BRASILIA (Reuters) -Brazil's government announced on Monday a new 10% reduction in the tax rate for import goods on a large part of products purchased abroad, aiming to reduce inflationary pressures.
The economy ministry's tax cut, which covers approximately 87% of the country's tariff goods, was approved after a meeting of the Brazilian Foreign Trade Chamber is effective between June 1 this year and Dec. 31, 2023.
A source had previously confirmed the information to Reuters.
"Today's measure, added to the 10% reduction already made last year, brings the Brazilian tariff level closer to the international average and, in particular, to the countries of the Organization for Economic Cooperation and Development (OECD)," the Secretary of Foreign Trade, Lucas Ferraz, said in a note to the press.
The waiver resulting from the tax cuts, according to the ministry, is estimated at 3.7 billion reais ($768.45 million).
The decision to reduce the tariffs, without approval of trade bloc Mercosur, was made under the protection of an article of the Montevideo Treaty.
Ferraz said Brazil will keep negotiating with bloc members to try to consolidate and make the import tax cuts permanent.
"Our expectation is that this year we will be able to make the 20% tax cut a measure of the entire Mercosur," he said.
Among products that will remain outside the measure are textiles, footwear, toys, dairy products and some automotive items.
The government had already unilaterally reduced the common external tariff (TEC) rates by 10%, without approval of all Mercosur members, saying it was urgent to deal with rising prices.
In April, the government showed its intention to promote a new 10% cut in import tariffs.
The economy ministry backs a gradual opening of the economy and recently implemented cuts in the industrial tax (IPI) to make Brazilian industry more competitive and enable the new reduction of the import tax.
An initial reduction of 25% in IPI was increased to 35%, preserving products from the Manaus Free Trade Zone. The measure was taken to court and currently is partially suspended.
($1 = 4.8149 reais)