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Law No. 11437, Of 28 December 2006

Original Language Title: Lei nº 11.437, de 28 de Dezembro de 2006

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LEI No-11,437, OF December 28, 2006

Altera the targeting of recipes arising from the Contribution to the Development of the National Motion Picture Industry -CONDECINE, created by the Interim Measuation no2.228-1, of September 6, 2001, aiming at the funding of programs and projects aimed at the development of audiovisual activities; amends the Interim Meastation No. 2.228-1, September 6- 2001, and the Law no 8,685, of July 20, 1993, by extending and instituting mechanisms of fomenting audio-visual activity; and gives other arrangements.

The P R E S D E N T E D A R E P A R E P B L I C A I do know that the National Congress decrees and I sanction the following Law:

Art. 1st Total features of the Contribution to the Development of the National Motion Picture Industry- CONDECINE, created by the Provisional Measure no 2.228-1 of September 6, 2001, shall be intended for the National Fund of Culture-FNC, created by the Act No 7,505 of July 2, 1986, reinstated by the Act No 8,313 of December 23, 1991, which will be allocated in specific programming category, called the Audiovisual Sector Fund, and used in the funding of programs and projects aimed at the development of audiovisual activities.

Art. 2nd Constituts FNC recipes, allocated in the specific programming category, referred to in the art. 1st of this Law:

I-a Condecine, as referred to by art. 1st of this Act;

II-the appropriations consigned in the General Budget of the Union, special credits, transfers and re-passes that are conferred upon it;

III-the resources referred to in art. 5th of the Law no 8,685, of July 20, 1993;

IV-(VETADO)

V-the yield product of applications of the features of the specific programming category to which the caput refers of this article;

VI-the product of the remuneration of resources passed on to the applicator agents, as well as of fines and interest arising from the decompliance of funding standards;

VII- 5% (five per cent) of the resources referred to in points (c, d, e and j of the art caput. 2nd of the Law no 5,070 of July 7, 1966;

VIII-the donations, legacies, grants and other features intended for the specific programming category to which the caput of this article is concerned;

IX-resources coming from agreements, arrangements, or contracts concluded with entities, bodies or companies, public or private, national and international; and

X-others that will tell you to be targeted. Single paragraph. The resources referred to in the caput of this article may not be used for administrative maintenance expenses of the Ministry of Culture or National Cinema Agency-ANCINE.

Art. 3rd The resources to which the art relates. 2nd of this Law will be able to apply:

I-through return-return investments in projects for the development of audiovisual activity and production of Brazilian audiovisual works;

II-by means of refundable loans; or

III-by means of non-refundable values in specific cases, to be predicted in regulation.

Art. 4th The features to which art refers. 2nd of this Law will support the development of the following programs, under the art. 47 of the Provisional Measure no 2.228-1, of September 6, 2001:

I-Program in Support of the Development of the Brazilian Cinema-PRODECINE;

II-Development Support Program of the Audiovisual Brazilian-PRODAV;

III-Development Support Program of the Infrastructure of the Cinema and the Audiovisual-PRO-INFRA.

§ First of the resources to which the caput of this article should be intended as a matter of priority for the fostering of Brazilian companies, as defined in the § 1st Art. 1st Interim Measement at 2,228-1 of September 6, 2001, acting in the areas of distribution, display and production of audiovisual works, as well as may be used in the equalization of the financial burden incidents in the operations of financing of audiovisual works and in minority participation in the capital of companies that are based on Brazilian audiovisual development, through financial agent, as per the provisions of regulation.

§ 2nd The expenditure on the applications referred to in the inciso III of the art caput. 3rd of this Act and with the equalization of the financial burdens referred to in § 1st of this article shall observe the limits of movement and commitment and payment of the annual budget and financial programming.

Art. 5th It will be constituted the Gestor Committee of the resources to which art refers. 2nd of this Act, with the purpose of establishing the guidelines and set out the annual plan of investments, follow up the implementation of the actions and evaluate, annually, the results achieved, having as the executive secretariat of the programming category specific to which the art is referred to. 1st of this Law to Ancine and as a Financial Agent the National Economic and Social Development Bank-BNDES or other financial institutions accredited by the Gestor Committee.

