AFFECTED FLOWOutflow (subsidised)
ANNOUNCED AS TEMPORARYNo
Tax-based export incentive
On 2 August 2011, Brazil's President Dilma Rousseff issued Provisional Measure (PM) no. 540 which was approved by the National Congress and converted into Law no.12.546 on 14 December 2011.
The measure introduced the Special Regime for the Reinstatement of Taxes for Exporters (Regime Especial de Reintegraçăo de Valores Tributários para as Empresas Exportadoras), also known as REINTEGRA. The program gives exporters of domestically manufactured goods a tax refund between 0% to 3% of the value of their exports, which then can be used either as a credit against their taxes or as a cash payment.
The goods eligible to profit from the REINTEGRA regime are listed in the annex of Decree no. 7.633/2011 and require a certain amount of local content, i.e. imported inputs should not exceed 40% (for some other products it is 65%) of the final product value. Inputs from the MERCOSUR are treated as of Brazilian origin.
On 28 December 2012, the program was extended by PM no. 601 until 31 December 2013. Since the Senate failed to approve the presidential act in due time, the extension of the program was introduced again, just before PM no. 601 was about to expire. The new PM, no. 610, was then consecutively approved by the National Congress and turned into Federal Law no. 12.844 on 19 July 2013.
Please note that Brazil only exported on a subset of the eligible tariff lines in the year prior to implementation.