March 27, 2012 defpro.com (Unofficial translation by defense-aerospace.com)
BRASILIA | Purchasing, contracting and product development of defense systems will receive new incentives thanks to the enactment of Law No. 12,598 on March 21 by President of the Republic Dilma Rousseff. The initiative enables one of the three cornerstones of the National Defense Strategy (END) and was approved unanimously by both houses of the Legislature.
The law is an offshoot of the Greater Brazil Plan, launched in August last year to increase the competitiveness of domestic industry.
According to the Secretariat of Defense Products (Seprod), the law which has just been sanctioned provides a strong stimulus to domestic enterprises to develop the technologies necessary for the defense of the country. "It is a very important step in the process of recognition by the Brazilian society of the need to strengthen the country’s defense industrial base, beginning with the National Defence Strategy (END)."
The law establishes the Special Tax for the Defense Industry (Retid), which provides defense strategic businesses (DSE) with differential access to funding for programs, projects and actions in the area. Another incentive is the exemption from the requirement for payment of PIS / PASEP, Cofins and the Tax on Industrialized Products (IPI).
Direct government agencies, public and private companies, joint stock companies, and municipalities, among others, are subject to the new régime. The legislation was published in the Official Gazette yesterday (March 22) and came into effect on that date.
Are considered defense products weapons, ammunition, transportation and communications equipment, uniforms and other materials used in related activities.
According to Admiral Carlos Alfonso Gamboa Pierantoni, vice president of the Brazilian Association of Manufacturers of Materials for Defense and Security (ABIMDE), Law No. 12,598 can be considered today one of the most important regulations for the industry. "It puts the Brazilian companies at the same level as foreign companies to sell defense products to the Armed Forces and also to the security sector."
On September 29, 2011, the President signed the Provisional Measure 544 (MP) that initiated the standardization of procedures. The MP was developed jointly by the Ministries of Defense, Science, Technology and Innovation, Development, Industry and Foreign Trade of Planning and Budget, and Finance.
According to ABIMDE, companies that operate in the defense market together generate about 30,000 direct and 120,000 indirect jobs, turning over more than 2.7 billion dollars per year. A paper presented at the end of last year by the association, found that this number could more than double over the next 20 years due to major projects announced by the government in recent months.
The estimate of job creation in the defense sector by 2030 is for 60,000 new direct and 240,000 indirect jobs. If these projections are right, the country could reach the 15th place in the ranking of major global players in defense.