Brazil Gives Tax Exemption To Foxconn
Recently, Apple CEO Tim Cook said that Apple saw a “huge opportunity” in Brazil. It turns out that sales was not the only thing that Cook had in his mind. Brazil has granted iPad assembler Foxconn special exemptions from Brazilian excise and other taxes, clearing the way for iPad production to begin in South American factories.
The production of iPad in Brazil was being anticipated since early 2011 by Foxconn-owned factories in Brazil. However, the proposed US$12 billion deal fell through in September 2011 when Brazil failed to meet Foxconn’s expectations for tax breaks. Brazilian officials characterized Foxconn’s demands as “crazy”. However, now it seems that Brazilian officials have changed their mind. Foxconn was also worried about getting skilled labor in Brazil. It remains to be seen how things will go in this regard.
Mercado reported that the tax exemption applied to “tablets with touch screens, no keyboard and weighing less than 750 grams” – at 600 grams, the iPad 2 comes in comfortably below that limit, as do several competitors’ products. The exemption rules also cover”Accessories, cables, power supplies and manuals.
According to reports from Brazilian media and Apple Fanboys in Brazil, high local prices for Apple’s gear have not stymied demand for the devices. If produced locally, Brazilian prices for the iPad could fall considerably since import duties will no longer be levied against them. And this could also create high demand for iPad made in Brazil. With a population of 200 million, Brazil represents a great opportunity for Apple to expand its operations in an area of the globe that consumer electronics companies have not viewed as a high priority market so far.