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Brazil Fights Competitors With Tax Breaks

by Mike Godfrey, Tax-News.com, Washington

05 August 2011


Facing a "predatory competitive world stage" and high currency appreciation, the Brazilian government has introduced a series of tax breaks and incentives for its domestic industry.

Recent figures show that the country's industrial production fell 1.6% in June, while the real has appreciated against the US dollar by around 6% this year alone. Cheap imports from China have not helped the situation, either.

In response, the government unveiled the "Bigger Brazil" plans on August 2, which include tax breaks worth BRL25bn (USD16bn). The incentives target specified industries hard hit by the continuing issues facing Brazil's economy, including the software, furniture, shoe and textile industries. There will also be a 12-month extension to the tax break available on the purchase of capital goods, construction materials and trucks and light commercial vehicles.

The plan also throws up a series of new trade barriers in a bid to curb the flood of cheap imports. These include a four-fold increase in the number of anti-dumping investigators, swifter adoption of anti-dumping duties and tougher quality control measures on imported goods. The government also intends to widen the availability of tax rebates on exported goods.

TAGS: tax | economics | business | tax incentives | manufacturing | Brazil | tax breaks | currency

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