Maritime companies go to court to preserve 50% discount on AFRMM charges

Nearly 20 companies that pay the AFRMM tariff, an additional charge over the freight levied for the transport of any cargo by Brazilian and international shipping companies operating in Brazil, have filed an injunction against the revocation of the 50% discount on the tax rates. The benefit had been granted via Decree 11.321/22, on December 30, by then-acting president Hamilton Mourão. The measure was to come into effect on January 1 but was revoked by President Luiz Inácio Lula da Silva (PT) through Decree No. 11,374/23.

On the 30th, the President’s Office informed, in a note, that the measure was to boost the shipping sector. The tax waiver would amount to BRL 2.44 million in 2023, another BRL 2.49 million in 2024, and BRL 2.42 million in 2025.

Representative of the companies that went to the courts, lawyer Larry Carvalho, a specialist in International Trade Law and Customs Law, stated that the new decree is unconstitutional for infringing  “tax anteriority,” which ensures the right for predictability to taxpayers. According to Carvalho, the principle set out in Article 150 of the Brazilian Constitution prohibits the collection or increase of sudden taxes that may generate financial imbalance for the taxpayer.

The lawyer also argues that as the AFRMM charge follows under the “Contribution for Intervention in the Economic Domain” (CIDE) category, an eventual tax increase could only happen from January 1, 2024. “The Federal Government should wait and increase (rates) the following year.” Cide is levied on the remuneration of waterway transport carried out between Brazilian and foreign ports and also between Brazilian ports.

The AFRMM is assessed at the rate of 8% on commercial transactions of general cargo, project cargo, and bulk carriers; 10% for coastal transport, and 40% for the river and lake transportation of liquid goods in bulk when carried to the North and North-eastern regions of Brazil.

Diniz stated that the revocation of the discount could have an economic and financial impact on corporations. “The tax is treated as a cost to the company and, consequently, passed on in the price of goods and services offered. As a result, the higher the tax burden, the higher the price of such products in the consumption chain”.

According to Diniz, the measure can be revoked “through a new decree, by the Executive Power, or by the action of the National Congress, through an amendment to Federal Law 10.893/2004, which regulates this tax. But, in any case, taking into account the size of the public deficit inherited by the new government, the chance of this happening is practically nil.”

Larry Carvalho said that, so far, the Federal Executive has not filed appeals against the injunctions granted by the Court in favor of the companies. Responsible for administering the AFRMM, the Federal Revenue has not commented on the matter.

Source: A Tribuna

To read the original reporting, please access: https://www.atribuna.com.br/noticias/portomar/empresas-recorrem-a-justica-para-garantir-desconto-de-50-nas-aliquotas-da-marinha-mercante

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