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Brazil's Inovar-Auto incentive program

Published Mon, 2013.02.04 | By

Cristiano FaƧanha

Summary

Synopsis of a tax policy announced late 2012 aimed at promoting techological innovation and development in Brazil's automotive industry.


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In October 2012, the Brazilian government approved by decree a new program to encourage vehicle technology innovation. Inovar-Auto fosters industry competitiveness by encouraging automakers to produce more efficient, safer, and technology-advanced vehicles while investing in Brazil.

Inovar-Auto provides these incentives in two ways. It first increases a tax on industrialized products (IPI) by 30% for all light-duty vehicles (LDVs) and light commercial vehicles. Second, it imposes a series of requirements for automakers to qualify for up to 30% discount in the IPI. In other words, IPI taxes will remain unchanged for those manufacturers that meet the requirements, thus incentivizing investments in vehicle efficiency, national production, R&D, and automotive technology. The program is limited to vehicles manufactured between 2013 and 2017, after which IPI rates return to pre-2013 levels unless modifications to the decree are made.

Download a fuller summary here.