EU Files WTO Complaint on Brazilian Taxes It Says Discriminate Against Imports
The European Union announced Dec. 19 that it has requested consultations at the World Trade Organization with Brazil over what it calls “tax measures that discriminate against imported goods and provide prohibited support to Brazilian exporters.” The EU states that it has raised this issue in bilateral talks and in WTO bodies but that “so far this has not brought progress.” If the WTO consultations do not reach a satisfactory solution within 60 days, the EU may request the establishment of a dispute settlement panel.
An EU press release states that in recent years Brazil has increased its use of the tax system to provide advantages to domestic industries and shelter them from competition, primarily through selective exemptions or reductions from taxes on domestic goods. The EU asserts that these tax measures have a negative impact on its exporters, restrict trade by favoring the localization of production and supplies, and result in Brazilian consumers facing higher prices and less choice.
For example, the EU states, in September 2011 the Brazilian government imposed a large tax increase (30%) on motor vehicles but excepted domestically produced cars and trucks. This tax was due to expire in December 2012 but was replaced by an “equally problematic tax regime” (Inovar-Auto) set to last five more years. Under other similar programs, tax benefits are reserved for goods produced in certain areas in Brazil, whatever the sector. Brazilian authorities have also broadened existing systems of tax exemptions for Brazilian exporters by enlarging the number of potential beneficiaries.