The government came up with the initial proposal to reduce taxes on consoles and video games. According to Reuters, which had access to a draft of the decree, the Ministry of Economy wants to lower the IPI (Tax on Industrialized Products) charged to consoles from 50% to 40%.
The text also points out that, for “parts and accessories for consoles without a built-in screen”, the IPI would rise from 40% to 32%. The tax on “game cards and video game machines with a built-in screen” would be reduced from 20% to 16%.
To begin to take effect, the decree needs to be signed by President Jair Bolsonaro. The justification for the document is that the tax reduction will help stimulate the electronic games segment, “the fastest growing branch of the entertainment sector in the world”.
The IPI is the one that most weighs in the tax burden for games and joins taxes such as PIS, Cofins and ICMS, which would not be changed. The Ministry of Economy estimates that the reduction of IPI rates would make the government stop earning R $ 50 million by 2021.
If the decree goes into effect in December, the sector will stop paying R $ 1.94 million in taxes in 2019. The government would still stop collecting R $ 23.80 million in 2020 and R $ 23.94 million in 2021 .
The amount may be higher if the measure starts to take effect sooner or if the rates become even lower. A few days ago, President Jair Bolsonaro used his Twitter account to promise the studies on tax reduction for electronic games.
“Brazil is the second market in the world in this sector,” he said in a tweet. Earlier, he had stated that the government was analyzing tax breaks on items such as computers and cell phones and addressed the possibility that the measure would also apply to electronic games.