Tax on industrialized goods (IPI – Imposto sobre Produtos Industrializados)
IPI is not cumulative; and thus tax due may be offset by credits arising from the purchase of raw materials, intermediary products, and packaging materials. However, no credits are granted for goods that become fixed assets. The rates at which IPI is charged on the value of industrialized goods, as they are imported or dispatched from domestic plants, varies in accordance with the nature of the goods. The average rate is 10%. Export goods are exempted from IPI.
Reduction IPI for cars
The IPI tax for cars manufactured in Brazil has been reduced. For cars imported from outside Mercosur and Mexico, the rate will fall from 37% to 30%, the minister of economic afffairs Mantega said. Cars up to a thousand cubic centimeters (1.0) has been reduced from 7% to zero by the end of August this year.
For vehicles with a thousand cubic centimeters (1.0) to two thousand cubic centimeters (2.0), the rate for alcohol cars and “flex” (alcohol and gasoline) for companies operating in Brazil, will be reduced from 11% to 5.5%. For imported cars, the rate will be reduced from 41% to 35.5%. As for gasoline cars a thousand to two thousand cubic centimeters, the IPI will fall from 13% to 6.5% for cars produced in Brazil and 43% to 36.5% for vehicles from outside Mercosur and Mexico. In the case of utilities, the rate will be reduced from 4% to 1% (companies established in the country) and for imported cars will fall from 34% to 31%.
In addition, Mantega said the private sector pledged to give discounts on the tables in force. He said the discount is 2.5% for cars up to a thousand cubic centimeters, 1.5% for cars of a thousand to two thousand cubic centimeters and 1% for utilities and commercial. The aim of all these measures is to reduce, according to Mantega, the cost of car dealerships in approximately 10%.
“For the automotive sector, we are implementing financial measures. The private and public banks have pledged to increase the volume of credit, increase the number of installments. The funding will be more installments, and also pledged to reduce the purchase price of the input, and perform the reduction of financial cost, or interest on the loan, “Mantega said.