BRASILIA, May 31 (Reuters) – The Brazilian government is
considering slashing a financial tax levied on car loans,
Uallace Moreira, secretary of industrial development at the
Development, Industry and Trade Ministry, said on Wednesday.
The measure, which would zero the tax known as IOF and
unlock credit for vehicle purchases, is under evaluation, but
the government has not made a final decision, Moreira told
Reuters.
Last week, Latin America’s largest economy unveiled a set of
initiatives to boost the automotive sector, including other tax
cuts and additional state-backed funding, arguing that car
manufacturers are going through difficulties due to
high-borrowing costs.
The one-off initiative would last three to 12 months,
Moreira said, with tax rates returning to previous levels once
it ended. The measure would benefit 11 automakers in the
country, representing 33 vehicle models, or around 40% of
Brazil’s auto market.
The IOF tax for vehicle financing has two rates, with a
fixed rate of 0.38% on the total loan amount, and an annual
charge of 3% for individuals.
The program has not yet been put into practice because the
finance ministry has asked for time to prepare budget measures
to compensate for the revenue loss.
(Reporting by Bernardo Caram; Writing by Peter Frontini;
Editing by Leslie Adler)
