Nintendo ends console and game distribution in Brazil, citing high taxes

Brazil's high tariffs on video game consoles have driven Nintendo out of the market there. Nintendo announced yesterday that it will end distribution of its consoles and games there.

In a statement, Nintendo of America attributed the move to "high import duties that apply to our sector." Nintendo could avoid those duties with a local manufacturing operation, but has chosen not to establish one, presumably for the costs involved.

In a statement emailed to Polygon, Nintendo of America said that the company's distributor for Latin America would no longer send products to Brazil, but it would continue to distribute Nintendo goods in the region.

"Brazil is an important market for Nintendo and home to many passionate fans, but unfortunately, challenges in the local business environment have made our current distribution model in the country unsustainable," the company said. "These challenges include high import duties that apply to our sector and our decision not to have a local manufacturing operation. We will continue to monitor the evolution of the business environment and evaluate how best to serve our Brazilian fans in the future."

UOL Jogos, the Brazilian gaming publication which first reported Nintendo's pullout, noted that banking regulations in the country also made digital purchases on the Wii U problematic for Nintendo.

Even when Nintendo announced the launch of the Wii U in Brazil in November 2013, Reggie Fils-Aime, the Nintendo of America president, noted the challenges posed by that country's import policies. Brazil's high tariffs on video games have driven up the price of the PlayStation 4 to 3,999 reals, almost $1,500 U.S. as of today. An Xbox One, which Microsoft manufactures in Brazil, costs 2,199 reals, a little more than $800 U.S.

When the PS4 launched in Brazil, Sony explained that 63 percent of the console's price tag was attributable to fees and taxes applied to the importing of the console. Sony, in an explanation to shocked consumers, mentioned the possibility of manufacturing the PlayStation 4 in Brazil to avoid the taxes and fees. Sony already manufactures PlayStation 3s in the country.