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Coastal Navigation incentive Program

A Coastal Navigation incentive program that the Ministry of Infrastructure intends to launch in August expects to expand the transport of goods along the Brazilian coast.

An interim measure is expected to bring about major changes in the industry’s regulatory framework, which has had an average annual growth of 12.8% over the past decade. Despite the Chinese economic pace, the government estimates that there is still plenty of room for expansion. The goals of the new program include doubling the volume of containers transported per year from the current 1.35 million to 2.7 million TEUs (20 foot equivalent unit) in 2022, and to increase by 40% the capacity of the maritime fleet dedicated to costal navigaiton in the next three years.

The plan, which has been called “BR do Mar” by the ministry’s technicians, foresees simultaneous and multi-front initiatives to stimulate the sector: more flexibility in the incorporation/import of new vessel by Brazilian shipping companies, easier use of port terminals aimed at handling cargo, a change in the guarantee system for access to the Merchant Marine Fund (FMM) and an attempt to end distortions in the charging of ICMS (state tax) on bunker.

“We are able to triple the growth rates of domestic shipping,” said Diogo Piloni, the national secretary of Ports and Waterways.

One of the Program’s greatest advances is the encouragement of the establishment of “special operations” – new routes that companies can offer on a trial basis linking one port to another.

To test a domestic route, one wil be temporarily free from the requirement to have own fleet (at least one ship imported or built in Brazil) to obtain registration as a Brazilian shipping company (EBN).

For a maximum period of four years, EBN may charter vessels without this obligation. The idea is to allow a test that paves the way for the establishment of longer lasting routes. Today one of the biggest obstacles to the development of coastal navigation is the lack of regularity of operations. “We are reversing the logic,” explains the director of the Department of Navigation and Waterways of the Ministry of Infrastructure, Dino Antunes Batista. “Today companies need to invest to enter the market. With our new Program they can enter the market and then decide how much to invest.

“When infrastructure is not available at the source or destination port, with a terminal capable of handling cargo carried on these experimental lines, companies can explore terminals through a simplified procedure – also for up to four years. This process promises to be less bureaucratic than a port terminal lease.

Shipping companies will gain an incentive to expand supply – not just special operations – with foreign vessels. They will earn exemption from federal taxes, such as Import Tax and PIS / Cofins, by incorporating ships manufactured abroad. These taxes increase equipment costs by 40% to 50%, according to government estimates, and will turn into credits.

The credits must necessarily be used in the Brazilian shipbuilding industry. It can be in the repair or maintenance of imported vessels, not just in the construction of ships. But gains from the exemption will need to be “returned” to national shipyards.

Another obstacle that the government intends to unlock with the MP is the guarantees for access to the billionaire Merchant Marine Fund (FMM). With different rates of financing for shipbuilding, the fund has been underused. The risk of loans rests with the credit transfer institutions – BNDES, Banco do Brasil, Caixa, Banco do Nordeste and Banco da Amazônia.

In the new program, the government will put into practice the “unenforceability of the linked account”. This means that a tax on the amount of freight that is collected by the shipping company and goes to itself, in a specific account for any FMM financing, can no longer be frozen or enforced against. As a result, banks will be collateralized and more comfortable with landing credit.

An additional goal of the Program is to match the price of fuel used in international (now ICMS-free) and domestic (15% to 18% tax) freight rates. The Union cannot legislate on state taxes, but has found a legal solution to allow the government of each state to clear the tax collection. Without this, any exemption would have to be endorsed by ever state on the National Council of Finance Policy (Confaz).

Brazilian Revenue will no longer charge IOF on export exchange

The Brazilian Federal Revenue will no longer charge the Tax on Financial Transactions (IOF) on foreign exchange transactions related to the entry of export revenues in Brazil. The Federal Official Gazette published on Wednesday (24) a consultation solution to clarify exporters on the incidence of IOF and reformulate their understanding from last year.

According to the National Confederation of Industry (CNI), at the end of last year, the Revenue began to demand the payment of 0.38% on foreign exchange that entered the country. At the time, the IRS’s interpretation was that the exemption would be restricted to those who internalized the export revenue on the same day of the export operation. According to the CNI Export Competitiveness Forum, companies were unable to perform the export exchange operation on the same day.

“The exporting companies were very worried. About 90% of these funds are internalized, but not on the same day, due to time zone, reserve to pay suppliers, among other reasons,” explained CNI Commercial Policy manager Constanza Negri, adding that the confederation presented several documents to question the Revenue’s change in interpretation of the rules.

At the time, CNI estimated losses of $ 3.7 billion to exporters this year, if the decision was upheld. According to Constanza, companies have even filed lawsuits against the IRS to maintain the exemption.

