ANNOUNCED AS TEMPORARYYes
On October 21, 2015, decree number 8.544 allowed for the reduction of the IPI between two companies that fall under INOVAR-AUTO’s program. If a company has an order from another company under INOVAR-AUTO’s, they may get the appropriate IPI reduction to up to 45% depending on the conditions.
Furthermore, the IPI reductions have been increased for all vehicles to 45% until the 31st of December, 2017. 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:
Created by Decree 7,819/12, this program now grants a 45% 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:
A number 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 a motor.
The number of stages for the program's accession will gradually cover the 12 stages. The R&D tax exemptions are granted for the purchase of inputs that qualify as strategic. The tax is applied to 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
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