IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

No

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 17 May 2013 | Removal date: open ended
Still in force

Tax or social insurance relief

On 17 May 17 2013, the Government of Brazil renewed, by Decree 8.015/13, the INOVAR AUTO program. Under this program, the government raises the Industrial Production Tax (IPI) by 30 percentage points on all light vehicles, whether manufactured domestically or imported. However, under certain conditions this tax increase may be waived. The conditions include requirements that discriminate against foreign commercial interests.

Created by Decree 7,819/12, this program grants a 30% tax exemption on the Industrial Production Tax (IPI, for its acronym in Portuguese) to producers, importers, and investors of automobile products that carry out a certain number of production stages in Brazil and invest in 2 out of the 3 following things within Brazil:

  1. Investment in R&D
  2. Investment in engineering, industrial technology and supplier capacitation
  3. Participation in the Vehicle Labeling Scheme.

The amount of production stages that must be done in Brazil varies by year; ranging from a minimum of 6 stages 2013 to 8 stages from 2016 and onwards until the end of this program. Automakers can get a 1-2% extra discount in the IPI by meeting more stringent corporate average vehicle efficiency targets. For heavy trucks the requirement is a minimum of 9 out of 14 and 7 out of 11 in the case of chassis with motor.
 
The number of stages for the program's accession will gradually cover the 12 stages. The R&D tax exemptions are granted on the purchase of inputs that qualify as strategic. The tax is applied on the sales price, but includes tariffs and other charges in the case of imports.
 
Production stages include: stamping, welding, anticorrosion treatment and painting, plastic injection, motor manufacturing, gearbox and transmission manufacturing, steering and suspension systems assembly, electrical systems assembly, axle and brake systems assembly, mono-block manufacturing or chassis assembly, final assembly, final review and testing, and own laboratory infrastructure for product development and testing.
 
Decree 8.015/13 will remain in force until 2017.
 
The GTA includes state guarantees and other financial incentives that are likely to affect the restructuring and performance of firms facing international competition, whether from imports, in export markets, and from foreign subsidiaries.

AFFECTED COUNTRIES

MAP
TABLE
EXPORT

AFFECTED SECTORS AND PRODUCTS

435 Lifting & handling equipment & parts
8709 Works trucks, selfpropelled, not fitted with lifting or handling equipment, of the type used in factories, warehouses, dock areas or airports for short distance transport of goods; tractors of the type used on railway station platforms; parts of the fore
870911 Electrical
870919 Other
441 Agricultural or forestry machinery & parts
8701 Tractors (other than tractors of heading 87.09).
870110 Pedestrian controlled tractors
870130 Tracklaying tractors
870190 Other
444 Machinery for mining, quarrying & construction; parts
8704 Motor vehicles for the transport of goods.
870410 Dumpers designed for offhighway use
491 Motor vehicles, trailers & semi-trailers; parts
8701 Tractors (other than tractors of heading 87.09).
870120 Road tractors for semitrailers
8702 Motor vehicles for the transport of ten or more persons, including the driver.
870210 With compressionignition internal combustion piston engine (diesel or semidiesel)
870290 Other
8703 Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 87.02), including station wagons and racing cars.
870321 Of a cylinder capacity not exceeding 1,000 cc
870322 Of a cylinder capacity exceeding 1,000 cc but not exceeding 1,500 cc
870323 Of a cylinder capacity exceeding 1,500 cc but not exceeding 3,000 cc
870324 Of a cylinder capacity exceeding 3,000 cc
870332 Of a cylinder capacity exceeding 1,500 cc but not exceeding 2,500 cc
870333 Of a cylinder capacity exceeding 2,500 cc
8704 Motor vehicles for the transport of goods.
870421 g.v.w. not exceeding 5 tonnes
870422 g.v.w. exceeding 5 tonnes but not exceeding 20 tonnes
870423 g.v.w. exceeding 20 tonnes
870431 g.v.w. not exceeding 5 tonnes
8705 Special purpose motor vehicles, other than those principally designed for the transport of persons or goods (for example, breakdown lorries, crane lorries, fire fighting vehicles, concrete mixer lorries, road sweeper lorries, spraying lorries, mobile wor
870510 Crane lorries
870530 Fire fighting vehicles
870590 Other
8706 Chassis fitted with engines, for the motor vehicles of headings 87.01 to 87.05.
870600 Chassis fitted with engines, for the motor vehicles of headings 87.01 to 87.05.
8708 Parts and accessories of the motor vehicles of headings 87.01 to 87.05.
870810 Bumpers and parts thereof
870830 Brakes and servobrakes; parts thereof
870840 Gear boxes and parts thereof
870850 Driveaxles with differential, whether or not provided with other transmission components, and nondriving axles; parts thereof
870870 Road wheels and parts and accessories thereof
870880 Suspension systems and parts thereof (including shock absorbers)
870891 Radiators and parts thereof
870892 Silencers (mufflers) and exhaust pipes; parts thereof
870893 Clutches and parts thereof
870894 Steering wheels, steering columns and steering boxes; parts thereof
870895 Safety airbags with inflater system; parts thereof
870899 Other
492 Motor vehicle bodies; trailers & parts thereof
8707 Bodies (including cabs), for the motor vehicles of headings 87.01 to 87.05.
870710 For the vehicles of heading 87.03
870790 Other
8708 Parts and accessories of the motor vehicles of headings 87.01 to 87.05.
870821 Safety seat belts
870829 Other

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