On January 25, the Ministry of Health published a decree regulating priority public health projects that can issue incentive bonds, which grant the investor an income tax exemption, and infrastructure, whose tax incentive goes to the source. With this, entities with SUS-linked projects will be able to access the capital market for business financing and strategic acquisitions, with tax benefits for investors. The Authority confirmed that the issuance cannot take place until the project is analyzed and declared a priority.
Projects should aim to implement, expand, restore, modernize or maintain the infrastructure and capital assets of health institutions associated with the Unified Health System (SUS), including hospitals, care units, laboratories, diagnostic centers, etc. Public bodies (Union, States, Federal District and municipalities) may submit applications; Public bodies and authorities; Franchisees, licensees or accredited entities engaged in the implementation of SUS-related health services; and special purpose companies associated with public-private partnerships or related contracts.
The requirements are the same as those of other ministries, with a detailed description of the project and its general purpose; Financial physical table. The total value of the investment and the portion that will be financed with bonds; Estimating social and operational benefits; Documents proving technical, organizational and budget feasibility; Information about the issuer and, where applicable, concession contracts, PPPs or similar instruments.
The portion of investment that can be financed by bonds can reach 100% for projects organized by the Federation or classified as priority by a competent federal body; Up to 90% for projects qualified by international institutions or accredited bodies; Up to 50% for other projects. It is prohibited to use resources to finance, refinance, or pay current expenses.
According to the materials produced by Veirano Advogados, the Ministry will monitor information related to the work and failure to comply with the imposed conditions may result in the project becoming non-compliant with the project, thus losing the applicable tax benefits.
“The regulation paves the way for hospitals, public sector managers and private sector partners to use capital market tools to enable large-scale investments in public health, with the potential to expand SUS installed capacity, modernize sector infrastructure and equipment and provide greater financial predictability for complex projects.”