BRAZIL

Adjusting Taxes
to Support Currency

Presented To: Dr. Doaa Salman

Presented By:
Heba Mohamed
Ahmed El Taiby
Mohamed Ghazy
Agenda
1. Introduction

2. Currency and Exchange Rate

3. Taxes Adjustment

4. Global Investment in Brazil

5. Conclusion

6. Questions

2
 1 Introduction
 Brazil, the largest economy in Latin America.

 Brazil is the tenth-largest economy in 2023 with a GDP

size of $2.08 trillion (IMF).

 Brazil’s GDP is projected to be $2.75 trillion by 2028,

making it the eight-largest in the world.

 Brazil is home to more than 60% of the Amazon

rainforest, the largest tropical forest in the world.

 Brazil is well known for its coffee production, and a

leading exporter of soybeans, corn, sugar, meat.

 Brazil is member of the BRICS.

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 Introduction
• the First Brazilian Republic is the period of Brazilian history from 1889 to 1930

A new era, but it didn't bring anything new to Brazil's poor, so the situation has become bad

Civil wars, economic crises and the control of the big coffee traders over the country

• the Second Brazilian Republic ) Unbalanced renaissance(

Juscelino
Vargas
Kubitschek

1937 1956

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 1 Introduction
 Brazil’s Economic Miracle (1968–1974)

 A period of prosperity that was marked by high annual rates of

economic growth.

 Expanded number of public and private development projects,

and an increase in the volume and the diversity of exports.

 The miracle resulted from the economic policies adopted by

military leaders .

 The annual GDP rose by an average of 11%, compared to the

average 3.7%.

 The industrial sector expanded at an annual average rate of Emílio Garrastazu

Médici
12.6%

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 Presidents Of Brazil (1990 – Present)

~ 3 Years 8 Years ~ 6 Years 4 Years

Tancredo Fernando Dilma Jair

Neves Cardoso Rousseff Bolsonaro

1990 1992 1995 2003 2011 2016 2019 2023

Itamar Lula da Michel Lula da

Franco Silva Temer Silva

2 Years 8 Years ~ 2.5 Years President

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 1 Introduction
 In 2010, Brazil experienced a significant growth in its
Gross Domestic Product (GDP).

 Despite this economic growth, In 2010, Brazil was

facing economic challenges such as:

 High inflation

 Large trade deficit ($47.52 B)

 Currency instability (Floating Exchange Rate).

 Brazil's dependence on exports make it more

vulnerable to fluctuations in commodity prices.

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2
Currency and Exchange Rate
 The Brazilian real is the official currency of Brazil, It is
subdivided into 100 centavos.

 As of April 2019, the real was the twentieth most traded

currency.

 “We are experiencing a currency war”. Guido Mantega

 The artificial devaluation of currencies by various countries

“is a global strategy”.

 This is a strategy commonly known as “competitive

devaluation” whereby a country engages in policies to weaken
its currency to encourage exports.

 Competitive devaluation was popular in during the Great

Depression (1930s) when countries around the world
attempted to stimulate domestic growth and employment
through exchange rate adjustments.
 The government was buying all excess dollars
entering Brazil.

 The central bank bought $5.9 billion in the first 12

days of September, the most in 11 months. (According
to Altamir Lopes, head of the central bank’s economic
department)

 The central bank has purchased U.S. dollars every

day since July, swelling its foreign reserves to a
record $274 billion.

 The CB did that to increase the demand on USD by

selling Reals, so the value of the Real will decrease.
3
Global Investment in Brazil
 Petroleo Brasileiro IPO

 A Brazilian state-controlled oil company.

 Raised 120.4 billion reals (equivalent to $70 B) to

develop offshore fields.

 It was the world’s largest IPO.

 The central bank has been boosting its intervention in

the FX market to offset an inflow of dollars from
global investors.

 PB sale amounted to about 18% of the value of all

equity offerings completed thus far in 2010 and
exceeded by three times the record initial public
offering of $22.1 billion by Agricultural Bank of China
in July of this year.
4
Taxes Adjustment
 Brazil charged 2% financial tax on capital inflows.

 New tax has been applied to fixed-income and stock

investments.

 Foreign direct investment will remain untaxed.

 Aims to prevent “excessive” surge of local currency

(gained 36% against the U.S. dollar).

 Exporters have aggressively lobbied the gov. to take

action to halt the currency’s gains.

 25% of Brazil’s industrial output is shipped to foreign

markets (Exports).

 Foreign investors have shifted money to emerging

markets after the 2008 financial crisis.
 Import tax rates range from 10% to 35%.

 Automated control system (Siscomex).

 The custom clearance process takes 3 working days on

average.

 Shipping to Brazil costs more than shipping to some

other countries, this is because there are higher taxes,
duties, and tariffs on shipments.

 Brazil is targeting to limit imports to support local

manufacturers, national industries, and to boost
exports more.
4
Global Investment in Brazil
 Petroleo Brasileiro IPO

 A Brazilian state-controlled oil company.

 Raised 120.4 billion reals (equivalent to $70 B) to

develop offshore fields.

 It was the world’s largest IPO.

 The central bank has been boosting its intervention in

the FX market to offset an inflow of dollars from
global investors.

 PB sale amounted to about 18% of the value of all

equity offerings completed thus far in 2010 and
exceeded by three times the record initial public
offering of $22.1 billion by Agricultural Bank of China
in July of this year.
5
Conclusion
6Questions
1. What is the import tax in Brazil? Does Brazil have a fixed or floating exchange rate?

2. In what ways did Brazil experience an economic miracle? How long does customs clearance take
in Brazil?

3. Why is shipping to Brazil so expensive? Why are taxes in Brazil so high?

THANK
YOU
 The Sixth Republic (1985–present)
~ 3 Years 8 Years ~ 6 Years 4 Years

Tancredo Tancredo Fernando Dilma Jair

Neves Neves Cardoso Rousseff Bolsonaro

1985 1985 1990 1992 1995 2003 2011 2016 2019 2023

José Sarney Itamar Lula da Michel Lula da

Franco Silva Temer Silva

5 Years 2 Years 8 Years ~ 2.5 Years President

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