Trade Regulations

Brazilian companies to have services purchases tax drawback

Sep, 06, 2022 Posted by Sylvia Schandert

Week 202236

Starting next year, Brazilian exporters will be able to purchase services such as transportation, insurance, handling, and cargo storage with a tax drawback. A law was enacted this Monday (5) establishing the drawback on service purchases, in addition to the existing benefit for products.

It will allow the waiver or exemption from the Social Integration Program (PIS) and Contribution on Social Security Financing (Cofins) tariffs on inputs used in goods produced for exports. The new law extended the mechanism to exporters purchasing services during production.

To be entitled to the benefit, exporters must prove the services are directly and exclusively linked to the export or delivery abroad of a product to benefit from the drawback mechanism. According to the Brazilian Ministry of Economy, the new policy will contribute to the participation of Brazilian companies abroad, generating a tariff reduction and improving the competitiveness of local exporters.

Until now, the drawback was only granted for purchasing national and foreign inputs destined for the industrialization of products to be exported. In 2021, the instrument fostered exports of over USD 61 billion, according to the Secretariat of Foreign Trade. With the new ruling, services will have the same treatment as physical inputs.

Source: ANBA – Brazil-Arab News Agency

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