WT/DS472/5  
 
7 November 2014  
(14-6588)  Page: 1/11  
  Original: English  
 
  BRAZIL – CERTAIN MEASURES CONCERNING TAXATION AND CHARGES 
REQUEST FOR THE ESTABLISHMENT OF A PANEL BY THE EUROPEAN UNION 
The following communication, dated 31 October 2014, from the delegation of the European Union 
to the Chairperson of the Dispute Settlement Body, is circulated pursuant to the Article 6.2 of the 
DSU. 
_______________ 
 
 My authorities have instructed me to request the establishment of a panel pursuant to Article 6 of the WTO Understanding on Rules and Procedures Governing the Settlement of Disputes  (DSU), 
Article XXIII of the General Agreement on Tariffs and Trade, 1994  (GATT 1994), Articles 4.4 and 
30 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement), and Article 8 of 
the Agreement on Trade-Related Investment Measures  (TRIMs Agreement) with respect to certain 
measures concerning taxation and charges imposed by the Federative Republic of Brazil (Brazil) 
(DS472, Brazil — Certain Measures Concerning Taxation and Charges ). 
On 19 December 2013, the European Union (EU) requested consultations with Brazil, pursuant to 
Articles 1 and 4 of the DSU, Article XXII of th e GATT 1994, Article 4 of the SCM Agreement and 
Article 8 of the TRIMS Agreement with respect to certain measures concerning taxation and charges imposed by Brazil. The request was circulated on 8 January as document WT/DS472/1, G/L/1061, G/SCM/D100/1, G/TRIMS/D/39. 
Consultations were held on 13 and 14 February 2014 with a view to reaching a mutually 
satisfactory solution. An additional meeting took place on 4 April 2014. Unfortunately, the consultations failed to settle the dispute. 
As a result, the EU respectfully requests that a Panel be established with the standard terms of 
reference as set out in Article 7.1 of the DSU with respect to the following matter:
1  
1.  MEASURES IN THE AUTOMOTIVE SECTOR 
Brazil has established a "Programme of incentive to the technological innovation and densification 
of the automotive supply chain" ( Programa de Incentivo à Inovação Tecnológica e Adensamento da 
Cadeia Produtiva de Veículos Automotores ) also known as "INOVAR-AUTO".2 Under the INOVAR-
AUTO programme, Brazil provides tax advantages wi th respect to the "Tax on Industrial Products" 
(Imposto sobre Produtos Industrializados , IPI).3 The tax advantages consist in a reduction of the 
IPI tax burden on the sale of the products (motor vehicles) covered by the programme.  
                                               
1 The EU reserves its rights, includin g under Article 4.7 of the DSU, with regard to measures identified in 
its request for consultations which are not the subject of this request for the establishment of a Panel. 
2 The INOVAR-AUTO programme was formally created by Law ( Lei) n° 12,715 of 17 September 2012. It 
maintained in force the provisions concerning IPI tax advantages for the automotive sector included in a 
previous legislative act (Law ( Lei) nº 12,546 of 14 December 2011). The main implementing measure for both 
legislative acts is Decree ( Decreto ) n° 7,819 of 3 October 2012, as amended. 
3 The IPI is established under the provisions of Law ( Lei) n° 5,172 of 25 October 1966 ( Código 
Tributario Nacional ), as amended, in particular in Chapter IV, Section I; and of Law ( Lei) n° 4,502 of 30 
November 1964, as amended. The provisions of those laws are further developed in Decree ( Decreto ) n° 7,212 
of 15 June 2010 and, as regards imports in particular, Decree ( Decreto ) n° 6,759 of 5 February 2009. WT/DS472/5 
 
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  To benefit from the INOVAR-AUTO programme, companies need to be "accredited" ( habilitadas ) by 
means of an administrative decision ( Portaria ).4 There are three types of "accreditation" 
(habilitação ): (i) for domestic manufacturers; (ii) for local distributors without manufacturing 
activities in Brazil; and (iii) for investors in domestic manufacturing capacity.5 I n  o r d e r  t o  b e  
"accredited", eligible operators must fulfil certain conditions which concern, depending on the 
accreditation sought, in particular a minimum number of manufacturing activities in Brazil and/or minimum levels of expenditure in Brazil on research and development, engineering, basic 
industrial technology and capacity-build ing of actual and potential suppliers. 
Under the INOVAR-AUTO programme, accredited companies can earn tax credits which can be 
used, under certain conditions, to offset the IP I otherwise due on the domestic sale of motor 
vehicles covered by the programme. The tax credits are linked to the level of expenditure in Brazil 
on certain items, including strategic inputs and tools, research and development, or capacity-
building of suppliers.
6 Expenditure in Brazil to purchase strategic inputs (automotive components) 
and tools is the item which translates into the largest tax credit and it is thus decisive as regards 
the actual tax burden on the sale of motor vehicles.7 As a result, the advantage of a lower tax 
burden on finished vehicles is contingent for the greatest part on the use of domestically sourced inputs (or, in other words, the level of domestic content in motor vehicles). 
Tax credits can be used to offset up to 30 percentage points of IPI tax due on the sale of motor 
vehicles.
8 Any excess tax credit can be used to offset the IPI due on the domestic 
commercialisation of imported vehicles, but only up to a maximum number of products.9 Tax 
credits are not used to offset the IPI tax at the border, which is generally due with limited 
exceptions.10 However, motor vehicles from a limited number of WTO Members11 benefit from a 
special reduction in IPI rates that apply both at the point of importation and in subsequent sales.12  
Companies accredited as investors in domestic manufacturing capacity are subject to specific rules 
as regards the earning and the use of tax credits, with a maximum limit of imported vehicles for 
which the IPI tax can be offset.13 
Special provisions also apply to companies producin g certain vehicles by fitting vehicle bodies on a 
chassis.14 
The EU understands that the INOVAR-AUTO prog ramme is set up and implemented through the 
following: 
Law ( Lei) n°12,546 of 14 December 2011;15 
                                               
