Brazil’s Tax Breaks Aim to Boost Auto R&D, Output

Brazil intends to give tax breaks to automakers for producing safer, more fuel-efficient vehicles especially if they design and build those models in Brazil.

The government says the goal of its four-year plan is to create more jobs in the auto industry, which accounts for one-fifth of the country's economic output. Officials contend that Brazil which is the world's fourth-largest auto market by sales should rank fourth in vehicle production instead of seventh.

The country has bolstered its domestic auto market since May by giving carmakers break on industrial taxes. The program is set to end on Oct. 31.

Carmakers can avoid a jump in those taxes by sourcing more parts in Brazil and neighboring countries and investing more in local engineering and research. Brazilian officials say the program will boost auto investment beyond the $22 billion that carmakers already have committed to spend over the next three years.

Automakers also can earn tax breaks by offering safety systems such as stability control that are not required by law.