Brazil set to cut import tax rates by 10%

BRASILIA, May 23 (Reuters) – The Brazilian government on Monday announced a further 10% reduction in the import goods tax rate on a large portion of products purchased abroad, in a bid to reduce inflationary pressures .

The Ministry of Economy’s tax reduction, which covers about 87% of the country’s tariff goods, was approved after a meeting of the Brazilian Chamber of Foreign Commerce came into effect between June 1 this year and on December 31, 2023.

A source had previously confirmed the information to Reuters.

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“Today’s measure, added to the 10% reduction already made last year, brings the Brazilian tariff level closer to the international average and, in particular, to the countries of the Organization for Economic Cooperation and Development ( OECD),” the Foreign Secretary said. Commerce, Lucas Ferraz, said in a note to the press.

The waiver resulting from the tax cuts, according to the ministry, is estimated at 3.7 billion reais ($768.45 million).

The decision to cut tariffs, without the approval of the Mercosur trading bloc, was taken under the protection of an article in the Montevideo Treaty.

Ferraz said Brazil would continue negotiations with bloc members to try to consolidate and make permanent the import tax cuts.

“We hope that this year we can make the 20% tax reduction a measure for the whole of Mercosur,” he said.

Among the products that will remain outside the measure are textiles, footwear, toys, dairy products and some automotive items.

The government had already unilaterally cut Common External Tariff (CET) rates by 10%, without the approval of all Mercosur members, saying there was an urgent need to deal with rising prices.

In April, the government showed its intention to promote a further 10% reduction in import tariffs.

The Ministry of Economy supports a gradual opening of the economy and has recently implemented Industrial Tax Reductions (IPI) to make Brazilian industry more competitive and allow for the new import tax reduction.

An initial 25% reduction in the IPI was increased to 35%, preserving products from the Manaus Free Trade Zone. The measure has been taken to court and is currently partially suspended.

($1 = 4.8149 reais)

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Reporting by Bernardo Caram in Brasilia Writing by Carolina Pulice Editing by Marguerita Choy, Matthew Lewis and David Gregorio

Our standards: The Thomson Reuters Trust Principles.

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