Economy 09-11-2018

Brazil promulgates law proposing new tax regime for the automotive industry

The President of Brazil, Michel Temer, promulgated the law known as Rota 2030 that proposes a new tax regime to encourage the automotive industry, a sector that has a significant weight in the economy of that country.

"The president signed Decree Ruta 2030. This is a new tax regime for vehicle assemblers in Brazil (...) The program will allow advances in the production of more modern cars, an example of this is the use of electric batteries, which they can help reduce pollution with less use of fossil fuels and align with the UN's 2030 agenda for sustainable development, "the Planalto Palace (seat of the Government) wrote on its Twitter social network account.

The law provides tax exemptions for automotive companies and gives incentives to companies to improve fuel efficiency and vehicle safety.

It will last 15 years and reduces by 3 percentage points the tax applied to engines that use gasoline and ethanol.

The manufacturing sector in Brazil represents about 22% of industrial GDP, while the majority of assembly plants in Brazil are multinationals such as Ford, Fiat and General Motors.

Global vehicle production in 2016 was 72.1 million units, of which 1.77 million were produced in Brazil, which ranks it as the tenth largest global producer of vehicles behind China, the US, Japan, India, South Korea, Mexico, Spain and Canada, says the Ministry of Industry.

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