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Struggling with Brazil’s High Taxes, Even in the Art World

Posted on the 04 October 2013 by Angelicolaw @AngelicoLaw

Brazil’s ART Rio-International Art Fair, which took place in early September, is one of the world’s top art fairs. Also known as ArtRio, the art fair attracts some of the best artists and some of the most wealthy art collectors in the world. But the success of the annual event is diminished by the complaints of wealthy art connoisseurs about the high import taxes imposed on art purchased in Brazil.

Brenda Valansi, the founder of ArtRio who has made lowering import taxes a personal priority, clearly expresses the problem. “There is absolutely zero benefit for anyone from this very antiquated system we have in place. Artists don’t benefit, collectors don’t benefit, the state doesn’t even really benefit and the Brazilian public certainly doesn’t.”

The combination of import taxes levied by federal, state, and municipalities adds 50% to 70% to the sales price of a work of art. To illustrate the negative impact of such high taxes, the import tax imposed by most other countries including the United States ranges between 7% and 10%.

Victoria Gelfand-Magalhaes, director of the Gagosian gallery’s New York branch expresses the concerns of art dealers. “I have never seen such high import taxes anywhere in the world,” she says describing the taxes as “medieval.” “It really makes it prohibitive for people here to buy international art.”

Victoria Miro gallery art director Glenn Scott Wright echoes Gelfand-Magalhaes’ sentiment. “Foreign galleries want to do business here, but the fiscal system has this mysterious and convoluted tax system that makes it hard for the world to do business in Brazil.”

Brazil’s taxes on other imported goods are also notoriously high. The current import tax structure in Brazil is the result of Brazil’s effort to protect domestic businesses and stimulate growth. However, according to the World Bank, Brazil ranks 156th in the world when it comes to tax burdens and the complexity of the tax structure.

It’s almost certain that lowering taxes for wealthy international art collectors is not a pressing concern for Brazil’s government. It’s currently focused on responding to nationwide protests that cried out for reforms that include more funding for public hospitals, schools, and infrastructure.

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