Brazil's government has raised taxes on over a thousand imported products, including cell phones, to boost local industry competitiveness, but most smartphones are already produced domestically.
In early February, the Brazilian government announced an increase in taxes on more than a thousand imported goods, including cell phones, aimed at enhancing the competitiveness of the national industry. The tax hike could reach up to 7.2 percentage points, impacting both sectors and consumers who buy goods internationally. Despite the increase, the majority of smartphones used in Brazil are locally produced, constituting about 95% of purchases, which mitigates the expected impact on consumer prices.
The Ministry of Finance and the Ministry of Development, Industry, Commerce, and Services (MDIC) were queried regarding the previous tax rates on cell phones but did not respond. It is important to note that the new measure exempts smartphones manufactured within Brazil from the tax increase, thereby protecting the local market from significant price hikes. According to the MDIC, only about 5% of smartphones in Brazil are imported, primarily from China, which means that the overwhelming majority of consumers will not see substantial changes in prices.
In addition to the tax on imports, the new regulation includes a zero tariff for any components used in the production of smartphones that cannot be sourced domestically. This aspect of the policy is designed to support local manufacturers by ensuring they can access essential parts without the burden of import taxes, thus fostering growth in the Brazilian manufacturing sector. Overall, while the new tax regime may affect some imported products, the local production of smartphones is expected to cushion the blow for consumers.
