IPI reduction should bring price reduction in the automobile sector. Check out all the information in the article below.

Buying a car has not been an easy task for most Brazilians.

New or used, it is a fact that prices have skyrocketed and made many people's dreams something much more distant.

In addition to the market variants that change all the time, our country's tax burden directly contributes to the rise in these prices.

However, there is good news for you who are looking to buy a car.

Yes, they are going to get cheaper soon, and those reductions could reach 25%.

This is all because of the IPI reduction!

Decree No. 10,979, of February 25, 2022, was sanctioned by President Jair Bolsonaro, with immediate effect.

The decree deals with the reduction of the IPI (Tax on Industrialized Products), a federal tax levied and managed by the Union.

IPI is the tax levied on any national or imported item that went through some industrialization process.

Economically, it is known as an extrafiscal tax, which is a tax developed to encourage or discourage economic behavior by the population.

This means that the rate of this tax can be changed to generate economic and social impacts in the country as of the presidential decree.

This type of tax rate reduction is not as uncommon as we might think.

In 2012, then President Dilma Rousseff granted the same benefit to the car sector, lowering the car tax by up to 7%.

This measure kept the market warm at the time, generating a total of 405,000 units sold in August 2012 alone.

The reduction lasted that year from the end of May to the end of December.

The decree provides for two percentage reductions:

However, even though the percentage is fixed for vehicles at 18.5%, in practice the reductions should reach consumers in the range of 25%.

The answer to that question is NO.

Although the tax reduction will bring price reductions to all types of vehicles, these reductions will not be uniform.

This is because the percentage of the rate varies depending on several factors ranging from the type of car, to engine size, energy efficiency and total weight of the car.

The Federal Government differentiates the types of vehicles (hatches, pickup trucks, SUV's) and engine size by the so-called TIPI (Incidence Table of Tax on Industrialized Products).

Therefore, depending on the TIPI number, the amount of tax on a given vehicle changes.

This is the big question asked by most of those who will read this article.

And the question is not that simple.

This is because, as it is a reduction that applies first to industry and then to commerce as a whole, the IPI reductions will only reach the final consumer when new stocks are being delivered to merchants.

Therefore, it is prudent for consumers to wait a little longer to enjoy the benefits of this tax reduction.

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