§ 1st The Gestor Committee will be made up of representatives of the Ministry of Culture, Ancine, of the institutions accredited financials and the audiovisual sector, observed the composition as per regulation.

§ 2nd A participation in the Gestor Committee will not be remunerated.

§ 3rd The operational expenditure of planning, surveying, analysis and structuring of operations, hiring, application of resources, follow-up of contracted operations and dissemination of results, necessary for the deployment and maintenance of the activities of the specific programming category, provided for in the art. 1st of this Act, they will not be able to exceed the amount corresponding to 5% (five per cent) of the resources raised annually.

Art. 6th The features to which art refers. 2nd of this Act not used until the end of the financial year, ascertained in the annual balance sheet, will be transferred as FNC credit, allocated in the specific programming category, in the following exercise.

Art. 7th The Provisional Measure no 2.228-1, of September 6, 2001, goes on to invigorate with the following essay:

" Art. 18. The distributor companies, the programmers of audiovisual works for the market segment of electronic mass communication services by subscription, the programmers of audiovisual works for other markets, as noted in point and of Annex I of this Provisional Measure, as well as domestic video rentals and display companies, shall provide periodic reports on the supply and consumption of audiovisual works and the revenues earned by the exploitation of them in the period, as standards dispatched by Ancine. " (NR)

" Art. 34. The proceeds of the Condecine's fundraising will be intended for the National Culture Fund-FNC and allocated in specific programming category called the Audiovisual Sector Fund, for application in the activities of foment concerning the Programs of which treats the art. 47 of this Provisional Measure.

I- (revoked);

II-(revoked);

III-(revoked). " (NR)

" Art. 39. ...................................................................................

...........................................................................................................

§ 2nd The values corresponding to the 3% (three percent) predicted in the inciso X of the caput of this article should be deposited in the date of payment, credit, employment, remittance or delivery to the producers, distributors or overseas intermediaries of the importances concerning income arising from the exploitation of cinematographic and videographical works or by their purchase or import at the fixed price, in account of special financial application in public financial institution, on behalf of the taxpayer.

§ 3rd The values not applied in the form of the inciso X of the caput of this article, after 270 (two hundred and seventy) days of its deposit on the account that it treats the § 2nd of this article, it will be aimed at the FNC and will be allocated in specific programming category called the Audiovisual Sector Fund.

§ 4th The values predicted in the inciso X of the caput of this article will not be able to be applied in audiovisual works of nature advertisement.

...........................................................................................................

§ 6th The projects produced with the features of which treats the inciso X of the caput of this article will be able to use the incentives provided for in the Act No. 8,685 of July 20, 1993, and in the Act No. 8,313 of December 23, 1991, limited to 95% (ninety five percent) of the total budget approved by Ancine for the project. " (NR)

" Art. 41. Funding Funds of the National Motion Picture Industry-FUNCINES will be constituted in the form of closed condo, with no legal personality, and administered by financial institution authorized to operate by the Central Bank of the Brazil or by agencies and development banks.

............................................................................................... " (NR)

" Art. 43. ...................................................................................

I-production projects of independent Brazilian audio-visual works carried out by Brazilian producing companies;

II-construction, reform and recovery of the display rooms of property of Brazilian companies;

III-acquisition of shares of Brazilian companies for the production, marketing, distribution and display of Brazilian audiovisual works of independent production, as well as for provision of services of cinematic and audiovisual infrastructure;

IV-projects of commercialization and distribution of Brazilian cinematographic audiovisual works of independent production carried out by Brazilian companies; and

V-infrastructure projects carried out by companies Brazilians. § 1st For the purpose of the application of the resources of the Funcines, the broadcasting companies of sounds and images and the telecom service providers will not be able to hold the stock control of the companies referred to in the inciso III of the chaput of this article.

§ 2nd The Funcines should hold, at a minimum, 90% (ninety per cent) of their equity applied in the ventures of the species listed in this article, observed, in relation to each species of destination, the minimum percentage to be established in regulation.

...........................................................................................................

§ 5th The audiovisual works of advertising nature, sports or journalism cannot benefit from resources of the Funcines or the FNC allocated in the specific programming category Setorial Fund of Audiovisual.

...........................................................................................................

§ 7th In the cases of the inciso I of this article, the project should contemplate the guarantee of distribution or diffusion of the works.

