Since it was announced as Finance Minister of the second term of President Dilma Rousseff , the expectation was that the first steps of Joaquim Levy would bring a tax increase. On Monday (19), economic measures were announced with the increase of taxes on fuels, on imported goods on credit operations and, it was also announced a presidential decree that will equate the wholesale sector and the Industrial in the Tax on Industrialized Products (IPI) levied on cosmetics.

So now  will be also charged the IPI  of the  wholesale sector  in the area of cosmetics, as already happens in the industrial sector. According to Levy, the measure has little effect revenue collection, but “equalizes” the taxation along the production chain  and distribution of this sector. “With the measure, said Jorge Rachid, Secretary of Internal Revenue, who attended the announcement, the government hopes to raise of the sector R$ 381 million this year (around US$ 145,8 million) and R$  653 million in 2016 (around US$ 249,7 million) by 2016. The changes take effect in May and the collection shall be done from June.

“As a whole the measures, the effect is to increase confidence, increase the willingness of people to invest in Brazil, take risk, the entrepreneur start thinking new things. And it reflects, lets say, in the financial indicators, “said the minister Joaquim Levy.

The Brazilian  Association of Personal Care, Perfumery and Cosmetics Industry – ABIHPEC –  announces that it will comment in relation to the increase of taxes on the sector only when the decree is published in the Official Gazette. “All that talk at this point will be assumptions,” said President of the Association, Joao Carlos Basilio. But  he expressed yesterday to the newspaper Valor Economico its indignation at the decision taken by the government of equating the wholesale company with the cosmetics industry in the incidence of IPI in the cosmetics sector. “Let’s talk with the leaders of parties and understand what happened,” he said.The sector has an average rate of double-digit growth for over 15 years. This year the growth forecast is  of 11.8%, while the GDP by the government will be less than 0.5%.

Study of LCA Consultores shows that this is the 3rd most taxed sector of the country. Thus, Abihpec, after the announcement seeks to sensitize the government with a new hearing request, already made at other times. “We continue to expect that the Government receive us to discuss the subject in order to introduce the negative implications on the sector and society in case of these measures be maintained,” said João Carlos Basilio, Abihpec´s president

O Boticario
and Natura, the two largest cosmetic companies in the country are not taking position individually. The final position of the companies of the the market will be given by the sector as a whole, through Abihpec’s.

Industry representatives say this is a double charge, which will be passed on to the consumer. “It is unfair to the industry pay a tax for his efficiency,” says Cesar Tsukuda, CEO of Beauty Fair, industry cosmetics fair.