Law No. 10/21 – Law Amending Law No. 10/18 of 26 June

May 5, 2021 | Conhecimento

On 22 April 2021, Law no. 10/21 – Law amending Law no. 10/18 of 26 June – Private Investment Law (“LIP”) was published. The changes to the LIP result from the need to improve conditions of competitiveness in attracting investment in the country. One of the most significant changes was the introduction of the contractual regime, which allows the State, as the entity promoting the investment, and the investor to freely negotiate the conditions of approval and implementation of the private project, as well as the incentives and facilities to be granted under the private investment contract.

The new LIP changes the concepts of internal and external investment, starting to mention that the investment can be carried out through the use of means of payment available in the national territory by foreign exchange residents in the case of internal investment and by the introduction or use in the national territory of freely convertible currency held by foreign exchange non-residents.

Among the ways of carrying out the investment, the introduction of raw materials as a form of investment also is included, and the incorporation of technology and knowledge susceptible of pecuniary valuation is no longer an option to carry out the investment.

With regard to the possibility of transfers abroad, the new LIP no longer requires the complete execution of the Private Investment Project so that foreign investors can transfer dividends abroad, the proceeds from the liquidation of their projects, indemnities due to them, royalties , transfers abroad may be made after the payment of the taxes due and the constitution of mandatory reserves.

External investors are now able to resort to internal credit even before the implementation of the entirety of their investment project.

Regarding the benefits, the new LIP also brings some new features:

  • The value of the investment and the jobs created are now also indicated as influencing factors in determining benefits and facilities;
  • The tax benefits that the various private investment regimes can enjoy are now provided for in the Tax Benefits Code in force (at the moment the Tax Benefits Code is yet to be published, which may determine some delay in the attribution of tax benefits to projects that may be approved before the publication of the aforementioned Code);
  • For the implementation of investment projects, investors are exempt from obtaining provisional licenses and other authorizations from public administration bodies, with the CRIP (Certificate of Private Investment Registration) being sufficient;
  • In cases where it is considered essential to obtain opinions, approvals and authorizations in the procedures applicable to investment projects, the body responsible for issuing these documents is obliged to comply with the deadlines established in the project schedule agreed with the investor. Tacit approval in the event of non-compliance with the stipulated deadlines is also included.

This law entered into force on the day of its publication, April 22, 2021.