Brasília – Responsible for almost one quarter of spending of Brazilian industry, imported services feel the weight of the tax burden. According to a study by the National Confederation of Industries (CNI), every time that foreign consultants are hired or technical support is requested for machinery and equipment, industry pays 41.08% to 51.26% in taxes.
To the organisation, this level of taxing hinders competitiveness of Brazilian industry, as costs rise, increasing the price of the end product and, often, barring access to new technologies. “Each and every company in the more sophisticated technology sector needs to import services. If Brazil wants more advanced industry, it needs to reduce taxes on services,” said the Foreign Policy director at CNI, José Augusto Fernandes.
According to the CNI director, the tax burden on the purchase of goods and services abroad mostly affects two kinds of companies. The first are the companies that develop products associated to services, like machinery and aircraft. The tax burden increases the spending of these companies with maintenance of these goods, which tends to be outsourced from abroad.
The second kind of company affected, according to the CNI director, are sectors with a global production chain, with production phases executed in several countries. In this case, the innovation developed in open systems, with contribution from several parts of the world, is affected by the taxing.
Currently, six taxes are levied on the purchase of services abroad: Income tax (IRRF); the Contribution on Intervention in the Economic Domain (Cide), levied on transfers abroad; the PIS (welfare tax); Cofins (social security tax); Tax on Financial Operations (IOF), levied on exchange operations, and the tax on services of any nature (ISSQN).
*Translated by Mark Ament
