Grants tax exception for regional car producers

In mid-September, the Government raised the Imposto Sobre Produtos Industrializados (IPI, an industrial products tax) on passenger cars by 30 percent, while at the same time exempted companies that fulfil local content requirements (i.e. source 65 percent of parts from MERCOSUR partners or from Mexico, with which Brazil has an auto trade deal) and who invest at least 0.5 percent of after-tax income in R&D in Brazil. A two-month period is granted to companies to adapt to the new legislation.

• Type:

  • Treatment and operation (Corporate taxation)
  • Promotion and facilitation (Investment incentives)

• Industry:

  • Manufacturing (Manufacture of transport equipment)

• Sources:

  • Official Gazette, Decree 5765/2011, http://www.in.gov.br/imprensa/visualiza/index.jsp?jornal=1&pagina=8&data=16/09/2011, 16 Sep 2011
  • EIU, Country Report, http://www.eiu.com/index.asp?layout=displayIssueArticle&issue_id=68556191&article_id=498556234, 01 Nov 2011