4 Article 40 of Law (Lei) n° 12,715  of 17 September 2012, as amen ded; Chapter III of Decree ( Decreto ) 
n° 7,819 of 3 October 2012, as amended. For the sake of clarity, the EU notes that the references made to specific provisions of Brazilian legal instruments in th is request are for explanatory purposes and are without 
prejudice to the examination in the proceedings of other relevant provisions of the specific legal instruments cited herein. 
5 Article 40 §2 of Law (Lei) n° 12,715  of 17 September 2012, as amended; Article 2 of Decree (Decreto) 
n° 7,819 of 3 October 2012, as amended. The EU underst ands that the list of accredited companies can be 
found at http://www.mdic.gov.br/sitio/interna/ interna.php?area=2&menu=3824&refr=327 . 
6 Article 41 of Law (Lei) n° 12,715  of 17 September 2012, as amended; Article 12 of Decree (Decreto) 
n° 7,819 of 3 October 2012, as amended. 
7 Article 12 of Decree ( Decreto ) n° 7,819 of 3 October 2012, as amended. 
8 Article 14 §1 of Decree ( Decreto ) n° 7,819 of 3 October 2012, as amended. 
9 Article 14 §2 of Decree ( Decreto ) n° 7,819 of 3 October 2012, as amended; special rules and 
exceptions are envisaged in Article 14 §5 §6 and §7. 
10 See in particular Article 22, item II (reduced IPI ra tes up to a maximum number of vehicles per year), 
and Article 30 (suspensio n of tax) of Decree ( Decreto ) n° 7,819 of 3 October 2012, as amended. 
11 In particular those countries cove red by the heading (caput ) of Article 21, as well as item I of the 
heading ( caput ) of Article 22, of Decree ( Decreto ) n° 7,819 of 3 October 2012, as amended. 
12 Articles 21 and 22, and Annex VIII, of Decree ( Decreto ) n° 7,819 of 3 October 2012, as amended. 
13 Article 41 §3 of Law (Lei) n° 12,715  of 17 September 2012, as amended; in particular, Articles 13 
and 16 of Decree ( Decreto ) n° 7,819 of 3 October 2012, as amended. 
14 Article 23 of Decree ( Decreto ) n° 7,819 of 3 October 2012, as amended. 
15 The EU understands that the latest amendment to date of the relevant provisions was by Law ( Lei) 
n° 12,844 of 19 July 2013. For the sake of clarity, the EU notes that the references made to the latest WT/DS472/5 
 
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  Law (Lei) n° 12,715  of 17 September 2012;16 
Decree ( Decreto ) n° 7,819 of 3 October 2012;17 
Portaria MCTI  n° 296 of 1 April 2013; 
Portaria MDIC  n° 106 of 11 April 2013; 
Portaria MDIC  n° 113 of 15 April 2013; 
Portaria Interministerial MCTI/MDIC n° 772 of 12 August 2013; 
Portaria MDIC  n° 280 of 4 September 2013;  
Portaria MDIC  n° 297 of 30 September 2013; 
accreditations ( habilitações ) granted pursuant to the INOVAR-AUTO programme;  
as well as any amendments or extensions, any replacement measures, any renewal 
measures, any implementing measures, and other related measures of the foregoing. 
The INOVAR-AUTO programme, as embodied and developed in the above-mentioned instruments 
and also as applied by the relevant Brazilian authorities, is inconsistent with Brazil's obligations 
under the GATT 1994, the SCM Agreement and the TRIMS Agreement. In particular, the 
programme is inconsistent with: 
Article I:1 of the GATT 1994, because motor vehicles originating in the EU are not 
accorded immediately and unconditionally any advantage, favour, privilege or immunity 
granted to like products originating in certain other countries. 
Article III:2 of the GATT 1994, because motor vehi cles of the EU imported into Brazil are 
subject to a IPI tax burden in excess of that borne by like domestic products.  
Article III:4 of the GATT 1994, because motor vehicles, automotive components and tools 
of the EU imported into Brazil are accorded less favourable treatment than that accorded 
to like products of Brazilian origin, as a result of the conditions for accreditation to the programme and the rules on the earning and use of tax credits.  
Article III:5 of the GATT 1994, because conditions relating to the minimum number of 
manufacturing activities which manufacturers of motor vehicles need to perform in Brazil 
amount to an internal quantitative regulation relating to the processing of products, and such conditions require a specified proportion of the final product from domestic sources; and because the conditions relating to the minimum number of manufacturing activities in 
Brazil also amount to an internal quantitative regulation that is applied so as to afford 
protection to domestic production. 
Articles 3.1(b) and 3.2 of the SCM Agreement, because the programme provides tax 
advantages that are subsidies within the me aning of Article 1.1 of the SCM Agreement 
which are provided contingent upon the use of strategic inputs and tools from Brazil over 
similar goods imported from other WTO Members, including the EU. 
Article 2.1 of the TRIMS Agreement, in conjunction with Article 2.2 and with paragraph 
1(a) of the Agreement's Illustrative List, be cause by requiring the purchase or use of 
strategic inputs and tools of Brazilian origin or from Brazilian sources in order to benefit 
                                                                                                                                               
