Brazil Implements Temporary Import Tax Exemption on Key Food Items to Address Inflation

Brazil’s Chamber of Foreign Trade has temporarily lifted import taxes on nine food items, including beef, coffee, and olive oil, to combat inflation. Effective from Friday, the tax rates will drop to 0% from previous figures of up to 32%. This initiative is expected to cost approximately US$ 110 million annually but is viewed as a short-term solution to market price stabilization.

On Thursday, Brazil’s Chamber of Foreign Trade’s Executive Management Committee (Gecex) approved the temporary exemption of import taxes on nine food items as a strategy to mitigate inflation. This applies to a range of products including boneless frozen beef, various types of coffee beans, corn for consumption, uncooked pasta, cookies, extra virgin olive oil, crude sunflower oil, cane sugar, and preserved sardines, up to a limit of 7,500 tons. The reductions, bringing taxes down from 7.2% to 32% to zero, are effective starting Friday.

The items benefiting from this tax reduction are categorized under the Southern Common Market (Mercosur) Nomenclature (NCM) codes. The classification consists of nine food varieties distributed across ten NCMs, particularly noting that coffee reductions include both roasted and unroasted options. This measure is set to aid consumers by lowering market prices on select essentials.

Brazil’s Vice President and Minister of Development, Industry, Trade and Services, Geraldo Alckmin, confirmed the initiation of these changes will occur on Friday, 14th, following its publication in the Federal Official Gazette. He further detailed that the zero import tax on sardines will be limited to a specific quantity of 7,500 tons.

Additionally, it was revealed that an import quota for palm oil would increase from 60,000 tons to 150,000 tons for the next year while maintaining a 0% tax. Alckmin predicted that the financial impact of this tax reduction would amount to approximately US$ 110 million annually but expressed confidence that the actual detriment would be lower due to the temporary nature of the measure.

Brazil has taken significant measures to address inflation by exempting import taxes on select food items, promising to temporarily alleviate costs for consumers. While the initiative aims for a substantial financial impact, its brief duration suggests limited long-term effects. As such actions demonstrate Brazil’s commitment to stabilizing food prices, ongoing monitoring will be essential for assessing the initiative’s efficacy.

Original Source: en.mercopress.com