IPI on Cars Reduced by 18.5%, Resulting in an Impact of Over 19 Billion Reais on the Federal Government

Written by Roberta Souza

Published on 04/03/2022 at 10:40

Foto: Reprodução Google Imagens (via Revista Carro)

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According to The Government, The Reduction of IPI on Cars Is An Attempt to Boost Sales, Which Fell 40% From December to January

According to the new Decree No. 10,979 from the Federal Government signed by President Jair Bolsonaro, since the first day of March, the Industrialized Products Tax (IPI) has been reduced by up to 25% on various items. Regarding cars, the benefit for the sector was 18.5%, however, the difference will not have significant effects on consumers’ pockets.

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The decrease in the Industrialized Products Tax on new cars varies according to the size and power of the engine, as shown in the Federal Government’s table known as the Tax Incidence Table on Industrialized Products (TIPI). For this reason, the TIPI number indicated in the table’s code shows the tax rate for each model.

Reduction of Tax on Cars with 1.0 Engine

For cars that have a 1.0 engine, the tax was reduced by the Government from 7% to 5.7%. Thus, the total price of the 1.0 car fell by 1.3% compared to the previous price. On the other hand, manufacturers end up making adjustments that, unfortunately, compromise the visibility of this difference within dealerships.

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IPI Reduction 2022

Engine Type	Current IPI Rate	Previous IPI Rate	Reduction
Displacement up to 1,000 cm3	5.7%	7%	1.3%
Displacement 1,000 cm3 to 2,000 cm3 (flex)	8.9%	11%	1.8%
Displacement 1,000 cm3 to 2,000 cm3 (gasoline)	10.6%	13%	2.4%
Above 2,000 cm3 (flex)	14.7%	18%	3.3%
Above 2,000 cm3 (gasoline)	20.4%	25%	4.6%

Source: Federal Government

According to the Special Secretariat of the Federal Revenue, this new measure will result in an impact of R$ 19.6 billion this year. The proportional reduction of tax rates enables productivity growth, a lower inter-sectoral tax gap, and greater efficiency in resource use. This small decrease in tax on car prices is an effort to boost sales, which are in constant decline in Brazil.

With this in mind, in January of this year only 116,601 cars were sold, while in the same month last year, the number was 162,531, a difference equivalent to 28.2%. The volume of cars registered in the first month of 2022 compared to December 2021 represents a reduction of about 40%.

Electric Car Sales Hit Historic Record, With Significant Progress from Tesla

The market for electric cars has shown constant growth, and in 2021, it had the best performance in history, with a highlight on the Tesla brand in global sales. Based on research from the International Energy Agency (IEA), Felipe Ribeiro reports, in an article for Canaltech that the presence of zero-emission vehicles was 8.57%, more than double the sales recorded in 2020, which was 4.11%. To read this news in full, click here.

IPI on Cars Reduced by 18.5%, Resulting in an Impact of Over 19 Billion Reais on the Federal Government

According to The Government, The Reduction of IPI on Cars Is An Attempt to Boost Sales, Which Fell 40% From December to January

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Reduction of Tax on Cars with 1.0 Engine

IPI Reduction 2022

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IPI on Cars Reduced by 18.5%, Resulting in an Impact of Over 19 Billion Reais on the Federal Government

According to The Government, The Reduction of IPI on Cars Is An Attempt to Boost Sales, Which Fell 40% From December to January

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