On February 27th, the São Paulo state government announced a package of measures aimed at reducing the ICMS tax burden until the end of 2024 for certain productive sectors of the state. The goal is to promote economic development in industries affected by the 2020 pandemic.
Additionally, the measure aims to stimulate job creation and enhance the competitiveness of São Paulo’s industries, encouraging new investments by companies in their productive activities.
The granted fiscal benefits are as follows: exemption, reduction of the tax base, granted credit, or deferment of ICMS for the following productive sectors:
Oat Milk: Reduction of the ICMS tax base on sales of non-alcoholic, non-fermented oat-based vegetable beverages, ready for consumption, so that the tax burden is equivalent to a rate of 7%.
Metallic Packaging: The tax on the sale of machinery and equipment destined for the manufacturing of metallic packaging is deferred until their sale or eventual disposal.
Cystic Fibrosis: Operations involving the medication Trikafta (active ingredients Elexacaftor, Tezacaftor, and Ivacaftor), intended for the treatment of the disease, are exempt from ICMS.
Wheel Loaders, Hydraulic Excavators, and Backhoe Loaders: Tax credit in such a way that the tax burden results in a rate of 5%.
Semiautomatic Washing Machines (Tanquinho): Manufacturers may claim a tax credit so that the tax burden on these sales results in a rate of 3% for domestic operations and 1.5% for interstate operations.
Information Technology (IT): Special ICMS taxation regime for IT industry contributors.
Data Centers: Suspension, deferment, and exemption of ICMS on equipment purchases.
Milk-Based Beverages: Reduction of the ICMS tax base on domestic sales of food products promoted by manufacturing or wholesale establishments.
Electricity: ICMS exemption for distributed electricity generation and central generators with installed power of up to 5MW.
Fruit Juices: Deferment of the tax on domestic purchases and exemption of the tax on the import of machinery and equipment intended to be part of the fixed assets of fruit juice and mixed juice manufacturing establishments.
Soybeans: Deferment on domestic operations involving soybean seeds, soybean meal, and soybean cake.
The government emphasized that, despite the measures leading to a temporary loss of revenue, they are expected to generate jobs and stimulate income growth in the state of São Paulo. This, in turn, is expected to lead to increased consumption in the long term, resulting in a subsequent rise in ICMS revenue.