Brazil shall grant tax breaks for 2014 stadiums

The Federal Government informed this Monday (17th) that it shall be granting tax breaks for the construction and refurbishment of the stadiums for the 2014 World Cup. In a note, the Ministry for the Treasury said that it shall be “granting tax exemption to the stadium of the World Cup, which shall not need to pay Industrialized Products Tax (Imposto sobre Produtos Industrializados - IPI), Importation Tax (Imposto de Importação - II) or social contributions (PIS/COFINS).”

In addition, the 12 cities that shall be hosting the World Cup matches shall be able to grant exemption from State Value Added Tax (Imposto sobre Circulação de Mercadorias e Serviços - ICMS) on all operations involving merchandise and other goods for the construction or the refurbishment of the stadiums. "Conditional on the cumulative concession of the benefits involving Importation Tax, IPI and PIS/COFINS, the exemption of ICMS on imports shall only be applicable if the goods do not have a similar product produced nationally”, the note informed, adding that this decision shall be made feasible through a Law or Provisional Measure.

FIFA, the institution that controls football on a world scale, this month showed concern with the progress of the works in preparation for the World Cup tournament. Jerôme Valcke, the Secretary-General of FIFA, went as far as saying that “Brazil is not on the right track” and that “red lights are coming on for Brazil”.
The Ministry for Sport replied by saying that “the issue of the arenas is a local issue, that affects the cities involved” and that the best response to FIFA was more work.

This week, the Local World Cup Organizing Committee (COL) shall finish its inspection visits to the 12 host cities to check the progress of the preparations in the cities of Belo Horizonte, Brasília, Cuiabá, Curitiba, Fortaleza, Manaus, Natal, Porto Alegre, Recife, Rio de Janeiro, Salvador and São Paulo.

Credit
Last September, the National Bank for Economic and Social Development (Banco Nacional de Desenvolvimento Econômico e Social - BNDES) opened a credit line of R$ 4.8 billion for the World Cup stadiums. Each host city shall be able to finance up to R$ 400 million or 75% of the project, with Bank funds.

So far, only four states have made requests for financing for refurbishment or construction work on football stadiums: Amazonas, Bahia, Ceará and Mato Grosso. The BNDES takes up to three months to analyze the consultation letters and grant the corresponding credit.

The delay in the clearance of the funds may make things difficult for some of the host cities. The President of COL, Ricardo Teixeira, wants to receive, no later than 14 June, a study which proves not only the cities’ capacity for investment but also the guarantee that the arenas shall be feasible after the World Cup.