By Moema Giovanella

This Wednesday (10) the new Law No. 14,801/2023, which creates Infrastructure Debentures, was sanctioned without vetoes by the Executive Government. Despite differing from Incentivized Debentures, which grant benefits to the purchasers of the securities, the new instrument does not eliminate them.

According to the new provision, special purpose companies, concessionaires, licensees, authorized companies or lessees, constituted as Corporations (S/A) and their controlling companies (direct and indirect) may issue public distribution debentures to raise funds for priority infrastructure or research, development and innovation projects.

In the case of Infrastructure Debentures, the incentive falls to the issuer, who will have a reduction in the calculation basis for Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL), after calculating financial expenses, of 30% of the interest paid to the bondholders.

The same rule of the regressive Income Tax table will also be used on the investor's side, applied to most fixed income products: 22.5% for investments with a term of up to 180 days; 20% for terms of 181 to 360 days; 17.5% from 361 to 720 days; and 15% from 721 days onwards. For foreigners, a rate of 15% is applied. If the investor is resident in a country with favorable taxation, the tax will be 25%.

The funds obtained must be invested in investment projects or economic production projects that are intensive in research, development and innovation in these areas. The debentures must be issued by December 31, 2030 and follow rules changed by the project in the laws on investment funds in the sector, with the structuring of specific regulations listing the areas in which the funds may be invested. These bonds may contain an exchange rate variation clause and may even be issued by direct or indirect controlling companies of the concessionaire companies.

Regulation and Criteria: Priority projects will now be specifically regulated, eliminating the need for prior ministerial approval in listed sectors, speeding up the debenture issuance process and reducing bureaucracy and costs for issuers and investors. In addition, Infrastructure Debentures that are used exclusively in projects that provide relevant environmental or social benefits will be subject to specific external assessment and will have a simplified processing and monitoring procedure.

Exchange rate variation clause: The device also provides for the possibility of issuing New Infrastructure Debentures with an exchange rate variation clause, subject to authorization from the Federal Executive Branch, enabling the entry of foreign investors.

Purchasers – related parties and fine: The new Infrastructure Debentures may not be acquired by persons linked to the issuer, including those domiciled abroad, under penalty of a fine equivalent to 20% of the value of the debentures and the income arising therefrom. The issuer is also jointly and severally liable for the fine in cases of fraud, collusion, simulation or abuse of legal form or lack of economic basis.

Tax Benefit for External Loan Transactions: the IRRF rate levied on interest arising from external loans contracted through the issuance of bonds on the international market to raise funds for the implementation of priority infrastructure projects was reduced to zero, except if the beneficiary is resident in a jurisdiction with favorable taxation or a privileged tax regime, or if the interest is paid to a related individual or legal entity.

Infrastructure Investment Funds: The fund's regulations must define the criteria for classifying projects in the sectors it considers to be priorities, and may also stipulate other criteria to encourage initiatives that bring about relevant environmental or social benefits, such as priority processing and monitoring of projects through self-declaration by the project owner.

The entry into force of the new Law No. 14,801/2023 will have direct repercussions on the country's integration and development, leveraging investments in infrastructure, such as the construction of railways, duplication of highways, improvement of the rural road network, integration of various modes of transport, being one of the Government's major bets for 2024.