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Brazil props defence industry by reducing taxes, but demands more exports

Monday, October 3rd 2011 - 08:07 UTC
Full article 5 comments
Some of the armoured vehicles manufactured in Brazil and popular in emerging countries Some of the armoured vehicles manufactured in Brazil and popular in emerging countries

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.

Categories: Economy, Brazil.

Top Comments

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  • GeoffWard2

    Worryingly, Brasil is getting more and more like Argentina - making up individual solutions for the specific sectors.

    This will create compounding difficulties as each new 'initiative' moves the country further and further from coherent, all-embracing policy.

    Sticking-plaster approaches to policy never work and, in this blatant case, foreign competitors counter-bidding for export contracts will claim unfair competition in order to remove Brasil from the process.

    Oct 03rd, 2011 - 09:30 pm 0
  • Forgetit87

    Do you even know whether they haven't been aided by their governments, those foreign corporations? I doubt they don't. Brazil the is one of the worse countries when it comes to promoting its exports, specially in the manufacturing sector. I don't doubt other countries have been playing this game for far longer.

    Oct 03rd, 2011 - 11:50 pm 0
  • Fido Dido

    This is good news for Brazil, specially that more and more (because of the so called credit crisis in Europe and in the US) foreign defence companies are interested to work with Brazilian defence companies in Brazil.

    Oct 04th, 2011 - 03:14 am 0
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