Brazil reduces taxes for tourism agencies

The tax reduction should encourage the recovery of tourism, one of the sectors most affected by the pandemic and which until 2019 represented 8% of the GDP of the largest country in South America

(Source: COCHA)

The president of the National Congress, Senator Rodrigo Pacheco (PSD-MG), enacted Law 14,537 of 2023, which reduced the tax on international transactions mediated by travel agencies and other national tour operators from 25% to 6%. The new rate was published in the Official Gazette of the Union this Wednesday (1st), reported the Senate Agency.

The tax reduction aims to promote the recovery of the tourism sector, one of the businesses most affected by the Covid-19 pandemic. With the new tax rate, the prices of international products and services sold by Brazilian travel agencies, such as tour packages, hotel reservations, flights and cruises, among others, are expected to decrease.

The tax reduction applies to expenses incurred by people residing in Brazil during trips abroad, whether for tourism, business, services, training or official missions, up to a limit of 20,000 reais per month. According to the law, the income tax withholding rate will increase to 7% in 2025, 8% in 2026 and 9% in 2027. The tax is applied to the purchase of travel packages, plane tickets or reservations of hotel and tours when there is no agreement to avoid double taxation with the country of destination, as is the case with the United States, Germany and Colombia, for example.

According to Senator Daniella Ribeiro (Social Democratic Party, PSD), more than 35,000 tourism agencies, which generate more than 350,000 jobs in the country, should benefit from tax reductions. For the senator, the reduction of taxes should stimulate the competitiveness of Brazilian tourism agencies compared to foreign ones.

"According to the World Tourism Organization, the productive chain involves more than 50 sectors of the economy, such as transportation, hotels, construction, food and beverages, events, advertising, entertainment, tourism agencies, tour operators, receptive agencies, and the most different types of suppliers," explained Ribeiro.

With the reduction of the tax, the Brazilian federal government will stop collecting R$ 4.2 billion from 2023 to 2025, according to estimates by the Ministry of Economy. The leader of the ruling party in the Senate, Jaques Wagner (Partido de los Trabajadores, PT), also defended the reduction of the tax that benefits companies in the tourism sector. "Tourism is an industry without smoke, without chimneys, that generates jobs, that attracts people, that favors cultural exchange," he concluded.

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