GSGA – Special Report – Brazilian Tax Review 01/2015 – December/January/February

Brazil issues a new regulation on the program to allow exporters to recover residual tax costs (REINTEGRA)

Law 13,043/2014 has reintroduced the program to allow exporters to recover residual tax costs incurred in the export production chain, ranging from 0.1% to 3% of their total export revenue (REINTEGRA). According to Decree 8,415/2015, the new recovery percentages are:

Period

Percentage of recovery

From March 1, 2015, to December 31, 2016

1%

From January 1, 2017, to December 31, 2017

2%

From January 1, 2018, to December 31, 2018

3%

The percentage of imported inputs used in products, among other things, can limit eligibility for these benefits. There are also certain requirements that must be met.

Provisional Measure 668/2015 increases PIS and COFINS levied on imported products

Provisional Measure 668/2015, published on January 30, 2015, increases the general PIS and COFINS tax rates on imported products, beginning May 1, 2015.

Under the new provisions, the general tax rates will be increased from the current 1.65% and 7.6% (PIS and COFINS, respectively) to 2.1% and 9.65%. In addition, there is an increase in the tax rate applied to specific products, including beauty products, machines and vehicles, among others.

These new rates must be applied with the additional 1% of COFINS tax if the imported product is listed in Appendix I of Law 12,546/2011. However, the Provisional Measure prohibits the credit related to the additional 1% for taxpayers under the non-cumulative method.

Brazil launches AEO ("Authorized Economic Operator") program

Upon the issuance of Normative Instruction 1,521/2014, Brazilian Federal Revenue (Receita Federal do Brasil), or RFB, launched the first phase of the AEO Program. This is a voluntary certification program for supply chain operators related to international trade who present low risk in terms of physical cargo security and tax and customs compliance.

Some of the benefits for certified operators are: recognition by international customs administration via a Mutual Recognition Agreement (MRA), a direct communication channel in customs to solve an AEO's problems, fewer physical and document examinations by customs in export transactions and requirement waivers in qualification for special customs systems.

According to the Normative Instruction, the implementation of the Brazilian AEO Program is scheduled to be conducted in three stages:

1. AEO Security (AEO-S), beginning March 2, 2015: authorized economic...