The AFRMM Merchant Marine Renewal Tax benefit that is applicable to shipping companies is described in Note 4 of the Financial Statements. As it does not meet the requirements for recognition as subsidized revenue in the income statement, a counterpart to the benefit registered as an asset is recorded as a specific liability to the Company.

The AFRMM benefit is recorded as a current asset and liability when released to the account linked to the funds to be received from the Merchant Marine Fund (FMM), as well as the amounts to be received from the FMM related to financing payments made with the Company’s own funds. The AFRMM amounts recorded as liabilities are recognized in the income statement when the repayment of financing occurs, as the obligations under the specific legislation are fulfilled.


The AFRMM is a benefit available to all Brazilian shipping companies that own or operate chartered vessels, and it is regulated by Law 10,893/2004 and other specific legislation applicable to the sector.

The Company receives the full amount of the additional 10% tax on the value of its clients´ cabotage freight via the Merchant Marine Fund for each cargo transport that it carries out. These funds are restricted and can be used exclusively in the construction, dockage, repairs, vessel maintenance and the repayment of financing granted for the purchase of vessels. The AFRMM installments are registered in specific asset accounts matched against liabilities, over the long term, as long as the requirements are not met for recording subsidized revenue in the income statement.

The AFRMM amounts registered as liabilities are recorded in the results as the following cumulatively occur: (i) the provision of a shipping service (cabotage, fluvial or lacustrine) performed with an own or chartered vessel registered in Brazil and (ii) the funds are applied by the Company in accordance with the conditions described in the previous paragraph and registered by the Merchant Marine Fund. These amounts are applied against the payment amounts on financing obtained from the FMM, and, when applicable, to dockage costs and expenses, corresponding to the generation of the incentive.