Brazilian President Dilma Rousseff signed a bill exempting defence companies from taxes for five years. The measure is geared to prop the defence industry and reduce the share of imported equipment for the armed forces.
We don't want to produce only for Brazil. We know our competitiveness resides in our ability to export, Rousseff said.
She said the tax breaks will not only boost the defence industry, but also help create a trade surplus in the sector for Brazil.
In the past decade, Brazil's defence imports totalled 2.37 billion U.S. dollars, while defence exports totalled 470m dollars, with an overall deficit of 1.9 billion dollars.
Defence Minister Celso Amorim said the tax exemption will increase the armed forces' ability to protect Brazil's resources.
We live in a fairly complex world, in which we don't know where threats come from, but we know what we must protect, he said.
Tax breaks are expected to benefit 186 companies. To be qualified for the exemption, companies must have factories in Brazil and produce strategic equipment such as weapons, ammunition, satellites, rockets, planes and military vehicles.
This is the latest measure Brazil has adopted to defend and boost its own enterprises. Last month the government increased the tax over imported vehicles by 30%, excepting those from Mercosur and Mexico, with which Brazil signed an agreement for the automobile sector.