Brasília – Decree #7,819, which regulates the Incentive Program to Technological Innovation and Expansion of the Motor Vehicle Production Chain (Inovar Auto), was published on the Official Gazette this Thursday (4th). The program is meant to foster research on the manufacturing of more modern, safer, environment-friendly vehicles. It also provides stimulus in the form of discount credits on payment of the Tax on Industrialized Products (IPI, in the Portuguese acronym).
The program will remain in effect until December 31st, 2017, and bids to participate are to be submitted to the Brazilian Ministry of Development, Industry and Foreign Trade. The permit, valid for 12 months and renewable for the same time span, will be issued jointly by the Brazilian Ministry of Development, Industry and Foreign Trade and the Ministry of Science, Technology and Innovation.
The IPI discount will be granted in the form of bimonthly credits, based on company spending on research, development, technology, inputs, tools and training provided to suppliers, among others. The IPI credit will be free from social security taxes PIS/Pasep and Cofins. It will also be exempt from the Legal Entity Income Tax (IRPJ) and the Social Contribution on Net Profit (CSLL).
The new regime will create jobs in the Brazilian industry and enable the population access to cheaper, more energy-efficient vehicles, said the Finance minister Guido Mantega. On commenting the decree, Mantega stated that Brazil is the fourth largest auto market in the world and wants to retain its position by providing a stimulus to production.
*Translated by Gabriel Pomerancblum
