Trade Liberalization and Integration of Domestic Output Markets in Brazil

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Raising productivity through structural reform in Brazil

“…Another special federal tax called CIDE has been levied on select goods and services, most notably on imports of services and financial transactions including remittances abroad. CIDE contributes to the very high taxation of imported services, with effective tax rates often approaching 50% (PNST, 2018 [53]). This is not only a very high tax burden but also a barrier to competition and precludes Brazilian companies from the competitive advantages stemming from imported tradeable services.…”