Source: Sindicombustíveis-AL - Maceió / AL - NOTICIAS - 03/08/2010

Diario de Pernambuco

During the sugarcane harvest period, there will be an advance collection of the Tax on Circulation of Goods and Services (ICMS) on the alcohol that is imported. This is a state measure to curb product entry and prevent possible unfair competition, since the import tariff was reduced to zero in April this year. Only during the off-season, between the months of April and August, can fuel be purchased abroad without paying the tax at the entrance, to guarantee the supply of the market. The decree was published today in the Official Gazette.

The import tariff on ethanol was reduced from 20% to zero by the Foreign Trade Chamber (Camex), on April 5. It was a kind of gesture of goodwill to encourage the United States to remove barriers to fuel alcohol imports into the country. In practice, there is almost no import of ethanol from other countries in Brazil. But a recent import of a volume of three million liters by a distributor in Pernambuco has worried the sector.

“The state's production is 400 million liters of ethanol. Three million liters is a considerable volume within this context ”, defends Renato Cunha, president of the Pernambuco Sugar and Alcohol Industry Union (Sindaçúcar). The import tax exemption is valid for six months and can be renewed for an equal period. But the evaluation of businessmen in the segment is that the benefit should not be maintained. “As there has been no change in the international market, as the United States continues with protectionist policies, it is more likely that the Brazilian government will not renew. In any case, we need to ensure that there will be no unfair competition during the production period, which begins in September, ”says Cunha.

The alternative found by the state government was to charge the ICMS on the entry of alcohol that is imported. "It is a rate of 25% and represents a weight on the cost of imports, since it represents one third of the value of the product", comments Roberto Arraes, executive secretary of state revenue. "We have to defend the jobs that are generated here," says Governor Eduardo Campos.

In order to provide an alternative for supply control, only in the off-season there will be no advance ICMS charge. However, only ethanol producers will have this benefit on imports. “The responsibility for ensuring supply to the market lies with the plants. They are the ones who must make this import to pass on to the distributors ”, argues Renato Cunha. The state government also extended the deadline for negotiating debts in the payment of ICMS, which would end on July 31. More than 22 plants will be able to pay the overdue taxes, an estimated volume of R $ 1 billion, until November 30.