4/10/2024
In January 2024 it was enacted Law No. 14.801, which creates the infrastructure debentures and was regulated in March by Decree Nr. 11.964. Infrastructure debentures complement the already well-known incentivized debentures (in force since 2011).
The rules aim to encourage the implementation of essential projects for the country, always based on environmental and social commitments, establishing clear and objective criteria, and defining initiatives eligible for privileged financing through such debentures. These initiatives include investment projects considered as priority in infrastructure sector or intensive economic production in research, development and innovation, such as projects related to ecological and digital transformation and industrial health complexes, as well as being accompanied by tax incentives.
The decree brings a significant improvement by simplifying access to funding, since prior publication of a ministerial decree for project approval is no longer mandatory, and it is up to the applicant to ensure that their project meets the requirements set out in the decree to qualify it.
Projects connected to the oil production chain and the generation of electricity from non-renewable sources are no longer considered a priority and, on the other hand, sectors at the technological forefront of the energy transition are now explicitly recognized as priorities, which includes the production of low-carbon hydrogen, synthetic fuels, carbon capture and projects for the transformation of strategic minerals for the energy transition, as well as the promotion of urban mobility projects related to the purchase of electric or hybrid buses using biofuels.
The prioritization criteria set out in the decree will concentrate tax benefits on projects of public interest, where only those involving concessions, permits, authorizations or leases will be considered priorities.
Infrastructure debentures will provide tax benefits directly to issuing companies, allowing better returns on issuances and attracting institutional investors who already have tax benefits. This type of debenture also allows interest paid to be deducted from net profit and the calculation basis for the Social Contribution on Net Profit (CSLL), as well as other advantages, such as extending the period for paying off expenses. It makes a possibility to issue debentures when the project is less risky, reducing the cost of raising funds and encouraging investment in infrastructure.
The new Infrastructure Debentures will coexist with the incentivized debentures, including the possibility of issuing both of them for the same project, being not possible that one debenture simultaneously accrues the tax benefits provided for both.
The team at L.O. Baptista Advogados is available to discuss this matter.
