MercoPress. South Atlantic News Agency

Brazil approves bill which allows the opening of tax-free shops along border towns

The Uruguayan city of Rivera, mirror with Livramento on a busy weekend shopping by visiting Brazilians

The Brazilian congress approved this week a bill which enables the opening of free shops or tax free shops, along border towns currently suffering from the massive inflow of imported goods purchased at international prices in such stores in Uruguay, Argentina and Paraguay.

The bill which still has to be promulgated by President Dilma Rousseff looks to benefit 28 counties in nine states geographically opposed to twin cities from neighbouring countries and exposed to their privileged competition since they are allowed to operate with imported tax free goods that can be purchased at similar prices to those in international airports or sea terminals.

The main customers for these free shops in Uruguay, Argentina and Paraguay are precisely Brazilian residents, particularly from the southern state of Rio Grande do Sul.

With the new bill the Brazilian Ministry of National Integration has the authority to identify and allow such shops to be set up along the border. The state forecasted to benefit most is Rio Grande do Sul which has to deal with at least ten twin cities in Uruguay and Argentina which operate these tax-free shops.

Stats from Uruguay’s fiscal deposits show that during 2011 the volume of merchandise to supply free shops in twin border cities next to Brazil, totalled 364 million dollars which represented a 19.3% increase over the previous year of 2010. The information was supplied by the Free Shops’ Entrepreneurs Chamber of Uruguay.

Furthermore the industry has been so successful that it has attracted some major international corporations such as Wisa and Saitn Honoré that operate worldwide.

Last Tuesday the Lower House of the Brazilian congress finally approved the text sent back by the Senate with some changes introduced and which basically contemplates very serious jail sentences and fines for those officials who directly or indirectly are deliberately involved in the purchase of foreign goods to provide the free shops.

The bill had been approved by the Senate a week before following long discussions to ensure strict controls for the new border free-shop industry. On Wednesday an agreement was reached and the bill was passed unanimously.