Approval of the Cabotage Incentive Program
After many debates, Law Project nº 4199/2020, called BR do Mar, was sanctioned by the Brazilian President, through Law nº 14.301, of January 7th, 2022, in order to incentivize Brazilian cabotage.
BR do Mar was one of the main topics of the Ministry of Infrastructure and is aimed at the country's economic development, considering its purpose of diversifying the Brazilian logistical modal, which is extremely dependent on highways.
However, some important vetoes were made on BR do Mar, such as:
- a specific tax regime (REPORTO) which could reduce the tax costsrelated to the modernization and expansion of the port structure; and
- the requirement of a minimum Brazilian crew.
On the other hand, a controversial issue was approved, authorizing the charterering of vessels from a foreign subsidiary of shipping companies, or from a foreign wholly-owned subsidiary of another Brazilian shipping company. Companies are allowed to bring foreign ships for up to 36 months, while the vessels built by the Brazilian naval industry are not ready.
The law here in also changes rules for resources using from the fee related to freight value, called Additional Freight for the Renewal of the Merchant Marine (AFRMM), as well as the one called the Merchant Marine Fund (FMM). The amounts paid by shipping companies to both resources maybe withdrawn with authorization from the National Bank for Economic and Social Development (BNDES), which acts as a financial agent.
After the law sanction, there are two measures for its full effectiveness:
- definition by the National Waterway Transport Agency (Antaq), within 90 days of the sanction, of which vessels may operate under this Law; and
- regulation by the Federal Government regarding the criteria for contractsand guarantees regarding the construction of the vessel.
The Law nº 14.301 is available here, in portuguese.
The Maritime team is available in case of doubts.