MCTI releases Lei do Bem growth data

The Lei do Bem (Law No. 11,196, of November 21, 2005) is one of the main tax incentives in the country, and provides for the promotion of innovation through research and technological development (RD&I). It applies to companies taxed under the Real Profit regime and aims to increase competitiveness through knowledge and improvements in products, processes and systems.

Since its creation in 2006, the Lei do Bem has already been used by more than 5,000 companies, stimulating investments of more than R$ 100 billion in technology and innovation in Brazil and generating a tax waiver of more than 20 billion over these 17 years, according to data from the Ministry of Science and Technology (MCTI). The importance of this fiscal incentive instrument is directly linked to economic and social development, since without technological innovation there is no international competitiveness.

New data

The number of companies that benefited from the Lei do Bem increased by 17% from 2020 to 2021, totaling 3012, a 5% higher increase compared to the analysis of the previous year. The value was lower compared to the period from 2016 to 2018 (average of 25% per year), however, there has never been such a significant increase in total investments and waiver, which grew by more than 50% in gross amounts. In 2020, there were 17.40 billion in investments and 3.87 billion in waivers, while in 2021 the amounts went to 27.18 billion and 5.86 billion.

The south and southeast regions lead in participation of companies, with 894 and 1757 respectively, and represent 88% (23.934 billion) of total expenses. Analyzing these regions, in the Southeast there were increases of more than 55% in total investments and waiver, and in the south region the increase was even greater, waiver jumped over 70% – from 642m to 1104m. It can be noted that the Northeast region, which represents a small portion of total investments (around 4%), also had a significant increase of 54% in total investments and 48% in tax breaks.

There are several sectors that benefit from the Lei do Bem, the largest category is the one that represents several areas: health, education, finance and insurance, followed by organizations of software, mechanics and transport, food, chemistry and electronics, which bring together the largest share of those involved.

The Software Sector

In 2022, the Brazilian Association of Software Companies (ABES) released a report on panoramas and trends in the Brazilian software market. According to the publication, world IT production grew 11% in 2021, while Brazilian growth was 17.4%, placing Brazil in 10th position in the world ranking. When analyzing ICT (Information and Communication Technology) data, total production in the country is concentrated mainly in the domestic market and is divided, in millions of dollars, as follows: Telecommunications (71,000), Hardware (26,300), Software ( 11,070) and Services (489).

It is observed that software companies are increasingly using the benefits of Lei do Bem. During the period from 2018 to 2021, there was a 160% increase in investment in software development eligible for the Lei do Bem, having increased from BRL 945 million in 2018 to BRL 2.5 billion in 2021, well above average general of other sectors. It appears that, in addition to the increase in the volume of investment, the number of beneficiary companies grew by 70% in this period and the average value of projects submitted by companies doubled.

Luiz Mariano Julio, director of FITec – Foundation for Technological Innovations and author of the book “Fostering Technological Innovation in Brazil”, says that these data demonstrate not only a growth in interest, but an increase in the complexity of the projects carried out. “Certainly part of this increase in complexity comes from the market demand for Digital Transformation, with increasingly intense use of Artificial Intelligence, Cybersecurity, Internet of Things and Cloud Computing, which raises the bar of technological complexity.” Finishes Mariano.

It is understood that large national and multinational organizations invest massively in software technologies, regardless of the sector in which they operate. This can be attributed to the growing importance that information technology and digital transformation have assumed in business across all industries. Companies such as IBM, Microsoft, PagSeguro, Telefônica, Claro and other market giants have been benefiting from these investments in software technologies for years, as well as using the Lei do Bem, allowing them to remain competitive in an ever-changing business environment.

Therefore, although the analysis of MCTI numbers referring to Lei do Bem segments the software sector from other sectors, it is likely that many of these other companies also invest significantly in software technologies. This is especially true in sectors such as telecommunications, finance, retail, healthcare and manufacturing, where technology is playing an increasingly important role in improving operations and creating new business opportunities.

Prospects

Law 11,196/05, which in its third chapter operationalizes the Lei do Bem, is still underused by Brazilian companies. It is estimated that there are more than 150,000 companies classified as real profit, and of these, only 1% benefit from the Lei do Bem. For André Moro Maieski, an innovation specialist and partner at Macke Consultoria, there are at least 20 times more organizations able to benefit from the incentive, either with investment in new products and services or with the improvement of those already in use.

Maieski says that the COVID-19 pandemic has accelerated investments in innovation in companies, but that is still insufficient compared to the need for organizations to increase their competitiveness through investments in technology. What André sees in living this scenario is that many companies are choosing to pay taxes and remain uncompetitive instead of seeking R&D projects that can actually generate major changes in the company. “A governmental benefit like this, which promotes massive investments in technology and the reduction of part of the technological risk, reducing costs and increasing revenue should be better explored”, he concludes.

Website: