Bolsonaro reduces tax benefit for soft drink manufacturers in Manaus Free Trade Zone – Economy

Bolsonaro reduces tax benefit for soft drink manufacturers in Manaus Free Trade Zone – Economy
Bolsonaro reduces tax benefit for soft drink manufacturers in Manaus Free Trade Zone – Economy

BRASILIA – On the last day of 2021, the federal government decided to reduce the tax incentive given to manufacturers of soft drink concentrates produced in the Free Trade Zone of Manaus. Decree of President Jair Bolsonaro published in the Official Gazette today reduces the credit that large soft drink manufacturers can accumulate when selling the syrup produced in Manaus (AM) to bottlers installed in other states.

According to the Brazilian Beer Industry Association (CERVBRASIL), the decree reduces the rates of the Tax on Industrialized Products (IPI) related to concentrated extracts for the production of soft drinks. The lower the rate, the lower the credit that can be used by soft drink giants such as Ambev, Heineken and Coca-Cola.

In this case, the higher the IPI rate, the more advantages manufacturers have to generate credits for a tax that is not paid and that are used to offset other taxes. The reduction of the IPI means, in practice, that the soft drink industries will have less “credits” from the tax. In other words, they will pay more taxes, like other beverage manufacturers.

“We understand that this is the path to be taken to establish a fair and healthy competitive environment in the Brazilian beverage sector. There is still a lot to be done, but it is a beginning”, said Paulo Petroni, president of CERVBRASIL. The entity, which represents breweries that do not have production in the Free Zone, wages a war to end these incentives, considering it extremely harmful to competition.

Wanted by Estadão/Broadcast, the Internal Revenue Service and the Ministry of Economy did not respond to the request for information on the impact of the measure and its scope. The decree brings a table of the IPI levied on various products. The Revenue makes an update of the IPI Incidence Table every year. This year, many decrees were changed, including 10,523, which deals with concentrates.

CERVBRASIL lawyers are still analyzing the impact of the changes. The new rates come into effect from April 1, 2022. Until then, a lot of political articulation should take place to try to stop the reduction in the benefit.

The president of the Mixed Parliamentary Front in Defense of the Brazilian Beverage Industry, Deputy Fausto Pinato (PP-SP), said, in a note, that the decree is a small step towards correcting one of the biggest competitive distortions that the Brazilian tax system carries.

“Unfortunately, it doesn’t solve it, as the big problem is tax illicit activities, which may even increase. We should already have a related litigation in the order of R$ 30 billion”, reported the deputy. He questions the decision of the Revenue to set a period of ninety for the reduction of rates.

For the economist and consultant in the sector, Antônio Corrêa de Lacerda, this taxation model means that there is a tax haven within Brazil itself. Lacerda has studied the subject and calculates that irregularities in the payment of taxes until 2020 generated a total dispute of R$ 20 billion in Brazil, in addition to more than US$ 5 billion in the United States.

Politics

Due to political interests in Amazonas, President Jair Bolsonaro had doubled the benefit during his government, when the trend would be a fall in a scenario of fiscal restriction. Lacerda says that what draws attention in the Brazilian case, and particularly in the cold drinks market, is the practice of using tricks in the Manaus Free Trade Zone to boost benefits and profits of few and large companies, including through tax fraud .

 
For Latest Updates Follow us on Google News
 

PREV JBS has a new president in Brazil and appoints ex-BC member as a member of the board
NEXT Eminem buys NFT from Bored Ape for R$2.5 million