Gabriel Caldiron Rezende of Machado Associados discusses the excise tax (IPI) reduction made by the Brazilian federal government, the steps taken to reach a reduction of 35%, and the controversies on the horizon.
After several uncertainties, the Brazilian federal government has cut IPI rates for most products by 35%, in an effort to boost the Brazilian economy after the COVID-19 pandemic.
IPI is a federal excise tax that is levied on sales of products by manufacturers and other entities held equal to manufacturers by law, as well as on imports and the subsequent resale of imported products.
As an excise tax, IPI is used to promote or discourage the consumption of certain products. Therefore, its rates vary depending on these products’ tariff code and whether they are essential or not. The rates may be as low as zero or reach higher rates, such as 300% for cigarettes, but generally they range from 5% to 20%.
Previously published by ITR