Brazilian government demands smarter investments from tech firms

Companies producing equipment in Brazil must increase the efficiency of R&D centers, says IT secretary.

The Brazilian government wants technology companies to make smarter investments in the country in return for the tax relief they currently receive to manufacture goods locally.

Through the Information technology Law, Brazil provides significant tax reductions to tech companies producing goods in the country - this is to encourage innovation investments in the hardware and automation sectors. In return, companies must provide a minimum of 4 percent of their annual revenue provided in research and development (R&D) investments.

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Between 2011 and 2013, R$ 1.6 billion ($645 million) has been invested by international technology firms producing computers in R&D centers. However, the government wants companies to come up with ideas to make more out of these facilities.

"We want to hear proposals and suggestions from these R&D centers in ways in which we can increase the efficiency of these resources provided by the private sector, in order to make the sector more competitive globally and export more," secretary of IT policies at the Brazilian government, Virgílio Almeida, told delegates at an event last week with representatives of 30 R&D centers created by companies benefiting from the tax relief.

The secretary added that one of the government's key challenges when it comes to IT policy is to strengthen the Brazilian R&D ecosystem for the sector, but also to develop mechanisms to increase the effectiveness of investments in Information Technology Law.

One of the suggestions that came out of the meeting was that more flexibility to centers in the application of resources from tax relief could be given to companies. Another suggestion was that the reporting mechanisms in place, where firms disclose details around investments made, could more focused on actual results.

According to the government, a seminar will take place in Brasília later this year to further discuss the role of R&D centers in context of the IT Law.

The pool of companies that benefit from tax relief and have made investments in research and development centers in Brazil include Lenovo, who committed to the creation of a $100m facility in the countryside of São Paulo and Intel, who launched a Rio de Janeiro research and development (R&D) facility focused on research around Internet of Things, Big Data and High Performance Computing (HPC) earlier this year.

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