Proving the Business Case for the Internet of Things

Brazil slashes taxes operators pay on M2M SIMs

Iain Morris
May 7, 2014
 
Brazilian authorities are reported to have given a boost to the local market for M2M services by slashing the taxes that operators must pay on M2M SIMs.

According to a report from Business News Americas, a regulatory decree has been signed off by President Dilma Rousseff after being published in Brazil’s federal gazette – the Diario Oficial de Uniao.

The new regulations cut the so-called installation inspection fee on each active terminal from BRL26.8 ($12.2) to BRL5.68, and the operation inspection fee to BRL1.89 from a previous charge of BRL8.94.

Operators pay the operation inspection fee on an annual basis for active SIMs deployed in the market and are next due to make payments in March 2015.

Business News Americas reports that cuts are specifically aimed at M2M terminals and take into account the usage of those devices in sectors including smart metering, car tracking and remote health monitoring.

Brazil’s communications ministry has reportedly published a statement arguing that regulation will not have an adverse impact on the 2014 fiscal budget.

Nevertheless, authorities are estimating a loss of around BRL110 million for 2015 as a result of the tax breaks.

Data from Anatel indicates that Brazil currently has about 8.48 million M2M connections, representing about 3.1% of the mobile telecoms market.
Authorities expect the tax changes to spur the deployment of M2M services in the Brazilian market.

“By 2016, with the [tax] exemptions, we estimate that the number of M2M devices should increase … to 23.3 million,” said communications minister Paulo Bernardo as quoted by Business News Americas.

While M2M terminals generate lower revenues than phone plans, they were taxed at similar rates, and Brazilian authorities have also said the tax changes were necessary to correct this distortion.
 
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