Brazil amends vessel importation tax

Legislation in Brazil regarding temporary importation taxes for any foreign-flagged vessel has been amended via Normative Instruction No. 1488/2014.

According to broker Seabrokers, owners of any vessel working on a long-term basis offshore Brazil can apply for REPETRO, which effectively suspends all taxes for the vessel during the term of that contract.

However, upon the conclusion of the charter, or in the absence of a long-term contract, a foreign-flagged vessel’s owners must pay a temporary importation tax to keep the unit in Brazil while they try to secure a new term charter or perform some spot jobs.

This tax would be 1 per cent of a suspended importation tax, which varies between 50-60 per cent of the vessel’s value.

To simplify, this temporary importation tax roughly equates to 0.5 per cent of the vessel’s value per month.

Previously, this temporary importation tax was paid on a monthly basis. However, the change to the legislation now stipulates that six months of this tax must be paid up front, making it very difficult, and potentially costly, for an owner to keep a foreign-flagged vessel in Brazil while they attempt to secure a new term charter or perform some spot jobs.

“On the flip-side,” said Seabrokers, “this could increase the opportunities available for a Brazilian-flagged vessel or those in REB (foreign vessel under Brazilian flag using Brazilian tonnage), helping to protect the domestic market and domestic tonnage.”