DECREE NO. 5,798, OF June 7, 2006.

Regulates the tax incentives to research activities technological innovation and development of technological innovation, of which they treat the arts. 17 a to 26 of the Law no 11,196, of November 21, 2005.

THE PRESIDENT OF THE REPUBLIC, at the use of the assignment that gives you the art. 84, inciso IV, of the Constitution, and with a view to the provisions of the arts. 17 a 26 of the Law no 11,196, of November 21, 2005,

DECRETA:

Art. 1st Without prejudice to the remaining standards in force applicable to matter, the legal person, relatively to the technological research activities and technological innovation development, can use of tax incentives, as disciplined in this Decree.

Art. 2nd For effects of this Decree, consider yourself:

I-technological innovation: the design of new product or manufacturing process, as well as the aggregation of new functionalities or characteristics to the product or process that imply incremental improvements and effective gain of quality or productivity, resulting greater competitiveness in the market;

II-technological research and development of technological innovation, the activities of:

a) basic research directed: the work performed with the aim of acquiring knowledge as to the understanding of new phenomena, with views to the development of products, innovative processes or systems;

b) applied research: the work performed with the goal of acquiring new knowledge, with views to the development or enhancement of products, processes and systems;

c) experimental development: the systematic work delineated from pre-existing knowledge, aiming at the proving or demonstration of technical feasibility or functional of new products, processes, systems and services or, still, an evident improvement of those already produced or established;

d) basic industrial technology: those such as the afferition and calibration of machines and equipment, the design and the confection of specific measurement instruments, the certification of conformity, inclusive of the corresponding tests, the normalization or the technical documentation generated and the patenting of the developed product or process; and

e) technical support services: those that are indispensable to the implantation and maintenance of the facilities or of the equipment intended for, exclusively, the execution of research, development or technological innovation projects, as well as the empowerment of human resources to them dedicated;

III-researcher hired: the graduate researcher, postgraduate, technologist or mid-level technician, with relation formal employment with the legal person who attests exclusively in technological research activities and technological innovation development; and

IV-legal person in the acting areas of the extinct North-East Development-SUDENE and Superintendency of Development of the Amazon-SUDAM: the establishment, matrix or not, situated in the acting area of the respective municipality, in which the technological research project and development of technological innovation are being executed.

Art. 3rd The legal person will be able to enjoy the following tax incentives:

I-deduction, for the purpose of ascertaining the net profit, of value corresponding to the sum of expenditures carried out in the period of ascertaining with technological research and development of technological innovation, classifiable as operating expenses by the Income Tax legislation of the Legal Person-IRPJ, or as payment in the form provided for in § article;

II-reduction of fifty percent of the Imposed Products Tax-IPI incident on equipment, machinery, apparatus and instruments, as well as the spare accessories and tools accompanying these goods, intended for research and technological development;

III-accelerated depreciation, calculated by the application of the usually admitted depreciation rate, multiplied by two, without prejudice to the normal depreciation of the machines, equipment, appliances and new instruments, intended for use in the technological research activities and development of technological innovation, for the purpose of IRPJ ascertainment;

IV-accelerated amortization, upon deduction as a cost or operating expense, in the period of ascertaining in which they are effected, of the expenditures relating to the acquisition of intangible goods, linked exclusively to technological research activities and development of technological innovation, classifiable in the beneficiary's deferred asset, for effect of IRPJ ascertaining;

V-credit of income tax withheld at the source, incident on the values paid, remitted or credited to beneficiaries residing or domiciled abroad, for the title of royalties, technical or scientific assistance and specialized services, provided for in averaged technology transfer contracts or registered pursuant to the Act no 9,279, of May 14, 1996, in the following percentage:

a) twenty percent, relative to the periods of ascertaining ended from December 31, 2008;

b) ten percent, regarding the periods of ascertaining closed from , up to 31 percent december 2013; and

VI-zero reduction of the aliquot of tax on income withheld at source in the consignments made to the outside intended for the registration and maintenance of brands, patents and cultivars.

§ 1st The willing in the inciso I of the caput of this article applies also to expenditures with technological research and development of technological innovation contracted in the Country with university, research institution or independent inventor of which treats the inciso IX of the art. 2nd of the Law no 10,973 of December 2, 2004, provided that the legal person who has effected the disclension with the responsibility, the business risk, the management and the control of the use of the results of the expenditures.

§ 2nd In the apuration of expenditures carried out with technological research and development of technological innovation, no will be computed the amounts allocated as non-refundable resources by organs and entities of the Public Power.

§ 3rd The benefit to which refers to the inciso V of the caput of this article can only be enjoyed by legal person who takes the commitment to carry out expenditures in research in the Country, in amount equivalent to, at a minimum:

I-once and a half the value of the benefit, for legal persons in the actuation areas of the SUDENE and SUDAM extincts; and

II-double the value of the benefit, in the remaining regions.

§ 4th The credit of income tax withheld at the source, which refers to the inciso V of the caput of this article, will be restituted in current currency, as disposed of in the regulatory act of the Ministry of Finance.

