Brazil modifies additional freight for merchant marine renewal rate

Local contact

EY Global

7 Apr 2022
Subject Tax Alert
Categories Indirect Tax
Jurisdictions Brazil

The reduction in the additional freight for merchant marine renewal rate for long haul and cabotage navigation could result in cost savings on imports. Taxpayers should consider adjusting their instructive documents to reflect the new rates.

On 25 March 2022, Brazil enacted the Cabotage Transport Stimulus Program, which modifies the additional freight for the merchant marine renewal (AFRMM) rate.


The AFRMM, enacted in 1987, is an addition to the freight rate charged by Brazilian and foreign shipping companies operating in Brazilian ports. It supports the development of the merchant marine and the Brazilian shipbuilding and repair industry, which also is a basic source of the Merchant Marine Fund. The AFRMM is a flat rate of 25% of the international freight value for long haul and a flat rate of 10% for cabotage navigation.

Cabotage Transport Stimulus Program

The Cabotage Transport Stimulus Program is intended to improve the quality of cabotage transport, stimulate the development of the Brazilian cabotage naval industry and use the AFRMM collection to optimize the resources available for cabotage transport.

The table below summarizes the AFRMM rate changes:

Modality Rate before 25 March Rate after 25 March
Long haul navigation 25% 8%
Cabotage navigation 10% 8%
River and lake navigation, when transporting liquid bulk in the north and northeast regions 40% 40%
River and lake navigation, when transporting solid bulk and other cargo in the north and northeast regions None 8%

The decrease from 25% for long haul navigation and 10% for cabotage navigation to 8% reduces the cost of imports that come in through ports. The freight rate, however, has increased over the past two years.

Because the new rates only apply from 25 March 2022 onwards, taxpayers that applied the reduced rates before that date must pay the difference between the old rates and the new rates.

Taxpayers that have imports coming into Brazil should consider adjusting their instructive documents to take into account the new rates. The new rates also will factor into the customs declarations and the calculation of the state tax, as the AFRMM is taken into account in calculating that tax. As a result, taxpayers that import high volumes of cargo might see a significant import cost reduction.


For additional information with respect to this Alert, please contact the following:

EY Assessoria Empresarial Ltda, São Paulo
  • Ian Craig
  • Wilson Mencaroni
  • Camila Angelo
  • João Casalatina
Ernst & Young LLP (United States), Latin American Business Center, New York
  • Lucas Moreno
  • Pablo Wejcman
  • Aline Milla
  • Jose Massari
  • Maria Clara Monteiro
  • Marcella Oliveira
  • Enrique Perez Grovas
Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific
  • Raul Moreno, Tokyo
  • Luis Coronado, Singapore

For a full listing of contacts and email addresses, please click on the Tax News Update: Global Edition (GTNU) version of this Alert.