amendments to the relevant legal instruments cited in this request are without prejudice to the possible 
examination of other amendments to the extent necessary to secure a positive solution to the dispute. 
16 The EU understands that the latest amendment to date of the relevant provisions was by Law ( Lei) 
n° 12,996 of 18 June 2014. 
17 The EU understands that the latest amendment to date was by Decree ( Decreto ) n° 8,294 of 12 
August 2014. WT/DS472/5 
 
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  from tax advantages, the programme is a trad e-related investment measure inconsistent 
with Article III:4 of the GATT 1994. 
2. MEASURES RELATING TO INFORMAT ION AND COMMUNICATION TECHNOLOGY, 
AUTOMATION AND RELATED GOODS 
 
2.1 Measures at issue  
Brazil has adopted and maintains legislation granting advantages in relation to taxes, duties, 
contributions and charges, which are contingent  upon domestic production and technological 
development of information and communication technology (ICT), automation and related goods in Brazil. The set of advantages primarily consist in tax exemptions or reductions applied in 
connection with taxes levied on the sale of th e relevant goods or on the revenue generated 
through those sales. These advantages apply in relation to a limited number of accredited companies established in Brazil.  
This system of advantages is embodied in and applied through a comprehensive set of inter-
related measures: (1) the Informatics Law ( Lei de Informatica ) and its implementing measures, 
hereafter collectively referred to as the "Informatics programme";  (2) the  "Programme of 
Incentives for the Semiconductors Sector"  (PADIS, Programa de Incentivos ao Setor de 
Semicondutores ); (3) the "Programme of Support to the Technological Developments of the 
Industry of Digital TV Equipment" (PATVD, Programa de Apoio ao Desenvolvimento Tecnológico da 
Indústria de Equipamentos para TV Digital ); and (4) the "Programme for Digital Inclusion" 
(Inclusão Digital ).  
2.1.1. Informatics programme 
Under the so-called "Informatics Law" ( Lei de Informatica),
18 domestic companies may benefit 
from certain tax advantages if those companies achieve specific investment targets in research 
and development and, concomitantly, produce IC T, automation or related goods in Brazil.19 In 
particular, the tax benefits consist of a reduction or exemption of the IPI tax otherwise due on the 
sale of the manufactured products, coupled with th e preservation and use of the tax credits linked 
to the purchase by beneficiaries of raw material s, intermediate products and packing materials 
used for industrialising the covered products.20 These tax advantages vary over time and across 
Brazilian states and regions.21 
To benefit from the tax advantages under the Lei de Informatica , companies need to be 
"accredited" ( habilitadas ) by means of an administrative decision ( Portaria ) granted jointly by the 
Ministry for Development, Industry and Trade and the Ministry of Science and Technology. In order 
to be accredited, eligible operators must invest in Brazil in relevant research and development 
(reaching a minimum investment target expressed as a percentage of their domestic turnover).22 
They must also demonstrate that they produce in Brazil in accordance with the terms of the "Basic 
Productive Process" (PPB, Processo Productivo Basico ).23  
PPBs determine the minimum manufacturing steps and conditions that need to be fulfilled at a 
manufacturing facility for a product to be considered as effectively "industrialised" in Brazil. They are issued by inter-ministerial decision ( Portaria ) at the initiative of the company seeking the tax 
advantages. PPBs aim at maximising domestic added value through "intensification" of the 
productive chain, while also increasingly requiring that components incorporated into the final product be, in all or in part, also produced in Brazil (including in accordance with their respective 
PPBs).  
                                               
18 Law ( Lei) n°8,248 of 23 October 1991, as amended. 
19 The precise product scope is determined in Decree ( Decreto ) n° 5,906 of 26 September 2006, as 
amended. 
20 As regards the maintenance of tax credits, see Article 4(3) of the Lei de Informatica . 
21 IPI reductions are set out in Article 4 §1A and §5 of the Lei de Informatica , and vary across regions in 
accordance with Articles 3 and 4 of Decree n°5,906. For products that are also "developed" in Brazil, percentages of IPI reduction are set out in Article 4(7) of the Lei Informatica . 
22 Articles 4 and 11 of the Lei de Informatica ; Article 1 and Chapter III of Decree ( Decreto ) nº 5.906. of 
26 September 2006, as amended. 
23 Article 4 §1C of the Lei de Informatica ; Article 6 and item III of the heading ( caput ) of 22 of Decree 
(Decreto ) nº 5.906. of 26 September 2006, as amended. WT/DS472/5 
 
