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Brazil To Remove Tax Breaks On Cars Next Year

by Mike Godfrey, Tax-News.com, New York

30 December 2013


The government of Brazil announced on December 24, 2013 that it will gradually cancel tax breaks on cars next year.

The Latin American country plans to lift the industrial products tax, known as IPI, on passenger cars by two or three percent in January, 2013, depending on size, having reduced the tax on home-produced cars to zero from 7 percent in 2012 to revive falling sales. In July the tax will be raised by a further two to four percentage points, according to the Ministry of Finance, depending on market conditions.

Deputy Finance Minister Dyogo de Oliveira had said last June that the increase would provide the government with an additional BRL1.146bn (USD482.91m) in the first half of the year. The additional revenue would help the government to boost its deteriorating finances.

Earlier this month the European Union filed a complaint to the World Trade Organization over Brazilian tax measures which allegedly shelter the domestic car industry from competition. Imported cars face a tax of 30 percent.

TAGS: Finance | tax | Brazil | tax breaks

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