BAT Brasil is one of the largest taxpayers in Brazil
Over the past decades, the Brazilian market tobacco is coexisting with continued increases in federal and state taxes. It is not aimlessly that BAT Brasil is one of the largest contributors across the country. The projection of BAT Brasil is that this figure shall grow in the coming years.
Tobacco is already the largest contributor of Tax (IPI), exceeding the automotive and beverage industries. Over the past four years, the adjustment of the tax was 110%. For certain brands, the increase reached 140%.
But the Tax on Sales and Services (ICMS), only in 2015, had its rate adjusted in 20 states and the Federal District. The increases were significant and reached 10% in the Federal District and 7% in São Paulo.
The recurring adjustments in the tax burden, though seemingly advantageous, are harmful both to the state and to the legal tobacco market. High taxes, added to inefficient border controls and regulations such as ADA Law 12,546 / 11, which stipulates a minimum value for the package sales with 20 cigarettes (R $ 5.00), open space for illegal products.
With prices well below those charged legally, smuggled cigarettes become attractive for the population - proof of this is that they now account for 48% of the Brazilian market. Thus, they impair the growth of the formal industry and therefore tax collection. It is estimated that R $ 4.9 billion cease to be paid in taxes each year due to the sale of illegal cigarettes.
BAT Brasil has been trying to establish a dialogue with the government to jointly find alternatives that meet government demands, but also guarantee the sustainability of the legal tobacco market.