Dialogue with Brazil’s government regarding cost reductions to obtain information on duty free land border transactions are ‘open’ and ‘positive’, Asociación Sudamericana de Tiendas Libres (ASUTIL) has confirmed to TRBusiness.

ASUTIL, which represents the interests of South America’s duty free business, had sent a letter to the federal government seeking to lower payments associated with retrieving spending transaction data across the country’s new land border business.

The current system administered by Serpro – a firm delivering government IT infrastructure – uses a database to consult on land border duty free transactions and applies a fixed rate accordingly to retrieve the information.

Often this service is expensive, up to 7% of the average purchase ticket value (paid in US dollars); currently around 50% of land border purchases are above $100.

NEGOTIATION UNDERWAY

As such, ASUTIL has been lobbying for a more equitable system given the significant financial pressures on travel retail due to the coronavirus (Covid-19) pandemic.

Speaking during an ASUTIL press webinar held today (22 September), ASUTIL Secretary General José Luis Donagaray said: “We have a very good relationship with the Brazilian government. We not only sent a letter but have a Zoom meeting every 20 days with the government. They have done some proposals and we are negotiating.

“The Brazilian government is open to finding a positive solution for everyone and are very positive, as we need this new business type of business to have healthy growth. It’s business for them also. It’s impossible that these stores will not have success.

“We’ve had meetings with Receita Federal (Brazil’s federal tax and customs service) and with deputies and senators from Brazil that are participating as they have a commission for these stores in border twin cities. We’ve exchanged a lot of information and have talked about the positive service. They are open. Brazilian government are really pro-business.”

Border shops in Brazil and across the region are slowly reopening for business and recovering traffic, including across the twin cities, attendees to the webinar heard.

“Shops in Brazil that were closed – they are open,” confirmed Donagaray. “In Uruguay a lot of shops that were closed are open. Some have special hours of opening.”

Separately, ASUTIL is working closely with officials and regulators in Brazil to harmonise legal aspects of the country’s border shop allowances with visitors from other countries.

As reported, Brazil’s land border duty free allowance for visitors rose from $300 to $500, effective 1 January, following an earlier announcement from President Jair Bolsonaro that coincided with a lift in the duty free purchase ceiling at airports from $500 to $1,000.

However, a $300 allowance ceiling exists for Brazilians wishing to purchase in their own stores [although there have long been calls for the government to lift this to $500 and this is expected at some point – Ed].

While the current situation remains hugely challenging (most borders remain closed to international tourism) and revenues are low, Donagaray informs webinar attendees that the average duty free ticket value is in fact high [this observation has been relayed to TRBusiness of late by several other stakeholders working in other regions, including Europe – Ed].

“When people have the possibility to buy, they will as they don’t know when they’ll next visit duty free,” said Donagaray. “In Brazil, duty paid is also doing well.”

While India recently overtook Brazil in terms of the number of Covid-19 cases, the situation in Brazil remains dire, with more than 4.5 million cases [source: John Hopkins University & Medicine].

ASUTIL has called on governments to support duty free stakeholders across the LatAm region, including issuing joint statements with ACI LAC and the Brazilian National Association of Airport Concessionaires; and issuing a letter to all ICAO representatives in each country with recommendations to adopt global safety standards and the industry recovery protocol.

The association has also urged Uruguay’s government to facilitate pre-sales of airport duty free goods before travel and has mooted the possibility of selling local products to local people paying tax at the borders.

Moving forward, ASUTIL is aiming to harmonise protocols across LatAm for each country and airport. For aviation, it is expected that most airports across LatAm will reopen in October, including Buenos Aires.

“Frequencies are starting slowly, but they are starting. The amount of passengers is another issue,” said Donagaray.

“Airlines are recovering very quickly inside the domestic market. It is moving forward inside Brazil, Argentina, Colombia and Chile. We see positive signs for movement of tourists, but it will be slowly.”

BORDERS: VIRTUAL EVENT IN NOVEMBER

Having recently announced its involvement in a virtual event for the Duty Free & Travel Retail Summit of the Americas next year, ASUTIL revealed during the webinar that it plans to host a virtual event for the borders duty free business on 25-26 November.

The partnership with the Chamber of Free Shops of Uruguay will include a conference on day one featuring different speakers aligned to the borders shops business, together with input from Brazil’s new land border operators.

Day two will hope to offer virtual networking time, with three options currently under consideration by ASUTIL. More information was not immediately available.

“We want to have information about the new borders, connect new borders stores with suppliers using the platform,” said Donagaray. “The idea is to continue in some way to have speakers sharing information and the virtual experience gives us the possibility to have important speakers and develop some sort of networking time.”

Watch out for more on the South Americas duty free business in the TRBusiness October issue, available soon…