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Brazil’s IT sector fears setbacks after WTO condemnation

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Electronics association Abinee said it will make proposals to improve and update the IT law. The group deems the legislation critical in attracting the world’s biggest ICT companies to the country, from components manufacturers to final hardware makers.

On Wednesday, the WTO said that seven Brazilian stimulus programs, including four directly related to electronics and IT, have provided nearly US$8bn in incentives since 2010. The subsidies benefitted the electronics, steel and auto sectors, among others.

“It is a serious problem that brings great concern to the industrial sector. We are studying improvements in the industrial policy to meet global requirements without compromising investments made in Brazil,” Abinee president Humberto Barbato (pictured) said.

The group fears that the government might use the WTO ruling to undo existing tax breaks that could lead to rising prices for end-consumers and affect demand.

“We must do industrial policy as other countries do, because it would not be smart to give up factories that generate quality jobs and generate lots of revenues for Brazil’s coffers,” added Barbato in a statement.

The combined revenue of electronics companies benefitting from the breaks surpassed 300bn reais (about US$95bn) from 2006 to 2015, according to the association. Related tax collection amounted to 57bn reais. In the same period, investments in R&D driven by the policies reached 12bn reais.

Abinee credits the IT law with turning Brazil into the world’s third largest PC market in 2011, behind only China and the United States, and the fourth mobile phone market in 2015. Currently, the country occupies the 10th and 6th spots, respectively.