According to the consultation solution published in the DOU, in the case of foreign exchange operations related to the entry of goods and services export revenues into the country, the IOF tax rate is zero. However, deadlines must be met for companies to be exempt, according to the rules of the National Monetary Council (CMN) and the Central Bank. According to the document, the export exchange liquidation contract shall be entered into for prompt or future settlement, prior or subsequent to the shipment of the goods or the rendering of the service, observing the maximum period of 750 days between the export operation and liquidating the exchange contract in order to receive the export revenue.

What is the North Arc?

A person who doesn’t know Brazilian logistics and ports, having only knowledge of Brazilian geography, would have no difficulty imagining the widespread use of waterway and cabotage transportation. Bearing in mind the profusion of rivers that flow through our territory, specifically in northern Brazil and our extensive coastline.

However, the flow of Brazilian production for a long time was done in a way that is very contrary to the advice of reason and intelligence, using primarily the South and Southeast grain ports. Meanwhile, due to successive records in our harvests, coupled with rising Chinese demand, has resulted in numerous bottlenecks in the already overloaded South/Southeast grain ports.

Consequence? Higher transportation costs and longer trips to production areas. Therefore, exporters began a search for viable logistics alternatives in other parts of Brazil. Thus, each year, the flow of grain through ports in the North/Northeast region has been growing substantially.

The ports above the 16° S parallel compose the so-called North Arc, covering the terminals of the North and Northeast. Since 2015, the Arco Norte ports have been the second largest exit point for soybeans and corn.

Obviously there are several obstacles and challenges to overcome. However, expectations are that the Arc North will export to 50% of the soybean from the state of Mato Grosso as early as 2023. Despite the obstacles, it is clear that grain flow through the North Arc is a path of no return and that the volume increase in the coming years is a fact.

Regarding the challenges of the region to be overcome, it is necessary to highlight that in 2016 a legislative consultant of the Brazilian Congress wrote a dense study regarding the North Arc, raising the region as the best logistics route for Brazilian grains. The study indicates in a practical and detailed manner all the difficulties and challenges of the region. It also proposes several solutions. The Legislative Consultant is nothing less than Tarcísio Freitas, the current Minister of Infrastructure, who has been working together to ensure better infrastructure for the Northern Arc.

North Arc – keep this name in mind!

Antaq opens hearing on bidding for areas on the Itaqui Port

The National Waterway Transportation Agency of Brazil (Antaq) opened last Monday (1), a public consultation and hearing to receive contributions, subsidies and suggestions for the improvement of the legal and technical information necessary to carry out a public bidding contest related to the leasing of terminals for handling and storage of liquid fuels, located in the Public Port of Itaqui, Maranhão, Brazil.

The legal technical documents related to this public hearing are available here.

Only the contributions, subsidies and suggestions referring to the documents placed in public consultation and hearing will be considered by the Agency. Contributions can be sent to Antaq by 23:59 on July 31, exclusively through the form and electronic form available only on their website: http://portal.antaq.gov.br/.

By means of identification of the taxpayer and within the stipulated period, it will be exclusively possible to attach digital images, such as maps, plans, photos, etc., through the following e-mail: [email protected]. The contributions received by Antaq will be made available on the portal.

By means of identification of the taxpayer and within the stipulated period, it will be exclusively possible to attach digital images, such as maps, plans, photos, etc., through the following e-mail: [email protected].

The contributions received by Antaq will be made available on the portal. A public hearing will be held at a date and place to be timely defined and disclosed by Antaq.

Transport & Logistics – The Shipping Law Review

Our partner, Larry John Rabb Carvalho, was chosen to write the chapter about Maritime Law in Brazil, in the fifth The Shipping Law Review’s edition, of the editorial “The Law Reviews”. The UK publication, in several jurisdictions, conduct a research of law firms and lawyers with expertise in strategic litigation, selecting them, along with internationally renowned experts, to contribute to the editorial.

Each book is focused in one area of law, and each chapter is written by a renowned lawyer to address your country’s law on relevant matters on the international scenario.

Adopting as a central theme the maritime transport regulatory framework in the nations with the largest maritime transportation, the publish “Shipping Review” aim to provide those working in the segment with an overview of the main problems faced in the area and potential solutions.

The honor of participating in the renowned editorial was highlighted by Larry Carvalho. “We are grateful and honored to have been chosen to contribute and expose to the Shipping market, its current scenario in Brazil and its legal framework.” While national boundaries and laws differentiate us, Shipping unite us in favor of universality of its rules, in order to guarantee greater legal security for all its players,” he said.