Brazilian states Goias, Pernambuco and Sao Paulo have been authorised to grant a VAT tax exemption on all distributed generation using the net-metering system in their regions, from 1 September 2015.
Brazil’s National Council for Financial Policy (CONFAZ) came to the agreement at an extraordinary meeting held in Brasilia, on 22 April.
Rodrigo Sauaia, director of Brazil’s solar industry association, Absolar, told PV Tech solar would the main beneficiary of this development as 93% of all net-metering systems currently installed in the country are PV.
Now the three states can legally and without questioning define their own policies for PV in terms of tax exemptions, Sauaia said: “This would allow them to increase the competitiveness of the net-metering system in their region by at least 30-40%.
“As a result of that, our expectation is that other states will also want to join this new trend to provide tax incentives to distributed generation in the region.”
Even though the state of Minas Gerais has been giving the same tax incentive for the last five years, it did not have support from CONFAZ, so it could be legally challenged at any point.
Despite Minas Gerais not being included in the list of three authorised states, meaning that it is still not legally protected, Sauaia said any state in the country is now able to submit an exemption request to CONFAZ and will “very likely be approved since other states already have this benefit”.
Sauaia said some government departments and some agencies had expected that all states would be exempted together, but instead the agreement means that states are given the opportunity to define if they want to join or not.
He added: “We don’t see any advantage for a state not to join this support for net metering. If they don’t, they will be at a competitive disadvantage in terms of attracting industry, companies and jobs to their region.”
An official statement from Absolar said: “We congratulate Confaz for their progressive position on the topic. We believe that this is an important first step to bring down the barrier of taxation to the development of PV in Brazil. Our expectation is that Confaz will also be open to evaluate further tax exemptions for not only electricity but also for components, which are currently very heavily taxed in the country.”
This month PV Tech reported that the Brazilian Government was under pressure to approve the tax breaks by campaigners from the Brazilian arm of Greenpeace.