Why AFRMM Affects So Much the Trade Between Brazil and Other Countries?
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Why AFRMM Affects So Much the Trade Between Brazil and Other Countries?

The AFRMM is protectionism in disguise, because many companies donÂ’t export to Brazil due to high costs after the nationalization of the products Imagine also if all countries would do the same thing?

The AFRMM (Additional to the Freight for Renewal of the Merchant Navy) was born as a special income, pursuant to Brazilian Decree-Law no. 3100, of 7 March 1941, which created the Committee on Merchant Marine. By the late 50's, it was instituted the Merchant Marine Fund - FMM. The income had been replaced by the Renewal Tax of Shipping - TRMM, with the figure of additional freight on import, export, or coasters, due to transportation of any cargo.

In 1966, the export operations were excluded from the collection of the fee. In December of 1970, legislation on the Merchant Marine Fund was changed by introducing, for his support, resources resulting from the "product of the additional freight charges for the renewal of Merchant Marine."

When the Brazilian Government introduced such tax, the intention was to create a fleet of ships. Thus, less of their currencies would be consumed with freights of foreign ship-owners. But the problem is that adding these to ocean freight rates, the increase in final product price is very significant. To make matters worse, if the importer purchased using Incoterms ex works, the tax is applied not only over sea freight, but also on all the values collected at source, including inland and THC.

Additional amounts charged are quite high at 25% on long-distance navigation, 10% in coastal navigation and 40% in inland and lakeside, with the transport of bulk liquids in the North and Northeast. For regions of Amazonia and the Northeast, the government extended the exemption until 2015, according to art. 18 of Provisional Measure No. 517 of December 31, 2010.

Just as the CPMF (contribution which was created to modernize hospitals and which ran from 1996 to 2007), the AFRMM must end, because it is of no value to exempt the Northeast and the Amazon if the rest of the country accounts for more than 80% of national GDP. Moreover, few products are excluded from the collection such as books, newspapers and periodicals.

The AFRMM is protectionism in disguise, because many companies don’t export to Brazil due to high costs after the nationalization of the products. Imagine if the government, besides the high taxes levied, resolved to create a tribute like this for each segment? Imagine also if all countries would do the same thing?

Business and political leaders of Brazil, as well as the entire international community must do something because you cannot continue with this injustice for so long.

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