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Rio de Janeiro - In the latest of a series of tax cuts aimed at revving up the economy by boosting consumption and production, the Brazilian government announced Tuesday that it was doing away with the PIS/Cofins welfare tax on smartphones.
The tax waiver will be applied to smartphones that retail for less than 1 500 reals ($750), which excludes high-end models such as the latest iPhones and Samsung Galaxy models, but includes most smartphones sold in Brazil.
Several companies that produce smartphones in Brazil, including Apple, Nokia, Samsung and Motorola, will benefit from the tax exemption.
Over the coming weeks, the government expects the price of Brazilian smartphones to fall as much as 30%, compared to their imported counterparts.
According to Communications Minister Paulo Bernardo, consumers will be able to buy smartphones at lower prices just in time for Mother's Day in early May.
With the move, the government expects the number of smartphones sold in the country to grow from 65 million to 130 million by next year, thus increasing digital inclusion. Brazil currently has some 240 million active cellphone lines.
The tax cut is expected to save companies up to 500m reals ($250m) per year, starting in 2014.
Tax cuts have already been applied to cars, computers and domestic appliances like ovens and washing machines, though they haven't always worked as expected.
Last month, President Dilma Rousseff announced tax cuts to staple foods, but the prices of several products did not drop, and some actually rose.
Likewise, the price of tablet computers and Apple products made in Brazil did not fall as much as consumers expected following tax cuts.
