Tax Reform: yacht factories complain about IPVA – 07/13/2023 – Market

The inclusion in the Tax Reform of the collection of IPVA (Tax on Motor Vehicle Ownership) for boat owners generated complaints in the nautical sector. Industry representatives allege that there will be job losses and legal uncertainty in the sector.

The concern is greater in luxury yacht shipyards, sold for tens of millions of reais. The companies say they fear a reversal in the scenario of evolution of the sector’s businesses in recent years.

In 2022, revenue reached BRL 2.5 billion, an increase of 25% compared to the previous year. According to Acobar (Brazilian Association of Boat and Implement Builders), the sector generates 100,000 jobs and there was an increase of 15,000 compared to the previous year.

The text approved last Thursday (6) by the Chamber of Deputies also includes jets among the vehicles susceptible to the collection of IPVA.

A 2020 study by the National Sindifisco (the Federal Revenue auditors union) estimated additional revenue of BRL 4.7 billion per year with the expansion of the tax base. Almost 90% of this value refers to vessels.

Ernani Paciornik, president of Grupo Náutica, organizer of the biggest event in the area in the country, says that the shipbuilding industry is characterized by intensive labor.

“There is no robot to manufacture fiberglass. We run the risk of killing a totally artisanal industry”, says the entrepreneur behind the Boat Show editions.

“They say they are putting the tax on because a boat is a thing for the rich, but how many jobs does the car you have in your garage generate?”, he asks, citing that a vessel employs, on average, seven people directly and indirectly, considering the crew and workers in marinas.

If also approved in the Senate, the collection of IPVA would be added to the taxes paid on the acquisition of boats —which would be replaced by IVA, the new tax to be created by the reform— and the fee for registering the vessel in the Navy system, which needs to be renewed every five years.

The annual taxation for the use of boats would not be a Brazilian novelty. It exists in major nautical markets such as the United States –in most states–, England and Australia. In Italy, it was instituted in 2013, but revoked three years later.

With the charge, boat owners choose to register them in countries considered to be tax havens, such as Malta, Cayman Islands, Bahamas and Panama, which exempt the fee or practice a lower rate.

In 2022, Panama, Liberia and Marshall Islands were the top three flags of registry for vessels in terms of deadweight tonnage (measured for cargo) and commercial value, according to the United Nations Office for Trade and Development.

In Brazil since 2013, the Italian Francesco Caputo, CEO of Azimut Yachts Brasil, says that the collection of tax on vessels can slow down the progress of the sector.

The brand’s shipyard in Itajaí (SC) is the company’s only one outside Italy and manufactures six vessels, which are sold for amounts ranging from R$ 8.3 million to R$ 55.8 million. The plant directly employs around 500 people, in addition to 100 outsourced workers, and has more than 1,200 suppliers, says the executive.

Azimut arrived in the country in 2010, shortly after the tax discounts of up to 72% granted by Pró Náutica, an incentive program by the government of Santa Catarina aimed at the sector’s industry. Today, around 70% of shipyards in the country are in the state.

Roberto Paião, CEO of the Okean Group, the company that owns the construction license for the Ferretti luxury yachts, says that the text of the PEC that expands the IPVA charge generates uncertainty in the sector due to the lack of definitions.

“There is no Fipe table [que calcula os preços de veículos anunciados e serve de referência para a cobrança de IPVA] of boats. How will states measure? By the size of the vessel? For power?”, asks Paião.

Despite the expectation for the charge, the Osklen group closed the sale of two vessels, which totaled R$ 40 million, in the edition of the Boat Show held last week in Itajaí, a port city 100 km from Florianópolis.

The proposal approved in the Chamber exempts from charging boats dedicated to water transport, fishing, industrial, artisanal, subsistence and scientific services.

Unafisco (National Association of Tax Auditors of the Federal Revenue) understands that the item can open a loophole for boat owners to try to evade paying taxes. They could, for example, misuse the classification of artisanal fishing, exempt.

For Daniel Tessari, a lawyer at Kincaid Mendes Vianna Advogados, there is concern about the status of vessels that are considered capital goods, but which were not placed among the exceptions provided for in the PEC. He cites as an example those that provide services to the oil industry.

He also considers it an “incongruity” to insert the collection of IPVA in the text of the reform that taxes consumption and provides for unifying taxes.

“The IPVA has a cumulative characteristic, it is a regressive tax, it is levied on assets, on assets that depreciate and does not allow credit”, he adds.