Brazil grants companies tax break to renew industrial equipment

Brazilian President Luiz Inácio Lula da Silva signed a bill to grant local industrial companies a tax break for purchases of machinery and equipment.

The bill involves the accelerated equipment depreciation model, which enables firms to declare depreciation expenses earlier in their accounts, thus reducing the basis for the calculation of corporate income tax, social contributions and others.

The government estimates that the rule change will pave the way for new investments of around 3.4bn reais (US$660mn) by industrial companies "preparing the sector for the challenges of digital transformation and ecological transition."

The bill was approved by congress earlier this year.

According to national industries association CNI, the average age of industrial machinery and equipment in Brazil is 14 years, and 38% has exceeded its usual life cycle or is close to doing so.