§ 8th For the purposes of this article, the definition of the Brazilian company constant in the § 1st art applies. 1st of this Provisional Measure. " (NR)

" Art. 44. Until the period of ascertaining relative to the calendar year 2016, inclusive, the physical and legal persons taxed by the actual profit will be able to deduct from the income tax due to the amounts applied in the acquisition of Funcines quotas.

§ 1st The deduction referred to in the caput of this article may be used in an alternative or joint manner with the said in the arts. 1st and 1o-A of the Law no 8,685, of July 20, 1993.

§ 2nd In the case of physical persons, the deduction provided for in the caput of this article is subject to the limit of 6% (six percent) jointly with the deductions of which treats the art. 22 of the Law no 9,532, of December 10, 1997.

§ 3rd Only are tax deductible due to the amounts applied in the acquisition of Funcines quotes:

I-by the physical person, in the calendar year to which to refer to the annual adjustment declaration;

II-by the legal person, in the respective period of ascertaining of tax. " (NR)

" Art. 45. ...................................................................................

...........................................................................................................

III-in the calendar year, as per adjustment in annual income statement for the physical person.

§ 1st In any hypothesis, it will not be deductible to the ascertained loss in the divestition of the Funcines ' quotas.

§ 2nd The deduction provided for in this article is limited to 3% (three per cent) of the tax due by legal persons and should observe the limit set out in the inciso II of the art caput. 6th of the Law no 9,532, of December 10, 1997.

§ 3rd (Revoged).

§ 4th The legal person who alienates the Funcines' quotas will only be able to consider as the cost of acquisition, in determining the capital gain, the values deduced in the form of the caput of this article in the hypothesis in which the alienation occurs after 5 (five) years of the date of its acquisition.

...........................................................................................................

§ 6th (Revoged). " (NR)

" Art. 47. As mechanisms of fomenting audiovisual activities, they become instituted, as standards to be dispatched by Ancine:

I-the Development Support Program of the Brazilian Cinema-PRODECINE, intended for the fostering of production projects independent, distribution, marketing and display by Brazilian companies;

II-the Brazilian Audiovisual Development Support Program-PRODAV, intended for the fostering of production projects, programming, distribution, commercialization and display of audiovisual works Independent production Brazilians;

III-the Infrastructure Development Support Programme of the Cinema and Audiovisual-PRO-INFRA project, intended for the fostering of technical infrastructure projects for film activity and audiovisual and development, magnification and modernization of the services and capital goods of Brazilian companies and autonomous professionals meeting the technological needs of Brazilian audiovisual productions.

..........................................................................................................

§ 2nd A Ancine will establish general criteria and guidelines for the application and surveillance of the resources of the Programs Referred in the caput of this article. " (NR)

" Art. 48. They are sources of resources from the Programs that it treats art. 47 of this Provisional Measure:

............................................................................................... " (NR)

" Art. 61. The defulfillment of the projects executed with resources received from the FNC allocated in the specific programming category called the Audiovisual and Funcines Sector Fund, the non-effectivation of the investment or its realization at odds with the statued implies the return of the increased features of:

............................................................................................... " (NR)

Art. 8th The Law no 8,685, of July 20, 1993, goes on to invigorate with the following changes:

" Art. 1st Until fiscal year 2010, inclusive, taxpayers will be able to deduct from the income tax due to the amounts regarding investments made in the production of independent Brazilian film audio-visual works by the acquisition of representative quotas of marketing duties on the said works, provided that these investments are carried out in the capital market, in assets provided for by law, and authorized by the Securities Commission, and the projects have been previously approved by Ancine, in the form of the regulation.

............................................................................................... " (NR)

" Art. 3rd .....................................................................................

§ 1st The legal person responsible for the remittance of the paid, credited, maids or remittances to the taxpayers of which it treats the caput of this article will have preference in the use of the resources arising from the tax benefit of which it treats this article.

§ 2nd For the exercise of the preference provided for in § 1st of this article, the taxpayer may expressly transfer to the responsible for the payment or remittance the benefit of which treats the caput of this article in device of the contract or by specially constituted document for these purposes. " (NR)

" Art. 4th The taxpayer who opts for the use of the incentives provided for in the arts. 1st, 1o-A, 3rd and 3o-A, all of this Act, shall deposit, within the statutory period fixed for the pick-up of the tax, the value corresponding to the abatement in account of special financial application, in public financial institution, the movement of subjecting itself to the prior substantiation by Ancine de ue is intended for investments in production projects of Brazilian cinematographic and videographical works Brazilian independent production.

