The State of Rio de Janeiro intends to present a proposal to introduce tax-free shopping for foreign tourists at the National Council for Fiscal Policy (Confaz) meeting in November.
In addition to the unanimous approval of the 27 Secretaries of State of the Council of Finance, the policy must be voted in the Legislative Assembly of the State of Rio de Janeiro (Alerj) to be implemented.
The issue was discussed yesterday (20) at the Commerce Association of Rio de Janeiro (ACRJ).
The Secretary of State for Tourism, Sávio Neves, explained that the exemption of foreign tourists from the value-added tax (ICMS) on the purchase of selected products would mean a tax waiver of about R$19 (US$3.7) million.
On the other hand, the Tourism Secretariat expects an increase in sales of R$100 million.
“Tax-free shopping already works all over the world, in some cities and developed countries, and we would give Brazil and Rio de Janeiro, especially, an important incentive to trade in items that tourists are buying more and more,” says Sávio Neves.
Tax exemptions for foreign tourists exist in some 60 countries, including neighboring countries such as Uruguay and Chile, as well as Peru and Colombia, which have recently joined the policy.
Proponents of the proposal argue that the possibility of not paying taxes when shopping is one of the criteria that increase the attractiveness of destinations.
Neves expects the project to be implemented in the first half of next year, following approval in Confaz and Alerj.
Another necessary step is selecting a private company through a tender to operate the tax-free system, which will be computerized and involve merchants and state tax authorities to ensure the traceability of purchases.
Global Blue, which operates tax-exempt in more than 40 countries, participated in the event, pointing out that some legal issues need to be discussed when drafting the tax-exempt policy.
Such as which products are eligible, which tourists can benefit from the tax exemption, and whether there will be a minimum value for purchases, to name a few points.
Different models worldwide also provide other forms of tax exemption, such as buying the product tax-free in the store or getting a refund of the tax amount at the airport before returning to your country of origin.
Luiz Velloso, the advisor to the president of the State Commercial Association of Goods, Services, and Tourism (Fecomércio RJ), said that the association is ready to help merchants interested in implementing the system, should it be approved.
For this purpose, the National Commercial Learning Service (Senac) will be mobilized. “It is important that Rio de Janeiro is the gateway to tax freedom in Brazil,” he said.
Velloso points out that the state has recovered the flow of Brazilian tourists this year but has yet to see the same number of foreign trips as before the pandemic.
“Fecomércio understood that this is a mechanism to help the retail sector. We are coming out of a serious crisis, and this is good news.”
With information from Agencia Brasil