Camex (Chamber of Foreign Trade) approved this Monday (23) a new 10% reduction in Import Tax rates on most products purchased abroad, informed the Ministry of Economy, in an initiative that did not include Mercosur endorsement and seeks to combat inflation and expand the country’s trade opening.
The decision was taken at an extraordinary meeting of Camex and covers about 87% of the country’s tariff universe, with 6,195 product codes.
The measure, which is temporary and will run from June 1 of this year to December 31, 2023, represents an additional tax cut. In November last year, the government had already unilaterally reduced the TEC (Common External Tariff) rates by 10%, without the approval of all Mercosur members, saying there was urgency to deal with the high prices.
The waiver of revenue from tariff reductions, according to the ministry, is estimated at R$ 3.7 billion.
According to the ministry, the purpose of the measure is to alleviate the negative economic consequences arising from the Covid-19 pandemic and the Ukrainian War, especially inflation.
“The new reduction will contribute to the cheapening of almost all imported goods, directly benefiting the population and companies that consume these inputs in their production process”, he said in a note.
Among the products included in the tariff reduction, the ministry mentioned beans, meat, pasta, biscuits, rice and construction materials.
An estimate presented by the ministry points out that tariff reductions will have an accumulated impact of R$ 533.1 billion in GDP growth and R$ 376.8 billion in investments by 2040.
According to the ministry, the decision to reduce tariffs unilaterally was taken under the terms of an article in the Mercosur Treaty of Montevideo.
The Foreign Trade secretary at the ministry, Lucas Ferraz, stated that Brazil will continue negotiating with the bloc’s members to try to consolidate and make import tax cuts permanent.
“Our expectation is that this year we will be able to make the 20% cut in tariffs a movement of the entire Mercosur”, he said.
Ferraz pointed out that 1,387 product codes will be outside the measure and will not have reduced tariffs. Among them are textiles, footwear, toys, dairy products and some items from the automotive sector.
The Ministry of Economy defends the gradual opening of the economy and recently implemented cuts in the IPI (Tax on Industrialized Products) to increase the competitiveness of the country’s industry and make possible the new reduction of the Import Tax.
The government implemented the IPI cuts as a way to make Brazilian industrialized products cheaper. Initial reduction of 25% was increased to 35%, preserving products from the Manaus Free Trade Zone. The measure, however, was judicialized and part of its effectiveness is suspended.
In addition to broad tariff cuts, the government has been announcing reductions to specific areas and products. This month, for example, tariffs on steel rebar were reduced and the rates on some types of meat, wheat, corn and other food items were reduced to zero.
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