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The effects of AFRMM boost the modernization of fleets and the financial health of the Brazilian naval industry, promoting initiatives that guarantee the development of the sector.
The impact of AFRMM is fundamental for the evolution of the naval industry in Brazil, ensuring the constant renewal and updating of vessels. The industry depends on investments that provide technological improvements and support the sustainable growth of the sector. In this way, numerous initiatives are carried out to strengthen the competitive capacity of companies and modernize your fleets.
Furthermore, the Additional Freight for Renewal of the Merchant Marine (AFRMM) plays a crucial role in the financial health of the country's shipping industry. With these resources, new construction projects are made possible and the infrastructure necessary to support economic demands is constantly improved. The integration of new technologies and processes is vital to keep the industry dynamic and efficient, ensuring that the Brazilian merchant marine remains competitive on the global stage.
Importance of AFRMM for the Naval Industry
The AFRMM (Freight Additional for Merchant Marine Renewal) plays a crucial role in recovering jobs in the shipping sector. As an example of these initiatives, we have the AFRMM, which is an Intervention Contribution in the Economic Domain (CIDE). Although its existence was regulated in 2004 by Law 10.893, in 1997 by Law 9.432, its objective is to provide financing for the construction and fleet modernization Brazilians. The additional is applicable to freight for the transportation of cargo unloaded in Brazilian ports, whether for Import, cabotage services (maritime transport between national ports) or inland navigation, carried out through rivers.
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Use of AFRMM and Allocation of Resources
The amounts collected through the AFRMM are destined to the Merchant Marine Fund (FMM), managed by the Ministry of Ports and Airports, through the Secretariat of Waterways and Navigation. This fund is then used to finance construction and modernization projects for fleets in Brazilian shipyards. It is worth mentioning that, according to Law 10.893, the AFRMM collected through cabotage, long-haul and inland navigation, carried out by Brazilian-flagged vessels operated by national shipping companies, is destined for these companies themselves. These amounts are deposited in the companies' linked account at Banco do Brasil, managed by BNDES.
AFRMM Generation and Calculation
The AFRMM value is calculated depending on the type of navigation and the product transported, ranging from 8% to 40%. For cabotage services, the rate is 8% on water freight. However, in practice, most customers do not pay for AFRMM due to a legal provision that exempts this additional incident for cargo transport destined for or originating from ports in the North and Northeast regions. This same provision determines that shipping companies must be reimbursed for these amounts, a responsibility that has fallen to the Federal Revenue Service since 2014.
Challenges in Reimbursement Management
However, dealing with the IRS has been a major challenge. Since 2019, the amounts reimbursed have decreased. In 2024, for example, payments were approximately half of those in 2023, and only 28% of the amounts reimbursed in 2022 were paid. This scenario has caused major problems for shipping companies, which depend on the resource for investments in the construction and modernization of their fleets. The IRS attributes these problems to a lack of budget, trained personnel and a suitable system. Since 2014, a system suitable for validation of information was not implemented, resulting in manual payments with long delays.
Blocks and Consequences
In January 2023, an update to the information validation system by the Federal Revenue Service led to the blocking of 100% of AFRMM reimbursements for all shipping companies, due to the implementation of excessive locks in the system. As a result, companies spent most of 2023 without receiving reimbursements, with payments only occurring in the last quarter. Several companies are still awaiting receipt since January 2023. This situation has drastically affected the financial health of companies, leading to a debate in the Chamber of Deputies in June 2024, organized by ABANI, the Parliamentary Front for Inland Navigation and Naval Industry, and other entities.
Discussions and Future of AFRMM
At the event, the Federal Revenue revealed that there are more than R$800 million in pending AFRMM reimbursements, of which R$638 million for cabotage and R$214 million for inland navigation. One of the solutions discussed was the transfer of reimbursement management to the Ministry of Ports and Airports, under the Secretariat of Waterways and Navigation, promising simplification and reduction of bureaucracy through a structural review and regulatory.
Benefits and Impacts of AFRMM
The benefits of AFRMM for the shipping industry are extensive. It allows shipping companies to finance the construction of new ships, maintenance, and modernization of vessels exclusively in Brazilian shipyards, discouraging the internationalization of this type of initiative. This, in turn, creates jobs, promotes technological innovation and strengthens the competitiveness of the shipping sector. Furthermore, the AFRMM is vital for the development of cabotage, allowing the expansion and modernization of the national fleet, making it a viable alternative to road transport and contributing to a more balanced and sustainable transport matrix.
Importance of Legal Security
In addition to strengthening the naval industry, the impact of AFRMM reverberates throughout Brazil's economy. Understanding the details of the tax and ensuring the legal security of investments is crucial for companies in the sector to make strategic decisions and make better use of the benefits provided by AFRMM.
Source: Eduardo Simeone, Legal Director, Compliance and Government Relations at Log-In Logística Integrada.
