Brazil: R&D Tax Incentives for Automotive Industry

On July 5th the new Rota 2030 program was published which aims to improve Brazil`s automotive industry by advancing its technological development, innovative energy, environmental protection issues as well as an overall improved quality of products.

Automotive companies whose R&D activities are aligned with named goals and practices can profit from the following tax incentives for up to a maximum of 10 years (2 x 5 years):

  • Reduction of corporate income tax for R&D expenses from January 1st, 2019 (approximately 34% of the current expenditures)
  • 1-2% reduction of IPI tax on cars that comply with the 2020 efficiency criteria
  • Exemptions from the import tax levied on imported components for car production without national equivalents starting January 1st, 2019

 

Furthermore, Decree 9,557/2018 from November 9th has clarified the minimum requirements as well as non-compliance penalties for the following aspects surrounding Rota 2030:

  • Import and commercialization of vehicles
  • Details regarding the import of auto parts with and without national equivalents
  • Details regarding Rota 2030