Brazil announces 10% reduction in common external tax on certain products

Experiencing difficulties in negotiating with Mercosur partners to reduce taxes on importing products from outside the bloc, Brazil decided to do this on its own. In a joint note, the Ministries of Economy and Foreign Affairs announced a 10% reduction in the 87% import tax on products in the tariff universe, except for goods such as automobiles, sugar, and alcohol, which already enjoy a differentiated treatment by the bloc.

According to the file, since Mercosur’s rules prohibit a unilateral reduction of tariffs – that is, without the approval of all members of the bloc – Brazil will resort to a device that allows for the possibility of adopting measures aimed at protecting people’s lives and health. The use of this device is justified by the urgent situation brought on by the Covid-19 pandemic and by the immediate need for an instrument that can contribute to alleviating its negative effects on the life and health of the Brazilian population”,

The reduction was adopted by CAMEX (the executive management committee of the foreign trade chamber) and will remain in effect until December 31, 2022. The size of the reduction was in line with what was agreed with Argentina in early October during a visit by its ministers to Brazil.

Brazilians saw Argentina as the main resistance to the common external tax (TEC) reduction. When they finally managed to reach an agreement, however, they encountered an obstacle from a partner who was even more aligned with the objective of modernizing Mercosur: Uruguay.

Last week, Minister of the Economy Paulo Guedes complained that the Uruguayans announced that their support for the Brazilian proposal to cut taxes under the bloc’s guarantee was conditional, based on bilateral agreement negotiations – that is, without the participation of all Mercosur countries. This once again stalled the conversations, because Argentina is against this flexibility.

“The Brazilian government has been working intensively within Mercosur to promote the revision of the TEC which, in its more than twenty-five years of existence, has never undergone a process of comprehensive reform”, states the note. “Brazil remains fully engaged in the ongoing negotiations in Mercosur. The Ministries of Economy and Foreign Affairs reiterate the exceptional and temporary nature of this resolution while reaffirming their commitment to Mercosur.”

Source: Canal Rural

To read the full original article, visit the link:

https://www.canalrural.com.br/economia/brasil-imposto-importacao-mercosul/

Sharing is caring!