MAIN PURPOSES & ADVANTAGES FUNDAP - In Portuguese, the terminology means "Funding for Port Activities Development" - Law # 2.508/70

::: MAIN PURPOSES

" Investments Incentive
" Import & Export Increase
" Economy Expansion
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The FUNDAP program was created by the State of Espírito Santo - law # 2508 - in May 22, 1970.

The financial resources that constitute the FUNDAP funding come from additional credits created by the annual state budget, from transfers effected by the indirect administration of the port activities and from other sources chosen by the Executive power via state decrees.

The main purposes of its creation were the willingness to increase Export and Import operations through the port of Vitória, the development of new technologies through the projects to be approved, the economy expansion and also the increased tax collection.
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::: ADVANTAGES

" ICMS (VAT equivalent)/ FINANCING
Imports: Payment terms deferred
Payments to be effected in up to 56 days
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Advantages/ Rights

For the FUNDAP companies, the ICMS (VAT equivalent) is only subject to payment once sale is effected (Decree # 3166-N). Contrary to regular Import companies, which pay for the ICMS once the goods are nationalized. This advantage is totally transferred to the customer.

In practice, the BANDES (Development Bank of the State of Espírito Santo) makes available for up to 56 days the same amount due in ICMS taxes, at cost 0. The whole financing duly presented by the FUNDAP company and approved by the bank is meant to be invested in the state of Espírito Santo so as to generate more activities in the Vitória port. This credit line is totally transferred to the customer.

An additional advantage here is the full right for the customer company to use the fiscal credits immediately, once the invoice is issued by the FUNDAP company.
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Financial Advantages

" Reduced Operational Cost.
" No Profit Margin Generation.
" Interstate ICMS.
" Lower IPI (taxes on industrial products) leverage.
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Reduced Operational Cost - JayFex & associates' specialized structures will be used by the customer at no cost. Except for the regular import expenses generated by the process, no other cost will be carried in the final cost of the goods.

No Profit Margin Generation - JayFex's associates in Vitória will invoice the goods using their cost value. No additional margin will be generated. This measure allows the customer to cut taxes, set better prices and increases its competitiveness in the market.

Interstate ICMS - ICMS tax will be applied on the total amount of the invoice at the moment the goods will leave the state of Espírito Santo. The tax due will be the interstate ICMS, the one in place in the state of Espírito Santo (12 %). This is 33,3 % lower than São Paulo's own tax and 29,41 % lower than the ones applicable in Santa Catarina and Rio Grande do Sul states. Therefore, the customer in these states benefit from less tax leverage related to the subsequent taxes (PIS, CONFINS, ICMS) applied when the goods are sold to their end users.

Lower IPI (taxes on industrial products) leverage - IPI tax regulations state that the importer will be the only party to collect the industrial products tax. This way, the IPI will be collected by JayFex's associates in Vitória based on the cost values and not on the sales value invoiced by the customer to the end users. This allows a reduced tax collection, which is another advantage for the customer.