Brazilian automakers General Motors (Chevrolet), Renault, Volkswagem, Hyundai and Stellants (Fiat) sent to the Ministry of Development, Industry, Commerce and Services (MDIC), on Friday (11), a request for accreditation of five entry vehicle models for the sustainable car program, which guarantees exemption from the tax on industrialized products (IPI) with more economical, sustainable and with more economical and with Manufacture in Brazil.
To be entitled to IPI Zero, the sustainable car must meet four requirements: issue less than 83 grams of carbon dioxide (CO₂) per kilometer, contain more than 80% recyclable materials, be manufactured in Brazil (steps such as welding, painting, engine manufacturing and assembly) and fit into one of the compact car categories (brands entry vehicle).
The models accredited by automakers include different versions: Chevrolet Onix, Renault Kwid, Volkswagen Polo, Hyundai HB20, Fiat Argo and Fiat Mobi. See the detailed list.
The launch of the initiative took place during a ceremony at the Planalto Palace, with the participation of the vice president and Minister of Development, Industry and Commerce, Geraldo Alckmin, as well as ministers, parliamentarians and representatives of the country’s automotive sector.
Decree signed by President Lula redefined the IPI table, built as a zero sum mechanism, in relation to the total of cars sold in Brazil. Valid until December 2026, the decree precedes the effects of the tax reform, the Planalto Palace said.
Green IPI
In addition to IPI Zero, valid only for compact entry cars manufactured in Brazil, IPI Verde has established a base rate of 6.3% for passenger vehicles and 3.9% for light commercials, which will be adjusted by an addition and decrease system. Calculation will take into account criteria such as energy efficiency, propulsion technology, power, safety level and recyclability index.
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According to the government, vehicles with the best indicators will receive bonuses (tax discounts), while those with worse assessments will be added.
Thus, there will be no tax deficit in the collection of tax. A hybrid-flex passenger car may have the rate reduced by 1.5 percentage points, according to the new table.
If you also meet the MOVER program efficiency criterion, you lose one more point, and if it meets level 1 recyclability, it loses another. With this, the IPI of this vehicle drops from 6.3% to 2.8%.
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Tax reduction
The government estimate is IPI reduction to 60% of vehicles sold in Brazil, based on the number of cars sold in 2024, without fiscal impact.
The sustainable car with IPI Zero and IPI Verde is part of the National Program for Green Mobility and Innovation (MOVER), launched last year, which aims to decarbonization of the country’s automotive fleet through tax incentives, especially in relation to the tax on industrialized product tax (IPI).
Move provides R $ 19.3 billion of financial credits between 2024 and 2028. The forecast of the sector’s production chain, between manufacturers, auto parts and concessionaires sector, is that investments associated with the program reach up to R $ 190 billion in the coming years.
