Brazil Cuts Industrial Tax by 25% for Most Products

Brazil’s government cut an industrial tax (IPI) by 25% to fight inflation and help industry recover from a pandemic downturn, the country’s official gazette showed on Friday.

The tax cut, with immediate effect, “is a milestone of the beginning of Brazilian reindustrialization after four decades of de-industrialization,” said the Economy Minister Paulo Guedes.

It will affect all industrialized products, with the exception of tobacco items.

Guedes acknowledged the measure has a short-term impact on inflation, but highlighted it was designed as a policy to increase industrial productivity.

Reuters had previously reported that the tax cut was coming.

The minister said it will represent a loss of around 20 billion reais ($3.9 billion) in tax revenue, with the federal government giving up 10 billion reais and the rest coming from state and municipal revenue.

By Marcela Ayres via Reuters