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  In addition, products that are considered as "developed" in Brazil benefit from greater tax 
advantages. Products are considered "developed" in Brazil when they meet the specifications, rules 
and standards laid down in Brazilian law and when the related specifications, projects and developments are carried out by residents in Brazil, in conformity with Portaria n° 950 of 
12 December 2006. In order to benefit from this characterisation, such status needs to be 
recognised (" reconhecimento ") by means of an administrative decision by the Ministry of Science, 
Technology and Innovation. 
The EU understands that the Informatics prog ramme is set up and implemented through the 
following: 
Law (Lei) n° 8,248 of 23 October 1991;
24 
Law (Lei) n° 10,176 of 11 January 2001; 
Decree ( Decreto) n° 5,906 of 26 September 2006;25 
Decree  (Decreto)  n° 6,759 of 5 February 2009 (final  and transitional provisions), as 
amended by subsequent acts;26 
Decree  (Decreto)  n° 7,212 of 15 June 2010 (especially Chapter VI, Section II); 
Portaria Interministerial MDIC/MCTI nº 177 of 18 October 2002; 
Portaria MCT  n° 950 of 12 December 2006; 
Portaria Interministerial MCTI/MDIC/MF nº 148 of 19 March 2007; 
Portaria Interministerial MCTI/MDIC nº 685 of 25 October 2007 ; 
Portaria Interministerial MDIC/MCT nº 170 of 4 August 2010; 
Portaria MDIC n° 267 of 30 August 2013;  
Portaria SDP/MDIC n° 1 of 18 September 2013;  
Portaria MCT n° 1,309  of 19 December 2013; 
Portaria Interministerial MCTI/MDIC nº 202 of 13 February 2014; 
Portarias  adopting PPBs pursuant to the provisions of the above mentioned instruments;27 
accreditations ( habilitações ) granted pursuant to the Informatics programme; 
as well as any amendments or extensions, any replacement measures, any renewal 
measures, any implementing measures, and other related measures of the foregoing. 
 
                                               
24 The EU understands the latest amendment to date was by Law ( Lei) nº 13,023, of 8 August 2014. 
25 The EU understands that the latest amendment to date of the relevant provisions was by Decree 
(Decreto ) n° 8,072 of 14 August 2013. 
26 The EU understands that the latest amendment to date of the relevant provisions was by Decree 
(Decreto ) n° 8,010 of 16 May 2013. 
27 The administrative acts  establishing PPBs ( portarias interministeriais ) are published in the Brazilian 
Official Journal (DOU). The texts are accessible throug h the website of the Brazilian Ministry of Science, 
Technology and Innovation (see http://www.mct.gov.br/index.php/content/view/3781/Portarias_Interministeriais.html ). WT/DS472/5 
 
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  2.1.2. PADIS and PATVD programmes 
Both PADIS and PATVD were established by Law ( Lei) n° 11,484  of 31 May 2007.28  
PADIS grants exemptions from several taxes, duties and contributions to companies conditional 
upon performing in Brazil certain development an d production steps (including design, creation, 
development, manufacturing, final assembling and testing) relating to: (i) semiconductors, as 
defined in the relevant law; (ii) LCD, LED, plasma and other displays; and (iii) inputs and equipment for the production of semiconductors or displays, in accordance with PPB requirements. 
Under PATVD these same exemptions are granted to companies that develop and manufacture in 
Brazil equipment for Digital TV. Such equipment must be produced in accordance with the relevant PPB or it must be developed domestically, as defined by Portaria n° 950 of 12 December 2006. 
In order to benefit from the tax and duty exemptions under both programmes, companies also 
require "accreditation" ( habilitação ) by the relevant Ministries. To be accredited, the company 
carrying out the activities described above must a llocate to research and development in Brazil a 
percentage of turnover from its gross domestic sales of the final products.  
Upon accreditation, the domestic sales or imports of machinery, tools, instruments, and 
equipment, as well as of software and inputs, destined for any of the development and production activities mentioned above, are exempted from certain taxes or charges,
29 including IPI, 
PIS/PASEP,30 COFINS,31 PIS/PASEP- Importação,32 COFINS- Importação,33 as well as from ordinary 
customs duties. In addition, accredited companies that perform the required production and development activities in Brazil may sell thei r products free of PIS/PASEP, COFINS and IPI.
34  
The EU understands that the PADIS and PADTV programmes are set up and implemented through 
the following: 
PADIS programme 
 
Law ( Lei) n° 11,484  of 31 May 2007;35 
Decree ( Decreto)  n° 6,233  of 11 October 2007;36 
Instrução Normativa RFB  nº 852 of 13 June 2008; 
                                               
