Price of imported may fall to 5% after the Supreme Court decision, calculates Association

With the decision of the Supreme Court (STF) that it is unconstitutional to include GST in the calculation basis for PIS/Pasep and Cofins on import operations, the cost of buying foreign products should fall at least 5%, Brazil's Foreign Trade Association (AEB). The President of the institution, Jose Augusto de Castro, explains that the fall in the cost of importation must vary in accordance with the ICMS state tax rates.
"What the SUPREME COURT did was return the legal principle. The Constitution is very clear that the possible taxation of social contributions, the calculation basis is the value for customs purposes, which in turn is the value of the goods plus freight and insurance, "he said.
According to Castro, at the time of the discussion on the provisional measure that instituted the contribution to the PIS/Pasep and Cofins on the importation of goods and services, in 2004, the AEB said that the measure would be unconstitutional. "When it was discussed the MP, we were talking about that the basis of calculation would be this monster that is there today. This feria the Constitution. "
The decision of the Supreme Court must also represent a drop in revenue. The Government's calculations indicate that the loss could be billion dollar. From 2006 to 2010, for example, were collected R $ 34 billion with the addition of GST on the calculation basis for PIS and Cofins on the importation of goods and services.
Medicines
The drug industry-one of the affected by the measure-still assesses the impact of the decision. However, preliminary calculations point to a price drop of up to 3%, according to the Chief Executive Officer of the pharmaceutical industry Union in the State of São Paulo (Sindusfarma), Nelson Mussolini. It highlights who still not all medicines would be impacted.
The transfer of the effect of tax cuts on medicines for sale to the ultimate consumer is defined by law. Law No. 10,742, 2003, stipulates that it is for a Board of market regulation of Medicines "to ensure the effective transfer prices for medicines of any amendment of the tax burden". With this, the Supreme Court decision gains would result in price reductions.
According to the Sindusfarma, however, about 30 to 40% of medicines sold in Brazil could not suffer the impact of the measure. That's because they are products on which there are already differentiated regime.
"Are medications considered of great relevance to the consumer, such as Oncology and against hypertension," Mussolini. Such products are included in law No. 10,147, of 2000, which proposes special arrangements for credit assumed use of the contribution to the PIS/Pasep and Cofins for producers and importers.
The products that could benefit would be the non-prescription drugs. The President of Sindusfarma highlights, however, that there are medicines of low final value and that the impact of a transfer of 2% to 3% cost reduction may not be significant.
Vehicles
The Chief Financial Officer of the Association of automobile importing companies (Abeiva), Ricardo Strunz, stated that the costs of car and light commercial members will retreat with the decision of the Supreme Court. However, he said, the fall in prices of such vehicles will be an individual decision of the importers.
"Technically, the cost falls. But companies (importers) suffered a lot with the increase of 30 percentage points of IPI (tax on industrialized products) and with Exchange rate variations over the past two years and many failed to pass it. So, the decision about the impact on the final price will be individual, "said Strunz. "It is good to remember that the very decision of the SUPREME COURT still needs to be published and submitted to the secretariats of Finance of States," he added.
The Executive could not estimate how much would be the percentage price drop with the reduction of the GST on the rate of 9.75%, because the calculation of the final price of the vehicles have a differentiated basis. That's because the vehicles have different prices and suffer taxation tax variables such as IPI, which changes according to the motor, the GST, depending on which port arrives and the import tax, this fixed in 35%.
The Abeiva accounts for about 3% of the vehicles sold in the country and by 15.8% share, if considered only those imported, according to the survey. The National Association of Automotive vehicle manufacturers (Anfavea), which accounted for 83.5% of imports, informed, through the press, which "does not usually comment on tax decisions". The other 0.7% of remaining vehicles come to Brazil by independent importers.
Balance of trade
As for the impact on Brazil's trade balance, Castro, Brazil's Foreign Trade Association, believes that the import can be stimulated by this decision of the SUPREME COURT, but that won't happen necessarily. "It will depend on domestic demand," commented. "We can also think that some products will have a lower cost which, passed on to the consumer, will assist in the control of inflation," he said.