Brazil/Displays

• 1. Seminar Invest in Brazil: Opportunities for Displays Washington State Convention Center Seattle, WA, USAMay 25th, 2010Ministry of Development,Industry and Foreign Trade

2. The Brazilian Displays andSemiconductor Industry Support ProgramMinistry of Development,Industry and Foreign Trade 3. PADISJos Ricardo Ramos Sales Foreign Trade Analyst [email protected] of Development,Industry and Foreign Trade 4. PADIS PADIS is the Brazilian Program for the DevelopmentofDisplayand Semiconductor IndustryCreated by Law 11,484 - May 31st, 2007That Law also makes provisions on new regulation for intellectual property rights on integrated circuits topography: Investment protectionCompliance with internationalIP agreements 5. Companies which invest in Research & PADIS Development (R&D) and manufacture, in Brazil:Beneficiaries Flat panels (as an input to electronic equipmentsand includes LCD, PDP/Plasma, LEDs, OLEDs and TFEL)a) Concept, development and design; orb) Manufacture of optoelectronic and photonic devices,including those applicable to displays; or c) Final assembly, electrical and optical tests of panel modules.OBS:1) It does not include CRT 6. Companies which invest in Research & PADIS Development (R&D) and manufacture, in Brazil:Beneficiaries Semiconductor electronic devices (headings 8541 and 8542 of NCM)a) Concept, development and design; orb) Diffusion (front-end); orc) Encapsulation and test (back-end). OBS: 1) Module assembly is not included2) Photovoltaic cell is included3) Chip on board is included 7. PADIS For the acquisition ofmaterials and design tools: equipments, Value added taxes Federal IncentivesSocial Security Contributions => from9,25% to 0% Tax on Industrialized Products => fromup to 15% to 0%Import Tax for inputs (supplies) andequipmentsPossibility of reduction to 0% 8. For the commercialization of displays or PADISsemiconductor devices:Value added taxes 1 FederalSocial Security Contributions => from Incentives 9,25% to 0%Tax on Industrialized Products =>from up to 15% to 0%Corporate Income Tax => from 15% to0%1Restrictions may apply. Refer to Brazilian Regulationfor more information. 9. PADISReduction to 0% of Social SecurityContributions (PIS-PASEP/COFINS, PIS-PASEP/COFINS-Importation) and of Tax on Federal Incentives Industrialized Products (IPI) ValiditySituation: when the beneficiary of PADISpurchases in the domestic market or importsmachinery, devices,instruments,equipments, softwares and inputs tomanufacture displays and semiconductors.Validity: until January 22, 2022. 10. PADISPossibility of reduction to 0% of theImport TaxFederal Incentives ValiditySituation: when the beneficiary ofPADIS imports machinery, devices,instruments, equipment, softwares andinputs (supplies) mentioned in an act ofthe Executive Branch, to manufacturedisplays and semiconductors. That Act willdetermine the list of goods, the conditionsand the validity of the incentive. 11. Reduction to 0% of the Contribution for PADISIntervention in the Economic Domain (CIDE)destined to fund the Program for EncouragingUniversity-EnterpriseIntegrationfor Federal Incentives Supporting Innovation mentioned by Article 2of Law no. 10,168, of December 29, 2000. ValiditySituation: In remittances abroad forpaymentofagreementsrelated toexploitation of patents and use of trademarksand agreements for the supply of technologyand technical assistance, when conducted bythe beneficiary of PADIS and linked tomanufacture of displays and semiconductors. Validity: 12 or 16 years, from the date theproject is approved more time to theprojects with more value. 12. PADISReduction to 0% of Social SecurityContributions2and of Tax onIndustrializaded Products Federal IncentivesSituation: On sale of displays3 or Validity semiconductors.Validity: until January 22, 2022. 2This reduction is also applicable to revenuesresulting from the sale of design, when performedby the beneficiary of PADIS 3 Restrictions may apply. Referto BrazilianRegulation for more information. 13. PADISReduction to 0% of the Income Taxrates and additional tax charged onexploitation profits. Federal IncentivesThe income tax reduction is also Validity applicable to revenues resulting from thesale of design, when performed by thebeneficiary of PADIS. Validity: 12 or 16 years, from the datethe project is approved more time to theprojects with more value. 14. PADISProject approval by the Ministries ofDevelopment, Industry and ForeignTrade (MDIC), Finance (MF) and Requirements Science and Technology (MCT).Fiscal regularity in BrazilInvest in R&D activities performed inBrazil at least five percent (5%) of its netrevenues earned in the domestic market. 15. PADIS Higher national production, with valueand specialized competence in project,development and manufacturing ofdisplays and semiconductor electronic Expected devices. resultsA strong displays and semiconductorsector in Brazil can allow a competitiveinsertion in the global market, withexports and great reduction of imports. Benefits to several productive chainswhich are big consumers of thosecomponents(Information andComunication, Automotive, Agribusiness,Textiles and so on). 16. PADIS PADIS can provide you good conditions toexplore Benefits to interestingmarketsby investors designing and manufacturing displays and ICs in Brazil without paying taxes and obtain other state incentives. And also exporting to Latin America and other markets. 17. Thank you very much!Ministry of Development, Industry and Foreign Trade