Brazil Will Pay 50% Less for Vehicles from Volkswagen, BMW, Peugeot, Renault, Audi, Porsche, and Mercedes-Benz After Import Tax Cut

The MRE Announced a Tariff Plan Where Brazil Will Pay Only 17.5% of the Import Tax on Vehicles from Volkswagen, BMW, Peugeot, Renault, Audi, Porsche, and Mercedes-Benz. The Quota for the Country Will be 32 Thousand Vehicles Per Year

This week, the Ministry of Foreign Affairs (MRE) announced a tax reduction plan as part of the agreement being made between the European Union (EU) and Mercosur. The main point of the proposal is a 50% reduction in the Import Tax, where Brazil will pay less tax on the importation of vehicles from Volkswagen, BMW, Peugeot, Renault, Audi, Porsche, and Mercedes-Benz.

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Brazil Will Have a Reduction in Import Tax

According to the measure, Brazil will be allowed to import from the 27 countries that make up the EU, for the next seven years, a quota of 32 thousand vehicles per year with a tax of 17.5%.

The agreement is expected to come into effect on January 1 of the year following the signing. It is important to note that if the country exceeds this quota, it will pay the full tariff, which is currently 35%.

After seven years of the agreement, the import tax on vehicles from Volkswagen, BMW, Peugeot, Renault, Audi, Porsche, and Mercedes-Benz will undergo a gradual reduction until it reaches zero over the next eight years.

Other Mercosur Countries Will Have Import Tax Quotas

Other countries will also receive quotas, which will be adjusted according to the size of their respective markets. Argentina will be able to import 15,500 per year with a reduced tariff, while Uruguay will have the right to 1,750, and Paraguay to 750 vehicles from Volkswagen, BMW, Peugeot, Renault, Audi, Porsche, and Mercedes-Benz. According to the agreement, other vehicle export markets to Brazil will remain taxed at the current rate of 35%, such as the United States, South Korea, China, and Japan.

The measure will primarily benefit brands that sell in the premium segment, which currently import a large portion of their total sales volume from European countries like BMW, Peugeot, Renault, Audi, Porsche, and Mercedes-Benz. The French brands Peugeot and Renault will also benefit from the import tax quotas, but to a lesser extent.

Find Out Which Vehicles Are Included in the Agreement

The rules apply to gasoline vehicles with any displacement for up to six people or with an engine of 3 liters for any capacity, while diesel models must have engines starting from 2.5 liters.

Thus, it opens the possibility for brands that currently have low import volume to change their plans and start offering new models or invest in larger volumes, such as Volkswagen, Citroën, Fiat, and the Japanese brands Toyota and Nissan.