Originally published in the March 16 edition of World Tax Daily (Copyrights Tax Analysts)
Brazil on March 15 published Foreign Trade Chamber (CAMEX) Resolution No. 16/2010, which opens a public consultation on tax measures to retaliate against the U.S. in response to the cotton dispute before the WTO. The CAMEX resolution appears to expand on a provisional measure published on February 11 that authorized trade sanctions but no tax measures.
The CAMEX resolution gives interested parties 20 days to comment on a government plan to impose taxes on royalties paid to U.S. companies for sales of their products in Brazilian markets. The taxation would extend to pharmaceuticals, movies, books and publishing, software houses, and other sources of intellectual property.
In the pharmaceutical sector, the retaliatory measures may include authorization for Brazilian companies to import medicines from sources other than the U.S. owner of the corresponding pharmaceutical patent.
The full list of retaliatory measures will be made public only after the 20-day consultation period has ended. The government still appears hopeful that the U.S. government will present a proposal to eliminate the disputed cotton subsidies, heading off the retaliatory measures before they take effect.
Brazil has already authorized the imposition of higher import tax rates on some U.S. products for one year, commencing April 8 — a move that is expected to bring in $591 million. Combined with the new retaliation measures, estimated to be worth $238 million, Brazil plans to enact $829 million in retaliatory measures against the U.S.
David Roberto R. Soares da Silva