Regulatory News

Starting in December, cigarettes will cost 20% more due to the new Tax on Industrialized Products (Imposto sobre Produto Industrializado - IPI). According to the Federal Income Revenue Office, the increase will be done gradually until January 2015 when the price will be 55% higher than it is today. Total tax on each pack of cigarettes will go up from the current 60% to 72% or 81% depending on the tax modal the manufacturer will use.

So that this increase does not facilitate smuggling and illegally-made cigarettes, the government established a minimum price. The measures are part of a new industrial policy. The decision to increase taxes on cigarettes was made to compensate for the tax loss in other sectors. Based on calculations by the Federal Income Revenue Office, Just with the IPI manufacturers will annually pay over R$7.7 billion in Brazilian currency (US$ 4.8 billion) in 2015, compared to R$3.6 Billion (US$ 2.2 billion) today.

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