Government extends export incentive for companies in Rio Grande do Sul affected by rains

The Provisional Measure published in the Official Gazette of the Union this week extends by one year the exemption periods, reduction to zero of rates or suspension of taxes provided for in the special drawback customs regimes (suspension and exemption) for companies established in Rio Grande do Sul and their suppliers. 

The MP, signed by President Luiz Inácio Lula da Silva, Finance Minister Fernando Haddad and Vice President and Minister of Development, Industry, Commerce and Services (MDIC) Geraldo Alckmin, is part of the federal government's actions to reduce the economic impacts of the rains that hit the state this year.

The drawback increases the competitiveness of Brazilian exports, reducing the burden on imports and acquisitions of inputs used in the production of goods destined for the foreign market.

The extension will allow the extension of the term of concession acts that expire between April 24 and December 31, 2024. The beneficiaries are legal entities with tax domicile in Rio Grande do Sul and their suppliers, even if established in other states. Among the sectors affected are: chemicals, cutlery, footwear, trailers and wooden frames.

“The heavy rains that hit Rio Grande do Sul in 2024 resulted in significant losses of machinery and equipment for several companies. This destruction compromised part of the production and export capacity of several segments of the Rio Grande do Sul economy, especially the industrial sector. With this measure, we hope to alleviate the economic pressure on local companies,” highlighted Vice President and Minister Geraldo Alckmin.

According to data from the MDIC Foreign Trade Secretariat (Secex), 211 companies from Rio Grande do Sul that use the drawback suspension have US$ 848 million in exports planned for 2024. In addition, US$ 360 million in replenishment of stock of inputs to be carried out by 94 companies are linked to the drawback exemption regime.

What is drawback

The drawback, suspension and exemption regimes allow for the exemption of taxes charged on imports and domestic purchases of inputs used in the manufacture of products intended for export.

The exemption includes Import Tax, Tax on Industrialized Products, Contribution to PIS/Pasep, Contribution to Social Security Financing (Cofins) and Additional Freight for Renewal of the Merchant Navy (AFRMM); in addition to ICMS on external purchases, in the case of suspension regime.