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Brazil commits R$1.9bn to imperilled tax-exemption regime for exporters

This article was originally published in Clinica

Executive Summary

The Brazilian government has committed R$1.9bn (US$1.1bn) to pay for a programme that exempts exporters from ICMS (Impostos Sobre Circulação de Mercadorias e Prestação de Serviços) taxes on goods and services in 2010, after previously omitting the funding from next year's federal budget. The programme entails reimbursing state and municipal authorities for the lost revenues that result from the tax-exemption scheme established by the central government – under the so-called Kandir Law – specifically to promote exports. The leading national medtech industry association, ABIMO, welcomed the development, claiming that the government of the state of São Paulo – the hub of Brazilian manufacturing – had threatened to withdraw its support for the scheme from January 1.

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