28 PADIS is established in Articles 1 – 11, whereas PATVD is established in Articles 12 – 21 of Law 
n° 11,484, as amended by Law ( Lei) n° 12,715  of 17 September 2012 and further developed by, inter alia , 
Decree ( Decreto ) n° 6,233  of 11 October 2007 (on PADIS) and by Decree ( Decreto ) n° 6,234 of 11 October 
2007 (on PATVD). 
29 Articles 3 and 14 of Law n° 11,484. 
30 Programa de Integração Social  ("Social Integration Programme" - PIS) and Programa de Formação do 
Patrimônio do Servidor Público  ("Civil Service Asset Formation Program" - PASEP), as laid down in Law ( Lei) 
n° 9,718 of 27 November 1998 and Law ( Lei) n° 10,637 of 30 December 2002, and their subsequent 
amendments. 
31 Contribuição para o Financiamento da Seguridade Social ("Contribution to Social  Security Financing" - 
COFINS), as laid down in Law ( Lei) n° 9,718 of 27 November 1998 and in Law ( Lei) n° 10,833 of 29 December 
2003, and their subsequent amendments . 
32 Programa de Integração Social e de Formação do  Patrimônio do Servidor Público incidente na 
Importação de Produtos Estrangeiros ou Serviços  ("Social Integration and Civil Service Asset Formation 
Programmes applicable to Import s of Foreign Goods or Services") , as laid down in Law ( Lei) n° 10,865 of 30 
April 2004, as subsequently amended. This contribution is regulated in Decree ( Decreto ) n° 6,759 of 5 
February 2009, Livro III, Title II. The formulae for calculating the charges due are laid down in Normative 
Instruction ( Instrução Normativa ) RFB nº 1,401 of 9 October 2013. 
33 Contribuição para o Financiamento da Seguridade Social incidentes sobre a importação de bens e 
serviços  ("Contribution to Social Security Financing applicable to Imports of Goods or Services") , as laid down 
in Law ( Lei) n° 10,865 of 30 April 2004, as subsequently amended. This contribution is regulated in Decree 
(Decreto ) n° 6,759 of 5 February 2009, Livro III, Title II. The formulae for ca lculating the charges due are laid 
down in Normative Instruction ( Instrução Normativa ) RFB nº 1,401 of 9 October 2013. 
34 Article 4 and 15 of Law n° 11,484. 
35 The EU understands that the latest amendment to date of the relevant provisions was by Law ( Lei) 
n°12,767 of 27 December 2012. 
36 The EU understands that the latest amendment to date of the relevant provisions was by Decree 
(Decreto ) n°8,247 of 23 May 2014. WT/DS472/5 
 
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  Decree ( Decreto)  n° 7,212 of 15 June 2010 (especially Chapter VI, Section III); 
Decree ( Decreto ) n° 6,759 of 5 February 2009 (especially Livro III, Title II, Chapter VII, 
Section VII), as amended by subsequent acts; 
accreditations ( habilitações ) granted pursuant to the PADIS programme; 
as well as any amendments or extensions, any replacement measures, any renewal 
measures, any implementing measures, and other related measures of the foregoing. 
PATVD programme 
 
Lei n° 11,484  of 31 May 2007; 
Decree ( Decreto)  n° 6,234  of 11 October 2007;  
Instrução Normativa RFB nº 853 of 13 June 2008; 
Decree ( Decreto)  n° 7,212 of 15 June 2010 (especially Chapter VI, Section IV); 
Decree ( Decreto ) n° 6,759 of 5 February 2009 (especially Livro III, Title II, Chapter VII, 
Section VIII); 
accreditations ( habilitações ) granted pursuant to the PATVD programme; 
as well as any amendments or extensions, any replacement measures, any renewal 
measures, any implementing measures, and other related measures of the foregoing. 
2.1.3.  Programme for Digital Inclusion ( Inclusão Digital ) 
Under the provisions of Law ( Lei) n° 11.196 of 21 November 2005, as amended,37 concerning the 
Programme for Digital Inclusion, Brazil exempts retail sales, and sales to companies or public 
entities, of a large number of so-called "digital products" (such as computers, input and output 
units, routers, smartphones and other hardware) from payment of PIS/PASEP38 and COFINS,39 
provided that such products are produced in Braz il in accordance with their respective PPBs.  
The EU understands that the Digital Inclusion programme is set up and implemented through the 
following: 
Lei n° 11.196 of 21 November 2005;40 
Decreto  n° 5,602 of 6 December 2005;41 
Portaria MC  nº 87 of 10 April 2013; 
Portaria STE  n° 2 of 26 August 2013; 
                                               
