Bill wants to exempt import tax on electric and hybrid cars by 2025

If approved, the bill that promises to exempt import tax on electric and hybrid cars will come into effect very soon. The PL will not need to go through the Senate plenary if the economic affairs commission previously approves it, going directly to the Chamber of Deputies   

Um Bill authored by Senator Irajá (PSD-TO) provides for exemption from import tax on electric and hybrid cars that are manufactured within the Brazilian national territory. This benefit would be valid until December 31, 2025. The Federal Government has minimized or zeroed the tax, since 2016, as a way to encourage Brazilian consumers to buy an electric car.

PL provides for tax exemption on electric and hybrid cars

However, the tax exemption – which was until the year 2025 – has ceased to be valid since January 2022. According to Irajá, about 80% of energy matrix in Brazil comes from renewable sources, such as hydroelectric power, photovoltaic solar energy, wind energy and biomass. Therefore, it makes no sense not to encourage the use of electric and hybrid cars in the country.

The senator also argued that the country is dependent on the import of specific parts for the assembly of electric or hybrid cars. According to Irajá, as we still do not have an industry in fact consolidated in the national territory in the manufacture of inputs, components and essential equipment for the assembly of these electric and hybrid cars.

Much of this equipment used in the assembly of electric cars comes from Asia and also from Europe. For the senator, it would be of great importance the creation, already for the next three years, of a law that exempts the tax on the importation of this equipment.

Therefore, the PL created serves to re-establish what had already been implemented a few years ago. The impact on top of that is of the order of 35% tax that is severely levied on all these products sold here.

Exemption from import tax, as provided for in the PL, may reduce the final value of the import

According to an analysis made by Senator Irajá, applying the import tax exemption, which is currently at 35%, a considerable reduction can be seen in the final price.

The senator also said that the impact of the final cost could reduce the value of these electric cars and hybrid models for the Brazilian end consumer by around 10 to 20%. Precisely because there is still a certain distance, which is still very large, between the economic viability of conventional car models, since the fleet is still powered by fossil fuel, in addition to being infinitely lower in terms of price than, for example, these models of vehicles powered by electricity or even hybrid models.

Ban on combustion-powered fleets, including hybrid models, in parts of Europe from 2035

The commission in Europe prohibited the manufacture of new automobiles powered by combustion engines, including hybrid vehicle models as of the year 2035. In some North American states, there was also the adoption of this radical measure.

If approved by the commission responsible for making decisions on matters of the economy, the bill that exempts electric and hybrid car models from import tax, as well as other electrified models, will go directly to the Chamber of Deputies, without even needing to pass through the plenary of the Senate.