Vice President Geraldo Alckmin of Brazil unveiled government initiatives on Sunday to grant tax benefits to companies, encouraging them to invest in new machinery and transportation. These measures align with President Luiz Inacio Lula da Silva’s strategy to “re-industrialize” Latin America’s largest economy, which is striving to recover industrial output levels from the pre-pandemic era, currently more than 18% below its 2011 peak.
The Lula administration aims to foster industrialization by promoting “green” projects, emphasizing flex-fuel and electric vehicles, renewable energy, and biofuels.
During a press conference, Alckmin introduced the first measure, the “Mover” program, through an executive order. This program reduces income taxes for transportation companies, encouraging investments in new technologies, research, and development.
Alckmin, who also serves as Lula’s Minister of Development and Industry, highlighted that the program is projected to provide benefits totaling 3.5 billion reais ($721.34 million) next year, gradually increasing to 4.1 billion by 2028. Stressing the urgency to address low investment and productivity, Alckmin stated, “This will attract investments to Brazil.”
While an executive order ensures immediate implementation, it necessitates approval from Congress within four months.
Lula’s second measure involves a bill sent to Congress proposing 3.4 billion reais in income tax benefits for companies aiming to renew their machinery. Termed the “accelerated depreciation project,” this initiative seeks to expedite the depreciation process, typically spanning 20 years, to a two-year timeframe.
Vice President Alckmin mentioned a potential “second phase” for the program in the future, though details were not provided.
To offset revenue losses resulting from these tax benefits, Alckmin outlined that import taxes, including those on electric vehicles imported from abroad, would be utilized. The comprehensive approach aims to stimulate corporate investments, rejuvenate Brazil’s industry, and contribute to the broader economic revitalization.
