ANNOUNCEMENT 30 Jan 2015
In January 2015, the government of Brazil announced a change to the import-specific domestic duties.
NUMBER OF INTERVENTIONS
Deloitte Brazil: http://www.deloitte.dbbrazil.com.br/show.aspx?idCanal=ZkZ6B9NpYZ6w2BKVYIE2sA==
Deloitte, Brazil Tax Alert, 4 February 2015 : http://www2.deloitte.com/content/dam/Deloitte/global/Documents/Tax/dttl-tax-alert-brazil-040215.pdf
Chamber of Deputies, 4 February 2015, 'Medida provis?ria aumenta PIS e Cofins sobre importa??o': http://www2.camara.leg.br/camaranoticias/noticias/ECONOMIA/481350-MEDIDA-PROVISORIA-AUMENTA-PIS-E-COFINS-SOBRE-IMPORTACAO.html
Provisional Measure no. 668 of 30 January 2015, published in the extra edition of the Official Gazette of 30 January 2015: http://www.planalto.gov.br/ccivil_03/_Ato2015-2018/2015/Mpv/mpv668.htm
Act by the President of the National Congress no. 13, published in the Official Gazette of 25 March 2015: http://pesquisa.in.gov.br/imprensa/jsp/visualiza/index.jsp?jornal=1&pagina=3&data=25/03/2015
EM n? 00021/2015 MF (i.e., explanation of motives concerning Provisional Measure no. 668) of 27 January 2015: http://www.planalto.gov.br/ccivil_03/_Ato2015-2018/2015/Exm/ExmMP-668-15.doc
Updated annex I and II of Law no. 10.485 of 3 July 2002, originally published in the Official Gazette of 4 July 2002: http://www18.receita.fazenda.gov.br/legislacao/Leis/2002/lei10485.htm
Updated version of Law no. 10.865 of 30 April 2004, originally published in the extra edition of the Official Gazette of 30 April 2004: http://www18.receita.fazenda.gov.br/legislacao/Leis/2004/lei10865.htm
Law no. 13.137 of 19 June 2015, published in the extra edition of the Official Gazette of 22 June 2015: http://www.planalto.gov.br/ccivil_03/_ato2015-2018/2015/lei/l13137.htm
Presidency of the Republic of Brazil. Presidência da República. Medida Provisória 774, de 30 de Março de 2017. Available at: http://www.planalto.gov.br/ccivil_03/_ato2015-2018/2017/Mpv/mpv774impressao.htm
Presidency of the Republic of Brazil. Presidência da República. Lei 10.865, de 30 de Abril de 2014. Art. 21. Available at: http://www.planalto.gov.br/ccivil_03/_ato2004-2006/2004/lei/l10.865.htm
On 30 January 2015, the Brazilian government issued Provisional Measure No. 668/2015, which increases the standard PIS (employee profit participation program) and COFINS (contribution for the financing of social security) tax rates levied on the import of goods. PIS and COFINS are federal taxes imposed on gross revenue earned by legal entities.
For domestic produce, the applied rates are 1.65% and 7.6%, respectively i.e. a combined rate of 9.25%. For the imported goods listed in Law no. 10.485/2002, however, the combined rate was raised from 9.25% (1.65% PIS and 7.6% COFINS) to 11.75% (2.1% PIS and 9.65% COFINS).
The combined rates for some particular sectors have already been increased previously and thus have an even higher PIS/COFINS rate now. This affects products such as paper, perfumes, sanitary products, machines and vehicles, auto parts, as well as tires and inner tubes, as stipulated in Law no. 10.865/2004.
The PIS/COFINS rate has been raised due to a decision by the Federal Supreme Court in 2013 which considered the inclusion of the ICMS (a value-added tax on circulation of goods and services) as part of the tax base for PIS/COFINS as unconstitutional. Since the decision by the court would lead to a lower taxation of imported goods compared to national products, the government decided to increase the combined PIS/COFINS rate.
The Provisional Measure no. 668 was effective from 1 May 2015 and initially set to expire on 30 June 2015 but was extended on 25 March 2015 by the Brazilian Congress for another 60 days (i.e., until 31 August 2015). A Provisional Measure is an act by the President which stays in vigor for 60 days and can be prolonged for another 60 days. During that time it needs to be approved the by the National Congress so to be tranformed into state law.
On 22 June 2015, the Provisional Measure no. 668 was transformed into Law no. 13.137.
On March 30, 2017, the president of Brazil issued Provisional Measure 774/2017 revoking the additional 1% rate of the contribution for the financing of social security (i.e. COFINS) levied on imports related to oil and natural gas; pharmaceuticals, pharmaceuticals, toiletries, toilet linen and toiletries; certain machines; certain auto parts; and certain packaging destined to the bottling of water, soda and beer.