Brazil exporters hit by currency get tax breaks

Brazil exporters hit by currency get tax breaks
Brazil's President Luiz Inacio Lula da Silva signed legislation that will grant tax breaks to exporters hit by the strengthening currency.
The real gained 19 percent against the U.S. dollar this year and more than 123 percent since 2002 on strong trade surpluses and high interest rates that attract foreign capital.
As a result, several exporters, including automobile manufacturers, have begun selling less abroad.
The industries to benefit from the law include textiles, shoes, and timber, the presidency said in a statement.
Companies in those sectors will be granted exemptions on social security taxes (PIS and Cofins) charged on capital goods purchases and imports.
They will also have access to a special line of credit totaling 3 billion reais ($1.7 billion).
The law also lowered the threshold for companies to be considered exporters and thereby qualify for existing tax exemptions on purchases of supplies. A company with 60 percent foreign sales is now considered an exporter, down from previously 80 percent. The companies will be exempt from paying IPI, an industrial tax, as well as PIS and Cofins.
Brazilian companies frequently complain that a total tax burden of around 38 percent of gross domestic product erodes their international competitiveness.
Brazil's economy is growing close to 5 percent, faster than in previous years.
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