UPDATE 2-Brazil says no tax credit planned for soy meal or oil
* Revenue Service studying correcting domestic tax distortion
* Government denies considering stimulating some soy exports
RIO DE JANEIRO, March 22 (Reuters) - Brazil's revenue service said on Friday the government had no plans to shift taxes to favor exports of soy meal and oil over exports of beans, as a newspaper had reported, but said it could scrap taxes on domestic soy, coffee and sugar production.
The newspaper Valor Economico said the government planned to rebalance the tax credits applied to soy meal and oil to favor value-added export sales, citing a source involved in the negotiations between the industry and the government.
Such a move would help big multinational crushers such as Bunge Ltd, Cargill Inc, Archer Daniels Midland Co and Louis Dreyfus Corp.
Carlos Alberto Barreto, secretary of the Revenue Service, said the government is studying how to eliminate or reduce the PIS/Cofins tax for domestic soy, coffee and sugar sales but denied that it was considering how to stimulate exports of soy meal or oil through tax credits.
Imbalances in the tax regime on the food sector arose recently after the government eliminated taxes on basic staples for domestic consumers on March 8.
Taxes, such as the PIS/Cofins in this case, are applied to goods produced at various stages of production and serve as credits to offsets tax liabilities at the time of sale.
If the tax is removed at the point of sale, as the government did for food staples to contain inflation, taxes paid earlier in the production process cease to hold value as credits, and would eventually raise costs in the production chain.
The Valor article said the government planned to raise tax credits for processors on soy meal and oil exports beyond the current incentives granted to soybean exports. That would reverse the current tax regime that favors beans and has put Brazil in a position to surpass the United States as the largest soybeans exporter this year.
Neighboring Argentina, whose tax system also favors meal and oil exports over beans, is the world's biggest exporter of soy products.
Such a change in the export tax structure could alter the profile of Brazil's soy exports, increasing the sale of industrialized value-added products, rather than simply raw materials such as soybeans.
"Promoting value added products is a good thing as long as it doesn't hurt the production of grains," said Maria Amélia Tirloni, who analyzes tax issues for the Aprosoja soy cooperative.
"Our consumer market is Chinese, and China buys soybeans," she said of the country that buys 70 percent of Brazil's soy.
Valor said the government had already reached an agreement with soy companies on the new model and is now discussing percentages for the tax credits.
Brazil's grain industry association Abiove, Cargill, ADM and Bunge representatives declined immediate comment on the Valor story.
- Exclusive: Radar data suggests missing Malaysia plane deliberately flown way off course - sources
- Investigators focus on foul play behind missing Malaysia plane: sources |
- Kremlin website hit by 'powerful' cyber attack
- West prepares sanctions as Russia presses on with Crimea takeover |
- UPDATE 1-Rolls-Royce concurs with Malaysia on missing jet's engine data