(Reuters) -Brazil’s government announced through a presidential decree a 25% cut to its industrial tax (IPI) for most products in a move to ease inflation and help local industry recover from a pandemic downturn, the country’s official gazette showed on Friday.
The tax cut “is a milestone of the beginning of Brazilian reindustrialization after four decades of de-industrialization,” said Economy Minister Paulo Guedes. The exception of the tax reduction are tobacco products, he said.
Guedes added that the government considered a 50% cut, which was not adopted “out of respect for the industry established in the Amazon rainforest.”
A 25% reduction of the IPI rate represents a loss of around 20 billion reais ($3.9 billion) in tax revenue, with the federal government giving up on 10 billion reais and the rest coming from state and municipal revenue, according to a source.
Reuters previously reported on the tax cut.
(Reporting by Marcela Ayres; Writing by Peter Frontini; Editing by Chris Reese and Alistair Bell)
