Brazil is planning to reduce taxes for solar panels in an attempt to promote wider use of rooftop power systems.
The federal government will lower profit participation contributions and social security taxes, known respectively as PIS and Cofins, for solar equipment used by residential consumers, Energy Minister Eduardo Braga said Wednesday. The government will also ask states to reduce the goods flow tax, known as ICMS, on the energy generated.
“The state of Sao Paulo endorsed our proposal and is leading a process that is a milestone for Brazilian solar generation,” Braga said in a speech to Congress. “Tax exemption will enable this source to be competitive.” He didn’t say how much the taxes might be reduced.
Brazil is seeking to offer incentives for so-called distributed generation, smaller systems that are installed close to where the energy is consumed. The move comes as the country faces a growing risk of water rationing after the biggest drought in eight decades curbed the country’s hydroelectric generation capacity. Banco Santander Brasil SA said in a Feb. 4 report that the risk of rationing is “high” and may shave as much as 2 percentage points off Brazil’s economic growth.