Government expands temporary zero tax on computer and capital goods | Brazil

The government approved two ordinances that imposed the import tax on 281 capital and computer goods without production in Brazil; the measure is temporary and is valid until December 31, 2021, and can be renewed. This commercial policy is not new, but it has been expanding: this year alone, more than a thousand items entered the ex-tariff regime, and the list is expected to grow thanks to less restrictive rules.

Gabriel Jabur / ME

Secint (Secretariat of Foreign Trade and International Affairs), linked to the Ministry of Economy, published two ordinances on Friday (8) temporarily zeroing the Import Tax rates of 261 capital goods (BK) and 20 computer goods and telecommunications (BIT).

Typically, computer goods pay 16% import tax. THE Ordinance 511/2019 exempts products such as cell phone back covers, ink reservoirs for printers, toner fusers in laser printers, biometric systems and systems for manufacturing wind blades.

As you may have noticed, these products are not intended for consumers. The same goes for capital goods, which normally pay 14% in import tax: the Ordinance 510/2019 mentions metal welding machines, laboratory centrifuges, hamburger bread ovens and marine engines. They cannot have equivalent production in Brazil; the same applies to computer goods.

This type of initiative is not valid for importing smartphones or notebooks, for example: the ex-tariff regime, which temporarily levies taxes, is aimed at companies. “The objective is to promote the attraction of investments to Brazil, relieving the investments directed to productive enterprises”, explains the Ministry of Economy in a note.

Government changes rule of equivalent national production

By zeroing the import tax for some components, electronics production in Brazil can be cheaper. This can also attract investment in this and other types of products, generating jobs and – who knows – making them more accessible in the country.

For this reason, the government wants to expand the ex-tariff regime, so that more capital and IT assets will be taxed zero. As we noted earlier, the products only receive no payment of the import tax if they do not have equivalent national production.

President Jair Bolsonaro and Minister Paulo Guedes (Photo: Isac Nóbrega / PR - 05/06/2019)

President Jair Bolsonaro and Minister Paulo Guedes (Photo: Isac Nóbrega / PR)

What does “equivalent national production” mean? It means that, during a 30-day public consultation, a Brazilian company proves that it makes similar products in the country – even if it is at a much higher price or in a very long term.

THE Ordinance 309/2019, approved in June by Minister Paulo Guedes, will change this rule. The “equivalent national production” now means that the product manufactured in Brazil has a lower price than the imported good (without considering the incidence of taxes); equal or superior performance or productivity; and delivery time equal or less.

In addition, during the public consultation, the Brazilian company must demonstrate experience in manufacturing the “equivalent national product” when supplying the last five years.

These new criteria are not yet in force as they depend on the regulation of SDIC (Secretariat for the Development of Industry, Commerce, Services and Innovation), linked to the Ministry of Economy. However, they make it clear that the ex-tariff policy should expand further.

Leave a Comment