BOSTON — Brazil is likely to introduce a new foreign exchange value-added tax this year, a move that will bolster its exports to China and boost its economic fortunes in the world’s second-largest economy.
In an announcement Monday, the Brazilian government said it will implement a new measure in 2019, raising its tax rate from 8% to 13%, which is the highest rate in the developed world.
Brazil has a large domestic currency and is the world leader in the export of manufactured goods, cars and machinery.
“We have to improve the competitiveness of the Brazilian economy,” Finance Minister Roberto Marques told a news conference.
The announcement came after Brazil said it had raised the tax rate to 12% in 2018, and earlier this month, announced a new levy of 15% on imports.
It also raised the value-Added tax rate, which is a measure of how much an item costs relative to the cost of its domestic equivalent, to 10% in 2020.
The change will boost Brazil’s exports to the Chinese and Indian markets, which are crucial for the Brazilian peso, which has lost almost 70% of its value against the U.S. dollar in the past year.
The change will also boost exports of oil and gas to China, and increase Brazil’s foreign exchange reserves.
Brazil will import $200 billion of goods this year and is planning to import $1.5 trillion of goods in 2019.