3 Sep 2013
Brazilian boat builders work to change tax laws
Brazil’s yachting business leaders have formed a new lobby group, the Sao Paolo Nautical Forum to work with state and federal government agencies and the wider industry to promote job creation and a reformed tax regime.
Composed of Eduardo Colunna, president of Brazilian boatbuilding association ACOBAR, Luis Henrique Moreira Ferreira, director of Brazilian offshore industry body SINAVAL, Nautica magazine’s technical director Marcio Dottori, the president of the Union of Marinas, Paul Island, and Seoão Caetano of the small business lobby SEBRAE/SP, the new forum aims to develop a new regulatory framework for the marine environment.
“The Sao Paulo nautical forum is an initiative of ACOBAR; we did the same thing in Rio de Janeiro state 2 years ago,” said Jorge Nasseh, vice president of ACOBAR and ICOMIA executive board member. “We introduced a tax reduction program to benefit boatyards located in those states. The reduction on VAT can run from 25% to 7%. This is a major relief in VAT taxes for the yards in those states. Unfortunately the benefit can not be granted for all the builders located in other states. ACOBAR is aiming for fair competition for local builders and reduction of the import tax.”
Brazil’s domestic taxes are levied at both the federal and state levels, with wide discrepancies between states affecting boatbuilders. In general, the state sales tax (ICMS) varies from 3.5 to 25 percent, while the IPI federal excise tax is set at 10 per cent and COFINS social contribution is levied at 9.25 per cent. Sao Paolo state boatbuilders, including MCP which recently delivered the 44m aluminium motor yacht Raffaella II, faces the highest ICMS, which the group wants to see harmonized across the country.
While less than 0.3 per cent of Brazil’s fleet of roughly 70,000 pleasure boats are over 75 feet in length, 5 per cent of the country’s domestic yacht models on offer are in that size range. In 2012, the number of people with net worth above US$1 million in brazil grew more than anywhere else in the world, and by 2016 Brazil will become the country with the highest growth in the number of people with net worth of US$100 million.
In October, ICOMIA is hosting a conference at the Sao Paolo Boat Show with the aim of joining all the Latin America Boat Associations. According to Nasseh, during that conference, Brazil will launch a "Discovery Boating" program (Venha Navegar in Portuguese).
Despite these positive signs, Brazil’s superyacht industry (as well as it’s small boat base) still faces significant hurdles to development. “We need to reduce taxes and improve domestic workforce training,” Nasseh says. “Once we make these changes, Brazil’s maritime and yachting sector can properly blossom.”
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