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Brazil food exporter lobbies blast government's new tax credit rule
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Brazil food exporter lobbies blast government's new tax credit rule
Jun 5, 2024 1:42 PM

SAO PAULO, June 5 (Reuters) - Brazilian food exporter

lobbies on Wednesday blasted the government's executive order

imposing new rules for use of tax credits, claiming the rules

are unconstitutional and will make companies less competitive on

global markets.

The backlash against the measure announced Tuesday

represents the latest test in President Luiz Inacio Lula da

Silva's shaky relationship with the powerful agribusiness

sector, which had supported his predecessor Jair Bolsonaro.

Brazil is the world's largest exporter of commodities

including coffee, beef, chicken, sugar and soybeans.

ABPA and ABIEC, which represent meat giants like JBS

and BRF, said the measure will oblige

companies to rely more on banks for credit, boosting expenses

and burdening their operations.

"The effect on production costs is direct and immediate,"

their statement said, adding the move could trigger food

inflation and job losses in Brazil.

The government said it is merely trying to close loopholes

that benefit several industries, as it seeks to raise almost 30

billion reais ($5.66 billion) to eliminate the budget primary

deficit this year.

The most affected sectors include pharmaceuticals, meat,

fruit, coffee, cereals and biodiesel.

"In addition to making Brazil a major exporter of tax

residues, [the executive order is] in total breach of the

Constitution regarding tax exemption for exports," coffee

exporters lobby Cecafe said.

Anec, which represents grains and cereals exporters in

Brazil, did not immediately reply to a comment request. Neither

has Abiove, which speaks for soy crushers including Bunge

and Cargill with local operations.

Biodiesel lobby APROBIO, which uses soy as a basic raw

material, said it will try to convince the government to

reconsider the measure to protect investments and safeguard the

country's efforts to transition into clear energy sources.

($1 = 5.3002 reais)

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