Brazil: Legislative Bill Revoking Additional Value For Merchant Marine Improvement (AFRMM) For Coastal And Inland Navigation Is Currently Pending At The Senate

The Federal Senate is currently analyzing the Legislative Bill (PLS) no. 421/2014, which revokes the incidence of the Additional Value for Merchant Marine Improvement (AFRMM) in coastal navigation. The AFRRM in inland and river navigations in transportation operations of liquid bulks in the North and Northeast regions would also be revoked.

To that end, the legislative bill proposes the abrogation of items II and III of article 6 of the Law no. 10,893/04, which are the provisions defining the AFRMM´s rate for referred navigation regimes.

The author of the proposal affirms that coastal navigation must be encouraged, because in addition to its economic advantages, produces less environmental impact than the road and railroad transportation modes. She also declared that the AFRMM collection on coastal navigation would be perverse, because creates tax disparities in relation to the competitor modals, considering that the goods transported in railways and railroads do not pay taxes of similar nature.

The rapporteur of the legislative bill in the Services and Infrastructure Committee presented the statistics whereby the total collected between 2013 and 2014 with the AFRMM on coastal navigation would only correspond to 1% of what is collected with the same tax on deep-sea navigation and therefore, the impact of the proposed revocation would be small.

With respect to inland and lake navigations for transportation of liquid bulks in the North and Northeast regions, the rapporteur pointed out that the collection results in a costly factor applied in a regionalized form, detrimentally to the less developed regions of the country. The revocation of the AFRMM would therefore be aligned with the constitutional principle of reduction of regional inequalities.

The Legislative Bill was approved on April 13, 2016 by the Services and Infrastructure Committee, and was submitted to the Economic Matters Committee for analysis where it will have a terminative decision. Should this Committee approve this legislative bill, the bill will be sent to the Chamber of Deputies to be voted.

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