§ ...........................................................................................

I-on behalf of the proponent, for each project, in the case of the art. 1st and the art. 1o-A, both of this Act;

II-in name of the taxpayer, his or her legal representative or the responsible for the consignment, in the case of the art. 3rd and the art. 3o-A, both of this Act.

§ 2nd ...........................................................................................

...........................................................................................................

II-limit of the resource aport object of the incentives provided for in art. 1st and in art. 1o-A, both of this Act, summed up, is R$ 4,000,000.00 (four million reais) and, for the anticipated incentive in art. 3rd and in the art. 3o-A, both of this Act, summed up, is R$ 3,000,000.00 (three million reais), and may these limits be used concomitantly;

............................................................................................... " (NR)

" Art. 5th The values not applied in the form of the arts. 1st and First, both of this Act, within 48 (forty eight) months, counted from the date of the beginning of the 1st (first) deposit in the account of which it treats the inciso I of § 1st art. 4th, and, in the case of the arts. 3rd and 3rd-A, all of this Law, after 180 (one hundred and eighty) days of its deposit in the account of which it treats the inciso II of § 1st art. 4th of this Act, it will be intended for the National Culture Fund and will be allocated in specific programming category called the Audiovisual Sector Fund, for application in projects to foster the national film industry, as per standards expedited by the Gestor Committee. " (NR)

Art. 9th Ficam included in the Act no 8,685, of July 20, 1993, the following arts. 1o-A and 3o-A:

" Art. 1o-A. By the year-calendar year 2016, inclusive, taxpayers will be able to deduct from the income tax due to the amounts referring to the sponsorship of the production of Brazilian cinematographic works of independent production, whose projects have been previously approved by Ancine, from income tax due ascertained:

I-in the declaration of annual adjustment by the physical people; and

II-in each period of ascertaining, quarterly or annual, by the legal persons taxed on the basis of actual profit.

§ 1st The deduction provided in this article is limited:

I-at 4% (four percent) of the tax due by the legal persons and must observe the limit set out in the inciso II of the art. 6o of the Law no 9,532, of December 10, 1997; and

II-at 6% (six percent) of the tax due by the physical people, jointly with the deductions that it treats the art. 22 of the Law no 9,532, of December 10, 1997.

§ 2nd Only are tax deductible due to the values expended on sponsorship title:

I-by the physical person in the year-calendar to which to refer to the annual adjustment declaration; and

II-by the legal person in the respective period of ascertaining of tax.

§ 3rd Legal persons do not will be able to deduct the value of the sponsorship from which it treats the caput of this article for the purposes of determining the actual profit and calculation basis of the Social Contribution on the Net Profit-CSLL.

§ 4th The specific projects of the audio-visual area, cinematographic of diffusion, preservation, display, distribution and technical infrastructure presented by Brazilian company will be able to be accredited by Ancine for fruition of the tax incentives of which it treats the caput of this article in the form of the regulation. "

" Art. 3o-A. Taxpayers of the Income Tax incident on the terms of the art. 72 of the Act No 9,430 of December 27, 1996, beneficiaries of credit, employment, remittance, delivery or payment for the acquisition or remuneration, to any title, of rights, relating to transmission, by means of broadcasting of sounds and images and electronic mass communication service by signature, of any audiovisual works or events, even those of sports competitions of which it is part Brazilian representation, will be able to benefit from abatement of 70% (seventy per cent) of the tax due, as long as they invist in the development of production projects of Brazilian film works of feature-length independent production and in the coproduction of Brazilian cinematographic and videophonographic works independent of short, medium and long-metre-films, documentaries, telefilmes and miniséries.

§ 1st The legal person responsible for the remittance of the importations paid, credited, maids, delivered or remitted to the taxpayers that it treats the caput of this article will have a preference in the use of the resources arising from the tax benefit of which it treats this article.

