IMPLEMENTATION LEVEL

National

AFFECTED FLOW

Inflow

ANNOUNCED AS TEMPORARY

Yes

NON-TRADE-RELATED RATIONALE

No

ELIGIBLE FIRMS

all

JUMBO

No

TARIFF PEAK

No
← back to the state act
Inception date: 21 Oct 2015 | Removal date: 31 Dec 2017
Still in force

Localisation incentive

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:

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

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

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
447 Weapons & ammunition & parts
8710 Tanks and other armoured fighting vehicles, motorised, whether or not fitted with weapons, and parts of such vehicles.
871000 Tanks and other armoured fighting vehicles, motorised, whether or not fitted with weapons, and parts of such vehicles.
491 Motor vehicles, trailers & semi-trailers; parts
492 Motor vehicle bodies; trailers & parts thereof
499 Other transport equipment & parts
8711 Motorcycles (including mopeds) and cycles fitted with an auxiliary motor, with or without sidecars; sidecars.
871110 With reciprocating internal combustion piston engine of a cylinder capacity not exceeding 50 cc
871120 With reciprocating internal combustion piston engine of a cylinder capacity exceeding 50 cc but not exceeding 250 cc
871140 With reciprocating internal combustion piston engine of a cylinder capacity exceeding 500 cc but not exceeding 800 cc
871150 With reciprocating internal combustion piston engine of a cylinder capacity exceeding 800 cc
871190 Other
8712 Bicycles and other cycles (including delivery tricycles), not motorised.
871200 Bicycles and other cycles (including delivery tricycles), not motorised.
8713 Carriages for disabled persons, whether or not motorised or otherwise mechanically propelled.
871310 Not mechanically propelled
8714 Parts and accessories of vehicles of headings 87.11 to 87.13.
871410 Of motorcycles (including mopeds)
871420 Of carriages for disabled persons
871491 Frames and forks, and parts thereof
871492 Wheel rims and spokes
871493 Hubs, other than coaster braking hubs and hub brakes, and free wheel sprocketwheels
871494 Brakes, including coaster braking hubs and hub brakes, and parts thereof
871495 Saddles
871496 Pedals and crankgear, and parts thereof
871499 Other
8716 Trailers and semitrailers; other vehicles, not mechanically propelled; parts thereof.
871680 Other vehicles

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