GSM Association Salutes Brazil for M2M Tax Regulation

While Brazilian operators and telecom providers celebrate as the new tax rule is enforced, the GSMA (Groupe Speciale Mobile Association) salutes Brazilian government for its initiative to reduce taxes on (Machine-to-machine) M2M devices. The regulation was approved by President Dilma Roussef in September 2012 and announced by Minister Paulo Bernardo of Brazil's Communication Ministry.

The Telecommunication Inspection Fund (FISTEL) collects two kinds of inspection taxes: The Installation Inspection Tax (TFI) and Operation Inspection Fee (TFF). TFI is charged upon activation of SIMs or terminals with varying costs for operators depending on the kind of installation. Meanwhile, TFF is an annual charge until the 31st of March every year, usually corresponding to fifty percent of the TFI amount. It is designed to defray cost incurred by the Federal Government in implementing, monitoring and developing techniques for telecommunications services. These fees are usually paid by individuals, consumers and companies.

With the regulation in place, these fees are primarily reduced by a combined 80 percent, drawing more investment and development of services involving M2M devices and technology, particularly Smart metering, Smart Grid Utilities, Vehicle Tracking and Remote Health Monitoring (E-Health).

"President Rouseuff's decision to reduce this taxation is a significant move to stimulate the growth of M2M services and should be recognised by other markets as a very positive and forward-looking move.", said Tom Phillips, GSMA Chief Regulatory Officer. "M2M is a new market whose growth should be encouraged by government policies of low taxation and light-touch regulation. Countries like Brazil that encourage the growth of M2M services will be the first to benefit from the social, environmental and economic opportunities of this important new sector."

According to GSMA Intel, there are 8.7 million active and operational M2M connections in Brazil today, and this is expected to grow exponentially in the next few years following the government's move to cut on taxes for M2M devices. From its recently released report, The Mobile Economy of Latin America, the GSMA has predicted M2M connections to hit 84 million by 2017.

Parlacom Brazil believes that this creates the right investment climate. This will enable providers to expand their coverage and provide greater pricing flexibility to individuals and businesses alike.