BRASILIA, Aug. 8 (Xinhua) -- Brazilian President Michel Temer ratified a law on Tuesday that seeks to eliminate a practice where states have been competing to offer the most attractive fiscal incentives for companies to invest there.
Published on Tuesday, the law said that the practice of states competing with the best incentives must end within 15 years to end "fiscal wars."
For this time period, regional governments may continue to offer fiscal incentives, although the timeline varies for specific sectors.
The longest timescale to continue the incentives has been provided for the promotion of agricultural and industrial incentives, as well as incentives to attract infrastructure investments for highways, rivers, railways, ports, airports and urban transportation.
In the case of incentives seeking to help international trade at ports and airports, the timeline drops to eight years. Incentives for all other areas of commerce must stop within five years.
Forestry activities must end their incentives within three years, and all other sectors not mentioned above must see incentives end within a year.
Furthermore, to allow new incentives, states must get the support of two-thirds of all the states in the country, including at least a third of states from each of the five regions of the country. Brazil's National Finance Policy Council, which has long objected to the practice, must also approve each incentive.
Economists have pointed out that these "fiscal wars" between states result in great losses of revenue, pushing the burden of taxation increasingly onto the population.
