Brazil partially rolls back import tax hike

By Marcela Ayres and Bernardo ‌Caram

BRASILIA, Feb ​27 (Reuters) - Brazil's ​government partially rolled back a controversial increase in import tariffs approved earlier this year, the Ministry of Development, Industry, Trade and ‌Services said on Friday.

The move, previously reported by Reuters, citing sources, ⁠restores a zero tariff on items that had been taxed after losing exemptions granted under ‌the government's policy to attract ‌data centers to the country.

In February, President Luiz Inacio Lula da Silva's administration raised import duties on more than 1,200 capital and technology goods.

The Independent ​Fiscal Institution (IFI), a fiscal entity linked to the Senate, had estimated the measure would generate between 14 billion reais and 20 billion reais ($2.7-3.9 billion) ⁠in additional revenue this year.

Now, 105 items have returned to a zero-tariff regime, including refrigeration compressors and ​other components critical for internal hardware cooling, as well as substations used to connect data centers to primary power infrastructure.

The government ​also reinstated exemptions for items unrelated to ‌the data center sector after receiving requests from various industries, including textile machinery, medical equipment and truck-mounted cranes.

The tariff hike ⁠had been crafted by the Finance Ministry, which argued that the realignment was needed because the affected goods account for a recurring sectoral trade deficit and a high penetration ⁠of imports - a trend the ministry's economic policy secretariat described as not "merely cyclical, but structural."

Speaking ​on condition of anonymity, a government source said the motivation behind the tax increase was fundamentally fiscal, as the additional revenue from raising import taxes - which does not require ‌congressional approval and takes immediate effect - will be important for meeting the government's fiscal targets not only this year but ‌also next year.

That discussion is taking place in the context of the 2027 ⁠budget guidelines bill, which is due ‌to be submitted to ​Congress in April, added the source.

($1 = 5.1417 reais)

(Reporting by Marcela Ayres and Bernardo Caram in Brasilia; Editing by Chris Reese and ‌Chizu Nomiyama )

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