São Paulo – The government of Brazil announced on Thursday (1) measures to stimulate the economy of Brazil. Among them the reduction of the Industrialized Product Tax (IPI) on white line products, benefits to real estate financing and regulation of the Reintegra, a programme through which exporters should get back up to 3% of taxes paid on manufactured products that are then exported.
Products in the white line include equipment like cookers, fridges and washing machines. The IPI levied on these products varies. The tax on cookers dropped from 4% to zero, that on washing machines, from 20% to 10% and that on fridges from 15% to 5%. In real estate financing, houses in the “Minha Casa, Minha Vida” (My House, My Life) program, considering a ceiling of up to 85,000 Brazilian reals (US$ 46.000), should pay just 1% in Income Tax and PIS/Cofins, previously forecasted for homes of up to 75,000 reals (US$ 41,000).
The government has also reduced the PIS/Cofins on pasta, which was 9.25% and also extended the zero tax levied on wheat for one more year. Credit operations for natural people also had the Financial Operations Tax (IOF) dropped by 3% to 2.5% a year and foreign investment in shares also had its rates zeroed, among other areas in the financial area.
"Stock markets have been dropping due to the international crisis and this is a movement to generate stimulus. If there is another speculative flow, we may, at any time, increase the tax again, said Finance Minsiter Guido Mantega, on disclosing the measures, regarding the IOF levied on foreign funds coming into the stock market.
Reintegra
The new regulations for the Reintegration of Taxes for Export Companies (Reintegra) will be valid starting on Thursday (1st). The return of 3% of the value exported in manufactured products may be used as a kind of compensation of dues with the Federal Reserve. According to the Minister of Development, Industry and Foreign Trade, Fernando Pimentel, the measure should benefit 8,500 products. According to him, the initiative should help the sector face the international crisis and help export manufactured products.
*Translated by Mark Ament