§ 2nd For the exercise of the preference provided for in § 1st of this article, the taxpayer may expressly transfer to the responsible for the credit, employment, shipping, delivery or payment the benefit of which treats the caput of this article in device of the contract or by specially constituted document for these purposes. "

Art. 10. The distributors of audiovisual works for the domestic video market, in any support, should use revenue control system on sales, compatible with the standards dispatched by Ancine.

Paragraph single. The willing in the caput of this article extends to the companies responsible for the manufacturing, replication and import of pre-recorded domestic video units, in any support.

Art. 11. Audio-visual activity explorers should provide information to Ancine as to co-production contracts, assignment of commercial exploitation rights, display, vehiculation, licensing, distribution, marketing, import and export of audiovisual works carried out with resources originating from tax benefit or direct foment actions, as per standards dispatched by Ancine.

Art. 12. It may appear in the budgets of national film and audiovisual works using the tax incentives provided for in the Laws in the 8,313, of December 23, 1991, and 8,685, of July 20, 1993, in the Interim Measure in the 2.228-1, 6 of the September 2001, and in this Law, in the amount of up to 10% (ten percent) of the total approved, the remuneration of the management services and execution of the respective project by Brazilian film producing companies.

Paragraph single. In the case that the services referred to in the caput of this article are outsourced, their payments should be proven in the benefits of accounts with tax notes or receipts from the contracted companies, accompanied by the vouchers for the pick-up of the tributes and matching contributions.

Art. 13. For the purposes of this Act, the infractions committed in the audiovisual activities are classified in:

I-light, those in which the offender is benefitted by extenuating circumstance;

II-graves, those in which an aggravating circumstance is verified;

III-gravely ones, those in which it is verified the existence of 2 (two) or more aggravating circumstances.

§ 1st The warning will be applied in the hypotheses of infractions considered lightweight, getting the notified infractor to do cessation of wrongdoing, under penalty of imposing other penalties provided for in law.

§ 2nd simple fine will be imposed when the offender incurring the practice of light or serious infractions and in the hypotheses where, warped by irregularities that have been practiced, cease to sanction them on the marked deadline, owing to their value vary between R$ 500.00 (five-hundred reais) and R$ 100,000.00 (one hundred thousand reais).

§ 3rd In the infractions for the which there is no specific sanction provided for in law, Ancine will privilege the application of a simple fine penalty.

Art. 14. For the purposes of this Law, of the Law No. 8,685 of July 20, 1993, and of the remaining normative instruments applicable to audiovisual activities, the following restrictive law sanctions shall be considered, without prejudice to the penalties provided for in the art. 13 of this Act:

I-loss or suspension of participation in the FNC's programs in category of specific programming, as per art. 1st of this Act;

II-loss or suspension of participation in lines of funding in official credit establishments;

III-prohibition of hiring with the administration public, for the period of up to 2 (two) years;

IV-suspension or prohibition of fruity of the tax benefits of audiovisual legislation, for the period up to 2 (two) years.

Art. 15. The defulfillment to the provisions of the arts. 10 and 11 of this Act will subject the offender to the fine of R$ 100,000.00 (one hundred thousand reais) to R$ 1,000,000.00 (one million reais), in the form of the inciso II of the art caput. 13 of this Law.

Art. 16. The defulfillment to the provisions of the arts. 18, 22 and 23 of the Provisional Measure no 2.228-1, of September 6, 2001, will subject the offender to the fine of R$ 2,000.00 (two thousand reais) to R$ 100,000.00 (hundred thousand reais).

Art. 17. In the devices without specific limit forecast, the fine imposed on the grounds of the discompliance of the provisions of the Provisional Measure no 2.228-1 of September 6, 2001 and in this Act will limit to 5% (five per cent) of the company's monthly gross revenue, observed the provisions of the art. 60 of the Provisional Measure no 2.228-1, of September 6, 2001.

Art. 18. The Executive Power will regulate this Act within 90 (ninety) days, from its publication.

Art. 19. This Act comes into force on the date of its publication.

Art. 20. The incisors I, II, IV and XIII of the art caput are hereby revoked. 11, the § § 3rd and 6th of the art. 45, the art. 51 and the § 1st of art. 60 of the Provisional Measure no 2.228-1, of September 6, 2001.

Brasilia, December 28, 2006; 185th of Independence and 118 o of the Republic.

LUIZ INACIO LULA DA SILVA

Guido Mantega

Gilberto Gil