Inovar Auto Incentive Programme

The INOVAR-Auto Incentive Programme was created in October 2012 to support vehicle technology innovation, enhance competition in the automative sector, manufacture more efficient and safer vehicles and trigger investment in the manufacturing supply chain. It set specific targets for minimum investment in research and development, increase in the expenditure in engineering, basic industrial technology and capacity building of suppliers, production of more efficient vehicles and increase in the safety of the vehicles produced. The Programme sets a 30% increase on the Tax of Industrial Products (Imposto sobre Produtos Industrializados - IPI) for all light duty vehicles and light commercial vehicles. To be exempt of the 30% IPI, the automakers need to meet a series of requirements related to the targets mentioned above. Under the programme, with regards to vehicle efficiency, car manufacturers need to improve their corporate average vehicle efficiency for new light duty vehicles by approximately 12% from 2012 levels by October 2017. Car manufacturers also have to comply with Brazil's Vehicle Labelling Programme (PBEV) and have to comply with minimum share of vehicle sales. This exemption applies only to vehicles manufactured between 2013 and 2017. Starting from 2017, vehicles that consume less than 15.46% will have the right to a reduction of 1% in the IPI. Vehicles that consume less than 18.84% will have the right to a reduction of 2% in the IPI. Beneficiaries of the programme include companies that manufacture vehicles in the country, companies that sell vehicles in the country and companies that have an investment project to manufacture vehicles in the country.

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