Business Roundtable with Treasury Secretary Steven Mnuchin
U.S. Treasury Secretary Steven Mnuchin held a roundtable with the U.S. business community in São Paulo, Brazil, on July 20, to discuss the U.S.-Brazil economic relationship. More than 20 of the largest U.S. companies investing across various sectors ranging from energy, IT and banking, many members of the Council, participated and shared their views and experience in doing business in Brazil.
- The following were the main issues raised by the companies during the roundtable:
- Brazil needs more macro stability to control its currency volatility, high fiscal deficit and debt trajectory. The October elections are crucial for the economic direction of the country.
- Brazil’s complex business climate, particularly in tax compliance, causes high investment costs. A tax reform should be an important priority for the next administration.
- Double taxation is of concern since U.S.-Brazil do not enjoy a bilateral tax treaty.
- Brazil needs to make more progress on trade facilitation – time consuming and high export and import costs.
- Oil and gas industry needs assurance that REPETRO tax exemption will not be revoked and environmental licensing process needs to be expedited.
- Tourism industry is pleased with Open Skies Agreement signed between U.S-Brazil in May 2018. However, security is a major concern for industry, especially in Rio de Janeiro.
- Auto industry is concerned with Section 232 since it will hurt competitiveness.
- Brazil has a tremendous need for infrastructure investments in order to improve its global competitiveness.
- Financial market needs to be better regulated. Brazilian banks should be better capitalized.
- Companies called on U.S. to influence Brazil’s domestic agenda and share the American experience in undertaking a comprehensive tax reform. Secretary Mnuchin announced that the Brazilian Government has requested technical assistance for Brazil’s tax reform efforts.
- Companies called on U.S. to support Brazil’s accession to the OECD.
- Business community called on both countries to resume the Economic and Financial Dialogue and work towards a bilateral tax treaty (BTT) and bilateral investment treaty (BIT). Secretary Mnuchin stated that Treasury will follow-up regarding the Dialogue, once a new Brazilian administration is in place. He also stated that BTTs are under discussion in U.S. Treasury since new U.S. Tax Law may overrides BTTs in place.