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Brazilian Government Extends Tax Incentive Program for Port Modernization and Expansion

Jan, 26, 2024 Posted by Gabriel Malheiros

Week 202404

The Brazilian Federal Government has extended the Tax Incentive Program for Port Modernization and Expansion (Reporto) for another five years. The extension was announced on Tuesday (Jan 23) by the Ministers of Ports and Airports, Silvio Costa Filho, Finance, Fernando Haddad, and Transportation, Renan Filho, at the Ministry of Finance auditorium in Brasília.

Created during President Luiz Inácio Lula da Silva’s first term, the tax incentive program aims to stimulate investments in logistics infrastructure, with the goal of improving operational efficiency and competitiveness of ports and railways in the country. With the extension, the government believes that every unpaid BRL 1 will lead to BRL 50 in investments.

The areas most benefited by the program are logistical efficiency, innovation promotion, and workers’ training and education benefits.

Moreover, according to data from the Ministry of Ports and Airports, without the program, such projects would become about 7% more expensive, with a 25% decrease in the acquisition of railway equipment and an increase in costs for railway concessions and extensions.

Silvio Costa Filho, the Minister of Ports and Airports, underscored the importance of ports to the Brazilian economy. “We need to improve Brazil’s ports, enhancing governance, technology, and, above all, dialogue with the international market. All of this is crucial, involving public and private investments, especially investments from the productive sector,” he mentioned.

Jesualdo Conceição, CEO of the Association of Port Terminals, emphasized the importance of Brazilian ports for cargo freight. “When we talk about the port sector, we are undoubtedly talking about national sovereignty … over 96% of international trade flow originates from the port sector—our foreign exchange, our exports, 100% of agribusiness goods leaves the country through the port sector,” he said.

According to Transportation Minister Renan Filho, “Reporto will ease the conditions for investments, build up Brazil’s international competitiveness, create new jobs, and certainly contribute to economic development.”

Data

Currently, the port sector in Brazil employs more than 272,820 workers, divided between direct and indirect activities in ports and navigation. The industry has attracted R$42.7 billion in investments in the last six years, with a benefit of R$1.08 billion from the program. From 2023 to 2026, a total of R$75.9 billion is expected, proving the program’s strategic importance for the country’s economic development.

Finance Minister Fernando Haddad clarified that Reporto plays a fundamental role in stimulating investment and exports. According to him, “No country can develop without the aid of these impulses. The country cannot isolate itself.” Haddad also called attention to the records achieved in foreign trade, emphasizing last year’s record trade surplus of almost 100 billion dollars.

What Is Reporto?

Reporto is a special customs regime created to encourage investments in the recovery, modernization, and expansion of Brazilian ports and railways, with the suspension and/or exemption of taxes. This regime was created through Law No. 11,033, dated 21/12/2004.

With Reporto, companies can purchase machinery and equipment by suspending federal taxes, such as Import Tariffs and Industrialized Products Taxes – IPI and PIS/Cofins.

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