One of the latest acts of the Brazilian Administration in 2023 was the creation of the Green Mobility and Innovation Program – the Mover Program, by means of Provisional Presidential Decree No. 1,205 of December 30, 2023.
The Program expands the requirements for the sustainable low-carbon development of the automotive fleet, and it stimulates the production of new technologies in the areas of mobility and logistics, based on the principles defined under the prior Rota 2030 Program.
It establishes mandatory requirements for the sale of new vehicles produced in the country and for the importation of vehicles. It also develops a system of incentives for carrying out research and development activities for the mobility and logistics industries, a system for non-produced auto parts and the Brazilian National Industrial and Technological Development Fund (FNDIT), to be set up and managed by the Brazilian Development Bank (BNDES), under the coordination of the Ministry of Industry, Foreign Trade and Services (MDIC).
Among the new features is the measurement of carbon emissions "from well-to-wheel", i.e. considering emissions throughout the cycle of the energy source used. There will be an additional requirement for recycled material in the manufacture of vehicles, with a minimum rate of over 50%. Another innovation is that, as of 2027, the complete carbon footprint of vehicles sold in Brazil will be measured, in a classification known as "cradle-to-grave".
As a way of ensuring a "green taxation", a system of rewarding or penalizing the collection of IPI (Brazilian Tax on Industrial Products) was instituted, based on indicators that take into account the source of energy for propulsion, energy consumption, engine power, recyclability, structural performance, and assistive technologies for driving. The rates will be defined by presidential decree in the coming months.
In order for companies to meet the program's mandatory requirements, Mover will grant tax incentives in proportion to investments in R&D (Research and Development). This means that companies will have to spend between 0.3% and 0.6% of their revenue, and each Real invested will entitle them to financial credits of between R$ 0.50 and R$ 3.20. These credits can be used to deduct any taxes administered by the Brazilian Internal Revenue Service.
The Mover Program also aims to attract industrial plants from other countries to Brazil. These companies will receive a financial credit equivalent to the import tax levied on the transfer of production cells and equipment, as well as IRPJ (Corporate Income Tax) and CSLL (Social Contribution on Net Profits) rebates for the export of products and systems made in Brazil.
Import tax on the import of parts and components with no national similar may be reduced, provided that manufacturers invest 2% of the total imported in research, development, and innovation projects in "priority programs" in the supply chain.
The Mover Program is part of the neo-industrialization policy and it aims to contribute to technological development, global competitiveness, integration into global value chains, decarbonization, and alignment with a low-carbon economy in the productive and innovative ecosystem of cars, trucks, and their road equipment, buses, chassis with engines, self-propelled machinery, and auto parts.
The Provisional Presidential Decree took effect immediately on January 1st, 2024, but it still needs to be analyzed by Congress within 120 days so that the text does not lose its validity. This period will be counted after the parliamentary recess at the beginning of February.
It is also expected that decrees and ordinances will be issued further detailing the regime.
