Brazil’s Tax for Imported Vehicles Rolls Back 30% image

Automakers who invest in Building assembly plants in Brazil will benefit from an ease of tax increase charged on imported cars, beginning with March 2012.

Last month Brazil increased by 30% the tax on Chinese made cars over the course of 2012, to stem a surge of imported cars being sold in Latin America’s largest economy. It seems that Brazil has somehow backed off its plans in order to protect its domestic market. The companies likely to take advantage of this decision include Anhui Jianghuai Automobile Group Co from China and Germany’s Bayerische Motoren Werke AG, which have already made public their plans to invest in Brazil.

“The tax was used as an emergency brake, now we will lower it,” Mauro Borges Lemos, head of the Brazilian Industrial Development Agency, said in an interview in Brasilia yesterday. “It’s an incentive to speed up investments.”

Since Brazil s the 5th biggest car market in the world, it is also a main target for Chinese automakers who want to expand oversea. Jac Motors plans to double annual sales in Brazil by 2015, building a $600 million factory in the northeastern state of Bahia this year. BMW, who stopped its expansion in 2011 due to the tax increase, declared it would build a plant here only if the government eases enforcement of the tax increase.