The brazilian cultural incentive law (Known as “Rouanet Law”) suffered big changes regarding fundraising limits.

The most striking change was the decrease in the amount that can be raised by producers and art business in general using the law: from 60 million to 1 million.

First, it is important to understand how the Rouanet law works: companies act as sponsors by investing in cultural activities such as exhibitions, music festivals and literary production. In return, the company can deduct this amount for income tax purposes. The deductibility limit is 4% of the corporate income tax. For example, if a company pays R $ 10 million of Income tax, it can allocate R $ 400,000 to encourage and sponsor a cultural project. This amount will be deducted of the income tax for the following year. 

The producer who wishes to obtain corporate sponsorship has a maximum value that can be raised using the law. This is the value that changed in the new wording, from sixty million to one million. This will directly impact large-scale art works that require a high investment to establish themselves in Brazil, such as original Broadway musicals.

These artistic productions require a great initial investment for hiring employees, rental of spaces for rehearsals and exhibitions, and many others.

With the limit of the amount receivable being only 1 million reais, cultural producer who wishes to present foreign works in Brazil will be hugely affected, and will need to develop new sources of sponsorship to reach their objectives.

New methods of raising Money is already being explored, the most popular being crowdfunding. This system is still on it’s early days, and there’s much to learn from the upcoming experiences.

We continue to monitor changes in Brazilian cultural development and inform decisions that impact the investment in the artistic sector.

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Lawyer Author of the Comment: Vittória Cariatti Lazarini
Source
Headline: Velhas atitudes emperram uso de alternativas à Lei Rouanet

“If you want to learn more about this topic, contact the author or the managing partner, Dr. Cesar Peduti Filho.”
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