Brazil Raises Industrial Product Tax on Auto Imports

[2011-09-20 17:28:07]


According to Brazil's O Estado de Sao Paulo Sept. 16, Brazil put forward on Sept. 15 its new policy on automobile industrial product tax, stating that automakers must comply with Brazil's three regulations to enjoy the tax preferences, i.e. maintaining existing tax rates, and otherwise they should bear 30-percentage-points higher tax.

The policy will last till December 2012 and the three regulations are:

1. No-less-than 65% of auto components used shall originate in Brazil and/or other Mercosur states (Argentina, Uruguay and Paraguay);
2. No-less-than 0.5% of business revenue shall be applied to research and development;
3. No-less-than six processes shall be completed in Brazil, including pressing, paint spraying, injection moulding and engine building.

It is said that the changes of such tax rates mainly apply to autos imported from China and South Korea, without effect on those from Mercosur states, Mexico and others in agreement with Brazil.

The tax rise is multistep, e.g. the rate is up from 7% to 37% for double-fuel 1.0-L-displacement autos, and up from 25% to 55% for 2.0-L-displacement autos and more.
Source: ETCN
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