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EU requests WTO consultations over Brazil’s discriminatory taxes

EU News 535/2013

Brussels, 19 December 2013

The EU today requested consultations with the Government of Brazil under the dispute settlement provisions of the World Trade Organization (WTO) on tax measures that discriminate against imported goods and provide prohibited support to Brazilian exporters.

In recent years, Brazil has increased its use of the tax system in ways which are incompatible with its WTO obligations, providing advantages to domestic industries and sheltering them from competition. This is mainly done through selective exemptions or reductions from taxes on domestic goods.

In September 2011 the Brazilian Government imposed a large tax increase on motor vehicles (an additional 30% on their value), coupled with an exception for domestically produced cars and trucks. This discriminatory tax was due to expire in December 2012, but in September 2012 it was instead replaced by an equally problematic tax regime, named Inovar-Auto, set to last five more years. In parallel, the Brazilian authorities took steps affecting other goods, ranging from computers and smartphones to semiconductors. Under other similar programmes, tax benefits are reserved for goods produced in certain areas in Brazil, whatever the sector. The Brazilian authorities have also broadened existing systems of tax exemptions for Brazilian exporters by enlarging the number of potential beneficiaries.

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