MARKET DEVELOPMENT
EU Seeks WTO Mediation In Tax Disputes
EU Seeks WTO Mediation In Tax Disputes
05/11/2014 (Tax-News.com) - The European Union (EU) has sought the World Trade Organisation's (WTO's) support to resolve trade tax disputes with Brazil and Russia.
The EU has requested that the WTO establish a panel of experts to rule on what it claims are discriminatory Brazilian tax measures. According to the EU, the bloc aims to re-establish a level playing field between Brazilian and European businesses and products.
At present, goods manufactured in the EU and sold in Brazil face higher taxes than Brazilian products because domestic products can benefit from exemptions from or reductions in the internal taxes imposed in various sectors. For example, the EU says that the tax on imported vehicles can exceed that collected on Brazilian-made cars by 30 percent of a car's value. When combined with the customs duties levied at the border and other charges, the tax can reach 80 percent of the import value.
The EU also claims its exporters are hurt by a requirement that Brazilian manufacturers must use domestic components in order to qualify for tax advantages. The EU alleges that the measures help to shield uncompetitive Brazilian manufacturers from international competition and limit the choice of affordable quality products for consumers.
Consultations were held between the EU and Brazil earlier this year in an attempt to resolve the dispute. The talks failed, and Brazil has since extended and prolonged some of the contested tax breaks. The EU has therefore requested the creation of a panel.
The EU has also asked for the WTO to mediate in another dispute with Russia over its import duties for paper products, refrigerators, and palm oil. The EU says that Russia has violated its WTO commitments to keep import duties below the limits in Russia's WTO accession documents.
According to the EU, Russia either applies a duty rate of 15 percent (rather than the stated 5 percent limit) or fixes a minimum amount that must be paid. The EU argues that these higher duties have a negative impact on European exports of these goods, which are worth around EUR600m (USD751m) a year.
The EU says that it raised the issue with Russia, but to no avail. If the proposed WTO consultations are unsuccessful, the EU may ask the WTO to establish a panel to rule in this case also.
The EU has requested that the WTO establish a panel of experts to rule on what it claims are discriminatory Brazilian tax measures. According to the EU, the bloc aims to re-establish a level playing field between Brazilian and European businesses and products.
At present, goods manufactured in the EU and sold in Brazil face higher taxes than Brazilian products because domestic products can benefit from exemptions from or reductions in the internal taxes imposed in various sectors. For example, the EU says that the tax on imported vehicles can exceed that collected on Brazilian-made cars by 30 percent of a car's value. When combined with the customs duties levied at the border and other charges, the tax can reach 80 percent of the import value.
The EU also claims its exporters are hurt by a requirement that Brazilian manufacturers must use domestic components in order to qualify for tax advantages. The EU alleges that the measures help to shield uncompetitive Brazilian manufacturers from international competition and limit the choice of affordable quality products for consumers.
Consultations were held between the EU and Brazil earlier this year in an attempt to resolve the dispute. The talks failed, and Brazil has since extended and prolonged some of the contested tax breaks. The EU has therefore requested the creation of a panel.
The EU has also asked for the WTO to mediate in another dispute with Russia over its import duties for paper products, refrigerators, and palm oil. The EU says that Russia has violated its WTO commitments to keep import duties below the limits in Russia's WTO accession documents.
According to the EU, Russia either applies a duty rate of 15 percent (rather than the stated 5 percent limit) or fixes a minimum amount that must be paid. The EU argues that these higher duties have a negative impact on European exports of these goods, which are worth around EUR600m (USD751m) a year.
The EU says that it raised the issue with Russia, but to no avail. If the proposed WTO consultations are unsuccessful, the EU may ask the WTO to establish a panel to rule in this case also.