Culture Incentive Law - ISS RJ: 5 steps for the companies support a project and strengthen its brand

Strengthening the policy of social responsibility and contributing to the development of the locality in which the company operates, by choosing to allocate resources to a cultural initiative aligned with business values, it brings positive reflections to its institutional image. In the city of Rio de Janeiro, this is possible through the Carioca Culture Incentive Municipal Law - Law No. 5553/2013, which is open to taxpayers up to August 31.

The law provides that companies can encourage cultural projects, giving them up to 20% of the ISS due to the municipality. In order to make this support possible, companies should register yearly as incentive contributors.

This partnership between the private sector and the government has been essential in maintaining many talents and promotion of important projects for the city's cultural scene.

Companies also receive the sponsorship counterparts, and may revert this to benefits for their employees, clients or community. Well developed and combined with other corporate programs, this initiative can prove to be a good strategy for strengthening the brand.

In short, it works as follows: the supporting company transfers up to 20% of the ISS payable to a project it selected from the registered projects with the city hall. The collection that will be intended for this cultural project is then made in the same tax payment slip, the DARM (Local Revenue Payment Form), issued by the “Nota Carioca” website.

If a company, for instance, pays BRL 50,000 in ISS, it may destine up to BRL 10,000 to encourage and sponsor a cultural project.

Check out the top five steps to support a cultural project.

1. Registration of the Incentive Taxpayer - from August 1 to 31

All legal entities enrolled for Service Tax (ISS) in Rio may apply for free, except the following companies:

• Micro and small companies, opting for Simples Nacional.

• ISS taxpayers whose tax is fully withheld by the service contractor, pursuant to Law 691/84.

• Companies that exclusively pay the ISS as a taxpayer, pursuant to Law 691/84.

2. Approval of registration by the City Hall - September

If the register information and documents are in accordance with the notice, the registration is approved. If deemed disabled at this stage, the company may appeal.

3. Disclosure of Incentive Amount - Until October 15

With the end of the registration approval phase, the city hall discloses the proportionality result and the total amount of the taxpayers’ tax incentive.

The participation total is limited to 20% of the company's ISS payment, based on the fiscal year of the previous year. However, this percentage may not be reached. The law provides for a tax waiver of at least 1% of ISS collected by the city in the previous year.

For example, for 2020, according to the Rio de Janeiro City Hall, the total amount of the available incentive will be around BRL 54 million. If the value informed by the incentive taxpayer companies exceeds this amount, the proportionality formula will be applied and then the available amount will be apportioned among all registered and qualified companies.

4. Filing of the Statement(s) of Acceptance - until October 31st

The Statement of Acceptance is the document signed by the taxpayer in charge of the Municipal Treasury Secretariat, confirming the intention to encourage cultural projects, considering the values approved by the city hall.

5. Choosing the project(s): file of Commitment Term (s) - from November 1st to December 15th

The incentive taxpayer has hundreds of available cultural projects, previously approved by the Municipal Culture Secretariat and qualified to receive sponsorship.

There are 19 areas covered by law at the supporter's choice: visual arts, crafts, audiovisual, libraries, cultural centers, cinema, circus, dance, design, folklore, photography, literature, fashion, museums, music, multiplatform, theater, transmedia, preservation and restoration of natural, material and immaterial heritage.

The sponsor should be aware that the project must capture at least 30% of the total sponsorship approved. Otherwise, the city will not transfer the resources and, therefore, it will not become viable.

Allocation Resources throughout the year

The incentive taxpayer should monthly intend the resources, through the City Hall system, between the days 20 to 30 of each month.

For everything to go smoothly, the ISS should be paid within regular payment deadlines.

The city is responsible for transferring the installments of the resource to the referred projects.

2019 deadlines

Between October and November, the City Hall has held an event called “Conexão ISS”, intended to a business round between cultural producers and taxpayer companies, so that the incentives have the opportunity to comprehensively know the objectives and counterparts from various cultural projects.

Expert assistance to benefit from legislation

Domingues e Pinho Contadores provides assistance in the taxpayer registration of the company and in the formalization of the Statement of Acceptance for choosing projects, and, during the implementation year, manages the allocation of ISS resources.

With this consultancy, companies has an adequate benefit from the current culture incentive legislation, intending the pre-established values to practices in line with their business, with total control over the reduction of invested values and return on image gains.