Law simplifies foreign participation in the telecommunication sector

Change is expected to help making the sector more attractive to foreign investors

Announced as a measure aimed at modernizing and reducing bureaucracy in the Brazilian business environment, Law No. 14.195/2021 also brings provisions that benefit specific sectors, such as telecommunication. Among other actions (read more), the new rule repealed the sole paragraph of article 18 of the General Telecommunication Law (Law No. 9,472/1997).

Below is the sole paragraph, now repealed:

"The Executive Branch, taking into account the interests of the country and its relations with other countries, may establish limits on foreign participation in the capital of telecommunication service providers."

As a result, there is no more imposition of limits by the Executive Branch, nor the rule established by Decree No. 2617/1998 (regulator of the General Telecommunication Law), which used to determine that the participation of foreign capital in this sector could only occur indirectly. When this rule was in effect, investments could only be made through companies incorporated under Brazilian law with headquarters and administration in the country.

Now, foreign investment can be made directly, without the need for a holding company headquartered and managed in the country to receive and transfer it to the telecommunication service provider.

Sector expertise

Domingues e Pinho Contadores' team guides clients in the telecommunication sector, considering all specific accounting and tax aspects of this business area.