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EU Hails WTO Win In Brazil Subsidy Case

by Ulrika Lomas, Tax-News.com, Brussels

31 August 2017


The EU has welcomed what it said was a full victory in its WTO challenge against Brazil's tax subsidies in the ICT, electronics, and automotive sectors.

The EU said that the ruling confirms that the tax advantages offered by Brazil to these sectors favor domestic over imported goods, and are illegal under WTO law.

The EU had alleged that "many products, ranging from computers and smartphones to motor vehicles are the object of tailor-made discriminatory tax programs," and that the tax benefits are "reserved for goods produced in certain areas in Brazil, whatever the sector."

It claimed that these tax measures have "a negative impact on EU exporters, whose products face higher taxes than domestic competitors," and that the measures therefore "restrict trade by favoring the localization of production and supplies, and give an advantage to Brazilian exporters."

The EU initiated the dispute in December 2013. In July 2015, Japan launched a parallel dispute against the same Brazilian programs, and the two cases were merged.

In its report, the WTO recommended that Brazil should withdraw the subsidies within 90 days. Brazil has 30 days to appeal the decision.

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

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