§ 5th In the hypothesis of expenditures with technical, scientific or resembling assistance and royalties by industrial patents paid to the physical or legal person abroad, the deductibility of the expenditures is conditional on the observance of the provisions of the arts. 52 and 71 of the Law no 4,506, of November 30, 1964.

Art. 4th The deduction that it treats the inciso I of the art caput. 3rd applies also for the purpose of ascertaining the calculation basis of the Social Contribution calculation basis on the Net Profit-CSLL.

Art. 5th The reduction of fifty per cent of the IPI of which treats the inciso II of the art caput. 3rd shall be applied automatically by the industrial establishment or equated to industrial, at the sight of order, purchase order or order document of the order, issued by the purchaser, which shall be shelved available to the audit, owing to the tax note the purpose for which the product is intended and the indication of the legal act which has granted the tax incentive.

Paragraph single. In the product import hypothesis by the beneficiary of the reduction of which it treats the caput of this article, the latter should indicate in the import declaration the purpose to which it is intended and the legal act authorising the tax incentive.

Art. 6th The accelerated depreciation quota, of which it treats the inciso III of the art caput. 3rd, will constitute the exclusion of net profit for the purposes of determination of the actual profit and will be controlled in the Actual Profit's Book of Purpose-LALUR.

§ 1st Total accumulated depreciation, including accounting and acceleration, will not be able to surpass the cost of acquiring the good that is being depreciated.

§ 2nd From the period of ascertaining in which it is reached the limit of which it treats the § 1st of this article, the depreciation value, recorded in commercial writing, is to be added to the net profit for the purpose of determining the actual profit.

Art. 7th Powerful can be also deduced as operating expenses, in the form of the inciso I of the art caput. 3rd and the art. 4th, the importances transferred to microenterprises and small-sized enterprises from which it treats the Law no 9,841, of October 5, 1999, aimed at the execution of technological research and technological innovation development of interest and on account and order of the legal person who promoted the transfer, yet the legal person receiving such importances comes to have a stake in the economic outcome of the resulting product.

§ First the provisions of this article apply to the transfers of resources effected to independent inventor that it treats the inciso IX of the art. 2nd of the Law no 10,973, from 2004.

§ 2nd importances received in the form of the caput of this article do not constitute revenue of microenterprises and small business enterprise, nor independent inventor's income, provided that they are used in full in the realization of research or development of technological innovation.

§ 3rd In the hypothesis of § 2nd of this article, for microenterprises and small-sized companies of which it treats the caput of this article that ascertains income tax based on actual profit, expenditures effected with the execution of technological research and development of technological innovation will not be deductible in the apuration of the actual profit and calculation basis of CSLL.

Art. 8th Without prejudice to the provisions of the art. 3rd, as of the 2006 calendar year, the legal person will be able to exclude from the net profit, in the determination of the actual profit and calculation basis of CSLL, the value corresponds to up to sixty percent of the sum of the expenditures carried out in the period of ascertaining with technological research and development of technological innovation, classifiable as expenditure by the IRPJ legislation, in the form of the inciso I of the art caput. 3rd.

§ 1st The exclusion of which treats the caput of this article will be able to reach:

I-up to eighty percent, in the case that the legal person increments the number of researchers contracted in the year-calendar of enjoyment of the incentive in percent above five percent, relative to the average of researchers with contracts in force in the year-calendar prior to the enjoyment of the incentive; and

II-up to seventy percent, in case the legal person increments the number of researchers hired in the year-calendar of enjoyment of the incentive up to five per cent, relative to the average of researchers with contracts in force in the calendar year prior to the enjoyment of the incentive.

§ 2nd Exceptionally, for the years-calendar from 2006 a to 2008, the percentage referred to in § 1st of this article be applied based on the increment of the number of researchers hired in the year-calendar of enjoyment of the incentive, in relation to the average of researchers with contracts in force in the calendar year 2005.

§ 3rd In the legal person hypothesis that is devoted exclusively to technological research and innovation development technological, for the calculation of the percentage of which it treats this article, the partners who act with dedication of at least twenty weekly hours in the activity of technological research and development of technological innovation will also be able to be considered exploited by the legal person itself.

§ 4th Without prejudice to the provisions of the caput and the § of this article, the legal person will be able to exclude from the net profit, in the determination of the actual profit and calculation basis of CSLL, the value of up to twenty percent of the sum of the expenditures or payments linked to technological research and development of technological innovation object of patent granted or cultivar registered.

§ 5th For the purposes of the provisions of § 4th of this article, the expenditures and payments shall be registered in Part B of the LALUR and excluded in the period of ascertaining the granting of the patent or the registration of the cultivar.

§ 6th The exclusion of which treats this article is limited to the value of the actual profit and calculation basis of CSLL prior to the own exclusion, vetoed the harnessing of the eventual excess in later ascertaining period.

§ 7th The provisions of § 6th do not apply to the legal person referred to in § 3rd of this article.

