ANNOUNCEMENT 10 Oct 2013In October 2013, the government of Brazil announced a change to the import-specific domestic duties.
NUMBER OF INTERVENTIONS
Rolim, Viotti and Leite Campos (law firm), news item of 29 October 2013: http://www.rolimvlc.com/en/noticias-para-informe/federal-law-reduces-pis-and-cofins-levied-over-imported-goods/
EY Trade Watch, December 2013, vol. 12, issue 4: http://www.eytax.jp/services/indirect-tax/issues/pdf/2013TradeWatchDecember_E.pdf
KPMG, regulatory update of 24 October 2013: http://www.kpmg.com/global/en/issuesandinsights/articlespublications/taxnewsflash/pages/brazil-social-contributions-pis-cofins-on-imports-of-goods.aspx
Federal Law no. 12.865 of 9 October 2013, Official Gazette of 10 October 2013, pp. 1-5 (in Portuguese): http://pesquisa.in.gov.br/imprensa/jsp/visualiza/index.jsp?jornal=1&pagina=1&data=10/10/2013
In late 2013, the government of Brazil reduced the internal taxation of imports across the board.
On 10 October 2013, the Brazilian Supreme Court decided in Federal Law no 12.865/2013 to reduce the social contributions, i.e., the PIS and COFINS tax, levied on imported goods. The law does not apply to imported services. Thus, the affected tariff lines are HS codes 01 to 97.
The PIS tax (Programa de Integraçăo Social) is a contribution to the social integration program and includes, e.g., unemployment benefits and allowances. COFINS (Contribuiçăo para o Financiamento da Seguridade Social) on the other hand, finances social security such as retirement and health care.
The PIS/COFINS tax used to be calculated with a gross-up calculation of customs value, state VAT (ICMS), PIS and COFINS. The Supreme Court ruled that this method was unconstitutional and decided that the basis for assessing PIS and COFINS should be the customs value.
For importers which operate under the non-cumulative method, this will increase their cash flow due to tax credits, while for importers using the cumulative method, this will reduce their import costs and offer them refunds for overpaid taxes over the last five years.
The measure, Federal Law no 12.865/2013, came into effect on 10 October 2013.