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Coca-Cola Threatens to Leave Brazil If Free Trade Zone's Subsidies Are Not Returned

08/21/2018 - 14h56

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JULIO WIZIACK
MAELI PRADO
BRASÍLIA
SÃO PAULO

The Coca-Cola Company is threatening to stop production in Manaus' Free Trade Zone if president Michel Temer doesn't bring back the tax breaks the soft drink industry had before the truckers strike, in May.

Alexandre Jobim, president of Abir (Brazilian Association of Soft Drink Manufacturers) took the matter to President Temer for the first time in June.

Abir represents 59 soft drink manufacturers, among them Coca-Cola, Inbev and Pepsi. They are threatening to cut 15,000 jobs because they fear a R$ 6 billion (US $ 1.5 billion) in sales in case Temer doesn't reverse the tax break cut.

Coca-Cola's US headquarters want this situation resolved until the end of this year, and insiders say it expects a bill establishing the tax on industrialized products of 15%, before Temer's mandate is over.

Luiz Carlos Murauskas - 16.set.2011/Folhapress
The Coca-Cola Company
The Coca-Cola Company

The government, on the other hand, would like to leave this matter for the next president to deal with. Tax breaks cuts were one of the ways it found to raise the necessary R$ 13.5 billion (US$ 3.4 billion) to end the truckers strike.

The budget issues that afflicted the government this year affected the soft drink industry, as well as other parts of the Brazilian economy.

If Temer doesn't oblige to Abir's request, Coca Cola has stated that it can shift production to another country that offers tax incentives. Colombia is the first alternative in the company's list.

Brazilian bottling companies would have to import Coca-Cola's concentrate and there would be an increase of 8% in the final price for the Brazilian market.

Translated by NATASHA MADOV

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