37 The Programme for Digital Inclusion is disciplined under Articles 28 to 30 of Law ( Lei) n° 11,196. The 
provisions of Law ( Lei) n° 11,196 are further developed in Decree ( Decreto ) n° 5,602 of 6 December 2005, as 
amended, and in other acts adopte d by the relevant authorities. 
38 Programa de Integração Social  ("Social Integration Programme" - PIS) and Programa de Formação do 
Patrimônio do Servidor Público  ("Civil Service Asset Formation Program" - PASEP), as laid down in Law ( Lei) 
n° 9,718 of 27 November 1998 and Law ( Lei) n° 10,637 of 30 December 2002, and their subsequent 
amendments. 
39 Contribuição para o Financiamento da Seguridade Social ("Contribution to Social  Security Financing" - 
COFINS), as laid down in Law ( Lei) n° 9,718 of 27 November 1998 and in Law ( Lei) n° 10,833 of 29 December 
2003, and their subsequent amendments . 
40 The EU understands that the latest amendment to date of the relevant provisions was by Law ( Lei) 
n° 12,715  of 17 September 2012. Provisional Measure ( Medida Provisoria ) nº 656 of 7 October 2014 extends 
the Programme until 1 December 2018. 
41 The EU understands that the latest amendment to date of the relevant provisions was by Decree 
(Decreto ) nº 7,981 of 8 April 2013. WT/DS472/5 
 
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  as well as any amendments or extensions, any replacement measures, any renewal 
measures, any implementing measures, and other related measures of the foregoing. 
2.2 Legal Basis 
The set of advantages contingent upon domestic production and technological development of 
information and communication technology (ICT), automation and related goods in Brazil, as embodied and developed in the Informatics, PADIS, PATVD and Digital Inclusion programmes and 
also as applied by the relevant Brazilian authorities, are inconsistent with Brazil's obligations under 
the GATT 1994, the SCM Agreement and the TRIM S Agreement. In particular, the set of 
advantages described above, as contained in th e mentioned programmes, are inconsistent with: 
Article III:2 of the GATT 1994 because, by the operation of tax exemptions or reductions, 
they impose a tax burden on imported ICT, automation and related products in excess of 
that applied to like domestic products. 
Article III:4 of the GATT 1994, because the condit ions for accreditation necessary for ICT, 
automation and related goods to benefit from the exemptions or reductions result in less 
favourable treatment granted to imported products than that accorded to like domestic products; and because, by imposing, under the terms of the corresponding PPBs, an 
obligation to use local inputs and equipment in the production of ICT, automation and 
related products, as a condition to benefit from the exemptions or reductions, these measures afford less favourable treatment to imported inputs and equipment than that 
accorded to like domestic products. 
Article III:5 of the GATT 1994, because the co nditions imposed under the terms of the 
corresponding PPBs regarding the minimum number of processing activities that producers 
of ICT, automation and related products need to perform in Brazil in order to benefit from the exemptions or reductions amount to an internal quantitative regulation relating to the 
processing of products, which requires a specified proportion of the final product to be 
sourced locally; and because the conditions relating to the minimum number of processing activities in Brazil amount to an internal quantitative regulation that is applied so as to afford protection to domestic production. 
Articles 3.1(b) and 3.2 of the SCM Agreemen t, because the exemptions or reductions 
granted in relation to ICT, automation and related products that comply with the terms of 
the PPBs are subsidies within the meaning of Article 1.1 of the SCM Agreement that are 
provided contingent upon the use of domestic over imported inputs and equipment. 
Article 2.1 of the TRIMS Agreement, in conjunction with Article 2.2 and with paragraph 
1(a) of the Agreement's Illustrative List, be cause by requiring, under the terms of the 
PPBs, the purchase or use of inputs and manuf acturing equipment of Brazilian origin or 
from Brazilian sources in order to benefit from the exemptions or reductions, they 
constitute trade-related investment measures inconsistent with Article III: 4 of the GATT 1994. 
2.3 Alternative claim 
Products imported into Brazil, including from the EU, are subject to charges collected at the border 
under the instruments known as PIS/PASEP Importação
42 and COFINS Importação .43 The EU notes 
that Brazil levies in parallel the "contributions" known as PIS/PASEP and COFINS on the turnover 
of domestic companies.  PIS/PASEP Importação and COFINS Importação were introduced several 
                                               
42 Programa de Integração Social e de Formação do  Patrimônio do Servidor Público incidente na 
Importação de Produtos Estrangeiros ou Serviços  ("Social Integration and Civil Service Asset Formation 
Programmes applicable to Import s of Foreign Goods or Services") , as laid down in Law ( Lei) n° 10,865 of 30 
April 2004, as subsequently amended. The formulae for calculating the charges due are laid down in Normative Instruction ( Instrução Normativa ) RFB nº 1,401 of 9 October 2013. 
43 Contribuição para o Financiamento da Seguridade Social incidentes sobre a importação de bens e 
serviços  ("Contribution to Social Security Financing applicable to Imports of Goods or Services") , as laid down 
in Law ( Lei) n° 10,865 of 30 April 2004, as subsequently amended. The formulae for calculating the charges 
due are laid down in Normative Instruction ( Instrução Normativa ) RFB nº 1,401 of 9 October 2013. WT/DS472/5 
 
