high interest rates and the drop in the price of commodities.
The entity also changed its projection for the end of the year: a 7% drop in revenue. Previously, the estimate was for an increase of 0.6%.
With information from Brazil Agency.
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