São Paulo – This Monday (26), the Brazilian minister of Development, Industry and Foreign Trade, Fernando Pimentel, stated that the Special Tax Refund Regime for Exporting Companies (Reintegra), a 3% refund of the tax on exported industrialized goods provided for under Plano Brasil Maior, a federal government plan launched in August, should become effective as of early August.
“The decree [on the Reintegra] is ready, we just need to publish it. I believe [it will happen] by early October,” said the minister upon answering a question from a businessman attending the luncheon and lecture at the Arab Brazilian Chamber of Commerce headquarters, in São Paulo. “There will be no exclusive rates, it will be 3% for all of the industries covered,” he added.
Still concerning taxes, when answering a question about excess red tape and taxes in Brazil, he said the government thus far has managed to find ways of lessening the trouble without having to address it directly, i.e. promoting a tax reform.
As an example, he mentioned Simples Nacional, a simplified tax system for micro and small businesses. “Little by little, the government has been addressing [the issue],” said the minister.
He believes the tax system will eventually evolve into a regime comprising “three or four major taxes”: a tax on added value applied to the trade of goods and services; another on property, similar to the property tax (IPTU) and the Tax on Motor Vehicles (IPVA); one on company revenues, to fund Social Security; and another on financial operations.
The minister added that negotiating a tax reform in Brazil is a complex task because of the autonomy of states and municipalities, i.e. it is hard to reconcile the interests of the federation’s different units. Concerning the fiscal war between states, by which some state governments grant incentives in the Tax on Consumption of Goods and Services (ICMS) to attract enterprises, he hopes an agreement can be reached on interstate rates, thus lowering the impact of local exemptions.
He also spoke on the 30 percentage-point increase in the Tax on Industrialized Goods (IPI) on imported vehicles, except those from the Mercosur and Mexico. The measure was announced last week and affects mainly Asian brands that own no plants in Brazil.
Pimentel stressed that this is an “emergency” measure with a deadline set for December 2012. “It is a penalty on companies that only import and do not manufacture products in the country, and an incentive to those who wish to produce,” he said, adding that Brazil is the fourth leading manufacturer and fifth leading buyer of automobiles in the world. The ruling, however, has been deemed protectionist by importers and foreign automakers with no plants in the country, and may even be questioned at the World Trade Organization (WTO), according to analysts.
Iraq
On answering a question from another businessman, the minister also spoke on Brazil-Iraq relations. According to him, the country “has a role to play” in the Arab nation’s recovery process. “We have no reason to remain detached,” he said.
October will see the first meeting of the Brazil-Iraq Mixed Bilateral Committee in 20 years. Brazil will also have a new ambassador to Baghdad, Anuar Nahes, currently the ambassador to Doha, Qatar. He intends to reopen the diplomatic representation in the Arab country’s capital for good.
*Translated by Gabriel Pomerancblum
