Tax Regulation Opens More Doors for M2M Business in Brazil

The tax reduction regulation for M2M services is finally taking effect in March of next year as confirmed by Diário Oficial da União, Brazil's federal gazette. The regulation targets to bring down installation and operation inspection fees that are paid by operators for all M2M terminals as part of the telecommunications fund. With this regulation in place, operating cost will decrease significantly and Brazilian telecom operators believe that they can use this to their advantage.

"The recent reductions on charges encouraged operators to invest more into M2M services", said Clovis Lacerda, CEO of Parlacom Brazil. "It has driven growth and substantial investment into the market", Mr. Lacerda further added.

Brazil's communication ministry has previously predicted that M2M terminals and devices will increase to 23.3 million before the end of 2016, about 33% growth from 17.5 million terminals at present. The decree mainly aims to address any discrepancy in the telecommunications market, especially with the taxes applied to mobile devices. M2M terminals are relatively cheaper, however they are taxed in the same way. Although government authorities are expecting some losses in 2015 due to the tax cuts, they remain positive and foresee a good deal of development in this area. Authorities are expecting more carriers to invest in M2M services and inspire more initiatives for both business and personal applications.

Recent reports also indicated that telecom operators invested 13 billion reais ($6 billion) to develop Machine-to-machine technology in the next couple of years. With these huge investments, Parlacom Brazil decides to increase its sales force and target vertical markets, including e-health and the emerging wearable technologies, confirms its CEO, Clovis Lacerda. According to Mr. Lacerda, the new regulation has tremendously increased the size and opportunity of the Brazilian M2M market.