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  years after the creation of PIS/PASEP and COFINS. The EU understands that Brazil considers the 
PIS/PASEP Importação and COFINS Importação  as charges which form part of Brazil's system of 
internal taxes, rather than as "other duties or charges" on imports (within the meaning of Article 
II:1(b) of the GATT 1994).  
In the event that Brazil submits (and/o r the Panel deems) that the PIS/PASEP Importação  and 
COFINS Importaçao  are not internal taxes falling under Article III:2 of the GATT 1994, the EU 
submits that the imposition of the PIS/PASEP Importação  and COFINS Importação  on ICT, 
automation and related goods imported from the EU violates Article II:1(b) of the GATT 1994 
because "other duties and charges" are imposed on  imported products in excess of the duties and 
charges set forth in Brazil's Schedule of Tariff Concessions.  
3.  MEASURES PROVIDING TAX ADVANTAGES TO EXPORTERS 
Brazil has put in place certain programmes that confer benefits to "predominantly exporting 
companies" in the form of a suspension, and ulti mately an exemption, of taxes otherwise due in 
relation to their supplies.  
3.1  The RECAP Programme 
Brazil has introduced a "Special Regime for the Purchase of Capital Goods for Exporting 
Enterprises" (RECAP, Regime Especial de Aquisição de Bens de Capital para Empresas 
Exportadoras ). Under this programme, Brazil suspends (and ultimately exempts) the application of 
the "contributions" ( contribuições ) known as PIS/PASEP, COFINS, PIS/PASEP  Importação and 
COFINS  Importação with regard to purchases by legal persons that are "predominantly exporting 
companies", that is, those companies that exported at least 50 percent of their gross turnover 
over the preceding year.44 
In order to benefit from the RECAP programme, "predominantly exporting companies" must obtain 
"accreditation" ( habilitação ) from the Secretariat of the Federal Revenue in the Ministry of Finance 
(Secretaria da Receita Federal of the Ministério de Fazenda ).45   
"Contributions" are suspended as regards the domestic purchase or importation by accredited 
companies of machinery, tools, instruments and other equipment.46 The suspension is not limited 
to the equipment, or the proportion thereof, that  i s  t o  b e  u s e d  i n  t h e  p r o d u c t i o n  o f  g o o d s  f o r  
export (which can be exempted from indirect taxes), but it applies generally (i.e. also as regards the capital goods, or the proportion thereof, used in the production of goods to be sold 
domestically). The suspension becomes a zero rate  (thus, an exemption from the "contributions") 
when certain conditions are met, namely the verification of the respect during the relevant time 
period of the required export threshold.
47 If an accredited company does not incorporate the 
capital goods to its fixed assets or if it sells the goods before the conversion of the suspension into 
a zero rate, it can be required to pay the suspended contributions as well as interests and 
penalties.48 If the export threshold is not achieved , only interest and penalties are due, 
proportionally to the difference between the ex ports actually made and the export threshold.49 
Companies admitted to the RECAP programme enjoy those benefits on condition that they 
undertake to maintain for the following two years a level of exports equal to or higher than 50 percent of their output.
50 In addition, the RECAP programme is also available to those companies 
that, even if their export activities did not reach 50 percent of their gross turnover over the course 
of the preceding year, commit to match or exceed  this threshold for the following three years.51  
                                               
44 Article 13 of Law ( Lei) n° 11,196  of 25 November 2005, as amended. 
45 Chapter II of Decree ( Decreto ) n° 5,649 of 29 December 2005, as amended. The EU understands that 
the list of accredited companies can be found at: 
  http://www.receita.fazenda.gov.br/Legislacao/RegimeAquisicao/RelacaodasPJIN605.htm . 
46 Article 14 of Law ( Lei) n° 11,196  of 25 November 2005, as amended. 
47 Article 14 §8 of Law ( Lei) n° 11,196  of 25 November 2005, as amended. 
48 Article 14, §4 and §6 (item II), of Law ( Lei) n° 11,196  of 25 November 2005, as amended. 
49 Article 14, §6 (item I) and §10, of Law ( Lei) n° 11,196  of 25 November 2005, as amended 
50 Heading ( caput ) of Article 13 of Law ( Lei) n° 11,196  of 25 November 2005, as amended. 
51 Article 13§2 of Law ( Lei) n° 11,196  of 25 November 2005, as amended. WT/DS472/5 
 
