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EU Files WTO Complaint On Brazilian 'Tax Advantages'

by Mike Godfrey, Tax-News.com, New York

23 December 2013


The European Union (EU) requested consultations with the Brazilian government via the World Trade Organization on December 19, 2013 over tax measures implemented by Brazil which allegedly discriminate against imported goods and provide unfair advantages to the country's exporters.

The EU claims that Brazil has contravened its obligations as a WTO member by favoring domestic companies and sheltering them from competition through selective tax exemptions or reductions from taxes on domestic goods.

The Brazilian government slapped an additional 30 percent tax on motor vehicles in September 2011, while exempting domestically produced cars and trucks, the EU said in a press release. The tax was due to expire in December 2012, but was replaced in September 2012 by a five-year tax called Inovar-Auto which the EU says is "equally problematic." In addition the EU alleges that Brazil has granted tax advantages to domestic companies in the electronics and related sectors.

It is claimed that these measures have a negative impact on EU exporters and restrict trade by favoring the localization of production and supply. On top of this, the measures hit consumers with higher prices, less choice and lower access to innovative products, the EU press release says.

The EU's request for consultations gives both parties an opportunity to resolve the situation through bilateral talks, but if a resolution is not reached after 60 days the EU may request the establishment of a WTO panel to rule on the dispute.

TAGS: tax | World Trade Organisation (WTO) | trade disputes | Brazil | trade | European Union (EU) | Europe

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