Art. 9th For the purposes of the provisions of this Decree, the figures for expenditures incurred on fixed installations and in the acquisition of apparatus, machinery and equipment, intended for use in research and technological development projects, metrology, technical standardization and conformity assessment, applicable to products, processes, systems and personnel, authorization procedures of registrations, licences, homologation and its correlates forms, as well as relative to intellectual property protection procedures, may be depreciated or amortized in the form of the prevailing legislation, and the undepreciated or unamortized balance may be excluded in the determination of the actual profit, in the period of ascertaining in which it is completed its use.

§ The value of the excluded balance in the form of the caput of this article is to be controlled in Part B of the LALUR and will be added, in the determination of the actual profit, in each period of later ascertaining, by the value of the normal depreciation or amortization that comes to be accounted for as operating expense.

§ 2nd The beneficiary legal person of depreciation or amortization accelerated in the terms of the incisos III and IV of the art caput. 3rd will not be able to use the benefit of which it treats the caput of this article relatively to the same assets.

§ 3rd The accelerated depreciation or amortization, of which they treat the incisos III and IV of the art caput. 3rd, as well as the exclusion of the undepreciated or unamortized balance in the form of the caput of this article, do not apply for the purpose of ascertaining the CSLL calculation basis.

Art. 10. The expenditures and payments of which treat the arts. 3rd to the 9th:

I-should be controlled accounting in specific accounts; and

II-only be able to be deduced if paid to resident and resident physical or legal persons in the Country, re-salvaged those mentioned in the incisos V and VI of the art. 3rd of this Decree.

Art. 11. The Union, through the agencies of fomenting science and technology, will be able to undersell the value of the remuneration of researchers, titled as masters or doctors, employed in technological innovation activities in companies located in the Brazilian territory.

§ 1st The value of the grant of which treats the caput of this article will be from:

I-up to sixty per cent for legal persons in the areas of actuation of extinct SUDENE and SUDAM; and

II-up to forty percent, in the remaining regions.

§ 2nd The grant of which treats the caput of this article is aimed at the hiring of new researchers by the companies, titled as masters or doctors.

§ 3rd The resources of which treats the caput of this article will be object of budget programming in specific category of the Ministry to which the agency of science and technology foment is bound, without prejudice to the allocation of other resources intended for the grant.

§ 4th The grant of the grant of which treats the caput of this article will be preceded by approval of project by the agency of fomenting science and technology referred to in § 3rd, and will respect the limits of values and form defined by the Ministry to which it is bound.

Art. 12. The enjoyment of the tax benefits or the grant of which it treats this Decree is conditional on the substantiation of the tax regularity of the legal person.

Art. 13. The disservice of any obligation assumed to obtain the incentives of which it treats this Decree, as well as the misuse of the tax incentives in them, imply loss of the right to the as yet unused incentives and the pick-up of the value corresponding to unpaid tributes due to the incentives already used, plus fine and interest, of mora or of trade, provided for in the tax legislation, without prejudice to the liable criminal penalties.

Art. 14. The legal person beneficiary of the incentives it treats this Decree is obliged to render to the Ministry of Science and Technology, in electronic medium, as per instructions by this established, information about its research programs technological innovation and development of technological innovation, up to July 31 each year.

§ 1st A documentation relating to the use of the incentives of which it treats this Decree should be maintained by the beneficiary legal person at the disposal of the audit of the Registry of the Federal Revenue Office, during the prescriptional time limit.

§ 2nd The Ministry of Science and Technology will refer to the Registry of the Revenue Federal as information regarding tax incentives.

Art. 15. The Industrial Technology Development Programs-PDTI and Agrolivestock Technological Development Programs-PDTA, and the projects approved until December 31, 2005 continue to be governed by the legislation in force on the date of publication of the Law in the 11,196, from 2005.

§ 1st The legal persons performing programs and projects referred to in the caput of this article will be able to ask the Ministry of Science and Technology for migration to the Law regime in 11,196, from 2005, owing, in this hypothesis, to submit final programme implementation report or project.

§ 2nd The migration of which treats § 1st will entail the cessation of the fruition of the tax incentives granted on the basis of the programs and projects referred to in the caput, as of the date of publication of the authoring act of migration in the Official Journal of the Union.

Art. 16. The provisions of this Decree shall not apply to legal persons who use the benefits of which they treat the Laws no 8,248, of October 23, 1991, at 8,387, of December 30, 1991, and No 10,176, of January 11, 2001.

Art. 17. As of October 5, 1993, the Decree No 949 of October 5, 1993 applies only in relation to PDTI and PDTA, whose projects have been approved until December 31, 2005.

Art. 18. This Decree comes into effect on the date of its publication.

Art. 19. It is revoked the Decree no 4,928, of December 23, 2003.

Brasilia, May 7, 2006; 185th of the Independence and 118th of the Republic.

LUIZ INÁCIO LULA DA SILVA

Guido Mantega

Luiz Fernando Furlan

Sergio Machado Rezende

This text does not replace the one published in the D.O.U. of 6/8/2006.