Tax hike on imported cars applied from Friday in Brazil

16 December 2011

Sao Paulo, Brazil, 16 Dec – The 30 percentage point rise in the rate of Tax on Industrialised Products (IPI) for imported cars that are not at least 65 percent nationally produced is due to be applied as of Friday in Brazil, according to the Brazilian press.

The newspapers noted the fact that the Ministry for Development, Industry and Foreign Trade had not managed to reach an agreement on how to deal with companies that are due to start producing in Brazil, but which as yet do not meet the criteria for the new rules.

This mechanism, which was due to be published by Friday, is now only expected to be published in the official Brazilian state bulletin in mid 2012, and will affect Chinese groups JAC Motors and Chery, Germany’s BMW and Japan’s Suzuki, which have already announced plans to start manufacturing in Brazil.

According to calculations by some of the groups and by some of the distributors affected, the price of the cars will rise by between 10 and 15 percent, depending on the exchange rate between the real and other currencies.

A spokesman for JAC Motors said the group was waiting for measures to be made more flexible in order to set itself up in the country, as it was very difficult to start producing vehicles with 10,000 parts with such a high level of locally produced components. (macauhub)