The Lei do Bem (Law No. 11.196/2005) is an important tool for companies looking to invest in research, development, and innovation (R&D) in Brazil, while also benefiting from significant tax incentives. If you’re interested in taking advantage of the incentives provided by this legislation to boost innovation in your company, follow this step-by-step guide to implement the Lei do Bem:
Step 1: Eligibility Assessment
Before you begin, verify if your company meets the eligibility criteria for the Lei do Bem. Generally, the law applies to companies subject to Real Profit taxation that are investing in R&D activities.
Step 2: Identification of R&D Activities
Identify the R&D activities your company wishes to undertake. This may include the development of new products, processes, services, or the improvement of existing products. Ensure that these activities align with the requirements of the law.
Step 3: Development of an R&D Plan
Develop an R&D plan outlining the activities, goals, timelines, and necessary resources. It’s crucial to document all stages of the innovation process, from conception to implementation.
Step 4: Project Registration and Approval
Register the R&D projects with the Ministry of Science, Technology, and Innovation (MCTI) or the Brazilian Industrial Development Agency (ABDI), depending on the type of project. Await approval to secure recognition of the tax benefits.
Step 5: Project Execution
Execute the projects according to the established plan. This may involve hiring qualified personnel, acquiring equipment and resources, and implementing R&D activities.
Step 6: Expense Recording and Control
Maintain a detailed record of all expenses related to the R&D projects. Accurate documentation is essential for audit purposes.
Step 7: Preparation of Fiscal Documentation
When filing taxes, include eligible R&D expenses in the calculation of Income Tax (IR) and the Social Contribution on Net Profit (CSLL) base. Ensure compliance with tax guidelines to enjoy the benefits.
Step 8: Audit and Compliance
Be prepared for potential audits. Keep all documents and records organized and comply with the regulations of the Lei do Bem.
Step 9: Enjoy the Benefits
With the successful implementation of the Lei do Bem, your company can enjoy tax benefits, including a reduction in Income Tax and CSLL, while strengthening its competitive position through innovation.
Step 10: Continuous Monitoring
Maintain ongoing monitoring of R&D projects and their outcomes. Innovation is an ever-evolving process, and adjustments may be necessary over time.
Implementing the Lei do Bem can be a significant step toward boosting innovation and sustainable growth in your company. However, keep in mind that legislation can change over time, so it’s essential to stay updated and seek guidance from professionals with expertise in tax law.
