Brazil Cuts Tablet Makers A Tax Break, As China’s Foxconn Eyes A Move

Brazil’s president just signed a tax break designed to attract tablet manufacturers. It’s all about Foxconn, Apple, and billions in potential revenues.

Foxconn road sign


 Brazil’s President Dilma Rousseff has signed a provisional bill that would allow manufacturers of tablet PCs to sidestep a 9.25% social-security tax and benefit from a reduction in the industrial-production tax, which would drop from 15% to 3%. These are significant moves, and potentially could make up for some of the shortcomings of Brazil’s complex legal and tax systems, which act as a barrier to high-tech firms opening facilities in the country.

These tax breaks are about the whole high-tech industry, but they’re really only aimed at one company: Honhai, or Foxconn. The China-based firm had been making overtures about a move to Brazil, but had been demanding concessions including tax breaks–it’s poised to invest some $12 billion in the South American nation, specifically to diversify and change how Apple‘s products are manufactured and distributed around the world.

There are a few wrinkles, centering on how much of a product is made in the nation in order to qualify for the new regulations, but it’s almost certainly going to work to attract Foxconn as well as stimulate other local firms to join in (national maker Multilaser has revealed plans to make a regional tablet costing less than $496).

Foxconn’s potential expansion into Brazil has been given a well-timed push, courtesy of a tragic explosion in a new plant in Chengdu, China. This facility had been quickly constructed to boost iPad production, and fine dust particles are being blamed for the explosion that killed three people and injured many more. Unfortunately, the new plant was actually situated in Chengdu to make life easier for workers–many of whom had previously traveled from China’s more remote provinces for the promise of well-paid work in Foxconn’s older factories, a situation some claimed was responsible for a spate of suicides among its workforce. All of Foxconn’s polishing facilities have now been shut for an inspection to make sure their dust extraction systems are working well, and the explosion and subsequent shutdown is said to cost Apple some 500,000 iPads.

[Image: Flickr user mwiththeat]

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