Brazilian Federal Revenue has estimated that R$ 900 million will fail to be collected by the public coffers between January of 2011 and December of 2015 because federal tax exemption for the World Cup accomplishment of 2014 in Brazil. The amount failing to be collected corresponds to the sum of Import Tax, Income Tax and social contributions Brazil will not charge from suppliers who will work at the World Cup.
According to the Federal Revenue, R$ 340 million out of R$ 900 million will be related to Tax Deductions on buildings at the stadiums which will be the games scenario. The rest of it will fail to be collected at the other activities and operations related to the World Cup. That value does not include the resignation of the Service Tax (ISS) which has been collected by municipalities and the Federal District, and nor the Taxes and Goods Services (ICMS), that could be granted by the states. 

Fifa’s requirements
Numbers were presented in a public hearing at Committee of Financial Oversight and Control, performed on last Thursday (27). The General Coordinator of Federal Revenue Taxation, Mr. Fernando Mombelli, emphasized that resignations meet on International Federation of Associated Soccer (Fifa) for the World Cup accomplishment.

Amid these guarantees required by Fifa, in order the Country can host the event, are the special conditions related to the Customs duties, import taxes, general tax exemptions and procedures relative to immigration, Customs and Check-in. “There is a clause providing reparation to Fifa in case the guarantees are not fulfilled”, Mr. Mombelli explained.

Projects
On Wednesday (26), the Executive Branch sent to the Chamber two Bills to reduce tax burden on operations of organization, preparation and performance of the games in the Country. One of the proposals grants tax exemption to Fifa and other entities that will provide services during the Soccer World Cup performance.
Amid the goods released form tax payment are food, medicaments, promotional products, fuel, sports equipments and image and sound broadcast services. Besides that, stadium buildings for the World Cup will be exempted from federal taxes payment.

The other project authorizes the World Cup city-hosts to grant exemption of Tax Services (ISS) over operations related to the event. The states will be also able to decide not to charge their Taxes on Goods and Services (ICMS) at the same situations.

According to the Chief of Legal and Tax Study Division and Articulation of Strategic Affairs of Federal Revenue, Mr. Augusto Carlos Rodrigues, the resignation impact on our public accounts has not been evaluated by the Federal revenue yet. The expectative announced by Sports Ministry is that the country can collect, with the event, around R$ 10 billions in taxes.

Difficulties
Federal Revenue employees have detailed situations or people being contemplated by the tax exemption. According to Mr. Augusto Carlos Rodrigues, one of the great difficulties has been to adjust FIFA’s demand on taxes and fees exemption to the Brazilian law reality, which does not permit directly exemption to an international legal entity.

He explained FIFA has been requested to create subsidiaries in Brazil in order to ensure exemptions to representations and entities enabled by the Federation. In practice, companies connected or registered in FIFA will not pay for importing equipments or consumer goods employed at the games as from 2011. After the competition ending, however, imported durable goods will be able to be exported or donated to public interest entities.

National products
To encourage product acquisition manufactured in Brazil, payment exemption of PIS and Cofins has been granted to FIFA on items purchasing for the World Cup. Controlling will be done at the proper invoice emission.

TV Broadcasting
In the case of broadcastings, the only exempted television station will be the one chosen as a source responsible for games signal reception and distribution.

Non-resident individuals will be exempted from taxes payment relative to activities performed in Brazil, since they are related to the World Cup. Someone who lives in Brazil and is going to work as a volunteer at the games will not pay taxes on expense reimbursement paid by FIFA. He said that, after the proposal approval, it will still be necessary to regulate specific points of exemption rights.

Translation - Grupo Solucion-SP Language/Márcia Regina Monteiro Ferreira