A decree signed by President Jair Bolsonaro reduces the IPI (Tax on Industrialized Products) on video games, parts and accessories: the rates vary from 16% to 40%, whereas before they were between 20% and 50%. The measure comes into effect as of this Thursday (15); the proposal received criticism from the Manaus Free Trade Zone, which foresees a reduction of 500 jobs in the region.
O decree 9.971 / 2019 stipulates new tax rates within the TIPI (Table of Incidence of Tax on Industrialized Products). The IPI for consoles without an integrated screen drops from 50% to 40%; in the case of parts and accessories, the rate goes from 40% to 32%. In the case of video games with an integrated screen, the rate goes from 20% to 16%.
At the end of July, Bolsonaro promised that the government would carry out studies on the reduction of taxes in video games: “currently the IPI varies between 20 and 50%; we have finalized studies to download them, Brazil is the second market in the world in this sector ”, he wrote on Twitter.
Then, the Ministry of Economy did the study to assess the fiscal impact of reducing the tax. It is estimated that the government will stop collecting R $ 50 million by 2021 with this measure; however, the agency believes that the tax reduction will be beneficial for stimulating the electronic games segment.
The criticism came from the national industry. The Manaus Free Trade Zone may stop producing 70,000 consoles a year with this tax reduction, ending 500 direct and indirect jobs in the region. This is the forecast of consultant Saleh Hamdeh, of the Federation of Industries of the State of Amazonas (Fieam) and of the Center of Industry of the State of Amazonas (Cieam).
Bill wants to zero tax on consoles and games
This month, the Senate’s CCJ (Commission for Constitution, Justice and Citizenship) approved a bill that zeroes in on the tax on consoles and video games produced in Brazil. The PEC (Proposed Amendment to the Constitution) was created based on a suggestion sent by the e-Citizenship portal, and still needs to be approved in plenary and in the Chamber.
Bolsonaro also evaluates reducing the import tax on computer and information technology goods, “like computers and cell phones”; the objective is to “stimulate competitiveness and technological innovation”, according to the president.
These are the new IPI rates for consoles and accessories:
- 9504.50.00 – Video game consoles and machines, except those classified below: from 50% to 40%
- 9504.50.00 Ex 01 – Parts and accessories of video game consoles and machines whose images are reproduced on a television receiver screen, monitor or other screen or external surface: from 40% to 32%
- 9504.50.00 Ex 02 – Video game machines with built-in screen, portable or not, and parts thereof: from 20% to 16%