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  The EU understands that the RECAP programme is set up and implemented through the following: 
Law ( Lei) n° 11,196  of 25 November 2005;52 
Decree ( Decreto ) n° 5,649 of 29 December 2005;53 
Decree ( Decreto ) n° 5,789 of 25 May 2006;54 
Decree ( Decreto ) n° 6,759 of 5 February 2009 (especially Livro III, Title II, Chapter VII, 
Section IV; 
Normative Instruction ( Instrução normativa ) SRF n° 605 of 4 January 2006; 
accreditations ( habilitações ) granted pursuant to the RECAP programme; 
as well as any amendments or extensions, any replacement measures, any renewal 
measures, any implementing measures, and other related measures of the foregoing. 
The RECAP programme, as embodied and developed in the above-mentioned instruments and also 
as applied by the relevant Brazilian authorities, is inconsistent with Brazil's obligations under the SCM Agreement. In particular, the programme provides advantages that are subsidies within the 
meaning of Article 1.1 of the SCM Agreement and wh ich are inconsistent with Articles 3.1(a) and 
3.2 of the SCM Agreement because they are contingent upon export performance. 
3.2 Export contingent subsidies concer ning the purchase of raw materials, 
intermediate goods and packaging materials 
Brazil suspends (and ultimately exempts) the application of the taxes and "contributions" 
(contribuições ) known as IPI, PIS/PASEP, PIS/PASEP  Importação , COFINS and COFINS  Importação  
with regard to certain supplies to accredited
55 or registered56 legal persons that are "predominantly 
exporting companies", that is, producers that expo rted at least 50 percent of their gross turnover 
over the preceding year.57 These benefits are therefore conditional on those companies achieving 
or exceeding a certain export target, expressed as  a percentage of the companies’ turnover. The 
benefits apply in relation to purchases of raw materials, intermediate goods and packaging 
materials by the beneficiaries of the scheme. The suspension is not limited to the inputs to be used in the production of goods for export (which can be exempted from indirect taxes), but it applies 
also as regards inputs processed or otherwise used in the production of goods for the domestic 
market.  
The suspension of the PIS/PASEP, PIS/PASEP  Importação , COFINS and COFINS  Importação  
contributions expires (and the contributions become definitively non-due) upon exportation or sale 
on the domestic market of the final goods incorporating the raw materials, intermediate goods and 
                                               
52 The EU understands that the latest amendment to date of the relevant provisions was by Law ( Lei) 
n° 12,715  of 17 September 2012. 
53 The EU understands that the latest amendment to date was by Decree ( Decreto ) n° 6,887 of 25 June 
2009. 
54 The EU understands that the latest amendment to date was by Decree ( Decreto ) n° 6,581 of 26 
September 2008. 
55 Under Normative Instruction ( Instrução Normativa ) SRF nº 595 of 27 December 2005. The EU 
understands that a list of accredited companies can be found at 
 http://www.receita.fazenda.gov.br/Legislacao/RegimeSuspensao/RelacaodasPJIN595.htm . 
56 Under Normative Instruction ( Instrução Normativa ) RFB nº 948 of 15 June 2009. The individual 
administrative acts ( Atos Declaratór ios Executivos ) concerning the registration of companies are adopted by 
the Revenue Service ( Receita Federal ) at sub-central level and are publishe d in the Brazilian Official Journal 
(D.O.U.). The EU is not aware of a publicly accessible compilation of such administrative acts. 
57 Article 29 of Law ( Lei) n° 10,637 of 30 December 2002; Article 40 of Law ( Lei) n° 10,865 of 30 April 
2004. WT/DS472/5 
 
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  packaging materials.58 In other cases, however, the taxes and contributions become payable, 
together with interests and penalties.59 A similar rule applies in the case of the IPI tax.60  
The EU understands that the scheme described above is set up and implemented through the 
following: 
Law ( Lei) n° 10,637 of 30 December 2002;61 
Law ( Lei) n° 10,865 of 30 April 2004;62 
Decree ( Decreto ) n° 6,759 of 5 February 2009 (especially Livro III, Title I, Chapter VII, 
and Livro III, Title II, Chapter VII, Section V); 
Normative Instruction ( Instrução Normativa ) SRF nº 595 of 27 December 2005;63 
Normative Instruction ( Instrução Normativa ) RFB nº 948 of 15 June 2009;64 
accreditations ( habilitações ) or registration ( registro ) of individual "predominantly 
exporting companies" pursuant to the scheme; 
as well as any amendments or extensions, any replacement measures, any renewal 
measures, any implementing measures, and other related measures of the foregoing. 
This scheme, as embodied and developed in the above-mentioned instruments and also as applied 
by the relevant Brazilian authorities, is inconsistent with Brazil's obligations under the SCM 
Agreement. In particular, the scheme provides ad vantages that are subsidies within the meaning 
of Article 1.1 of the SCM Agreement and which are in consistent with Articles 3.1(a) and 3.2 of the 
SCM Agreement because they are contingent upon export performance. 
* * * 
The EU asks that this request be placed on th e agenda for the meeting of the Dispute Settlement 
Body expected to be held on 18 November 2014. 
 
 
__________  
                                               
58 Article 9 of Normative Instruction ( Instrução Normativa ) SRF nº 595 of 27 December 2005. 
59 Article 9 §1 of Normative Instruction ( Instrução Normativa ) SRF nº 595 of 27 December 2005; Article 
20, sole paragraph, of Normative Instruction ( Instrução Normativa ) RFB nº 948 of 15 June 2009. 
60 Article 20 of Normative Instruction ( Instrução Normativa ) RFB nº 948 of 15 June 2009. 
61 The EU understands that the latest amendment to date of the relevant provisions was by Law (Lei) 
n° 12,715  of 17 September 2012. 
62 The EU understands that the latest amendment to date of the relevant provisions was by Law (Lei) 
n° 12,715  of 17 September 2012. 
63 The EU understands that the latest amendment to date was by Normative Instruction ( Instrução 
Normativa ) RFB nº 1.424, of 19 December 2013. 
64 The EU understands that the latest amendment to date was by Normative Instruction ( Instrução 
Normativa ) RFB nº 1.424, of 19 December 2013.