• Brazil and the "War of Ports"
  • February 6, 2013
  • Law Firm: Crowell Moring LLP - Washington Office
  • As of January 1, 2013, Brazilian's Senate Resolution n. 13/2012 is in full force. The Senate enacted the resolution to resolve the so-called "War of Ports", by which some Brazilian States compete with each other by offering more favorable State tax rates over products imported through their ports. As a consequence of said "war," not only some ports would be operating well beyond their capacity, but also would be preferred by foreign companies even though other ports would make logistically much more sense.

    By Resolution n. 13/2012, the bulk of Brazilian imports will pay an uniform intrastate tax rate of 4% over the goods imported into the country and then transported to a different State for sale. The flat rate applies to products not subject to any industrialization process after customs clearance, or if after industrialization the contents of the final product are composed by at least 40% of imported features. However, imported products with no similar substitutes within the Brazilian market are an exception to the flat rate, and the definition of which products fall into this category is defined by the Council of Ministers of the Brazilian Foreign Trade Chamber (CAMEX).

    The new Senate Resolution will have a significant impact over the States of Espirito Santo, Santa Catarina and Goias - those that offered the lowest tax rate as an incentive for importers to use their ports. In response to the resolution, the State of Espirito Santo filed a lawsuit before the Supreme Court of Justice claiming that the new Senate Resolution is unconstitutional.