Brazil approves accelerated depreciation regime and new electric‑vehicle import tax exemption

Brazil's Chamber of Deputies Industry, Commerce and Services Committee approved a bill establishing a Special Accelerated Depreciation Regime (Reda). Companies under the real‑profit tax regime can deduct 50% of the purchase price of new machines and equipment in the year of acquisition and the remaining 50% in the following year, reducing the taxable base for IRPJ and CSLL. The measure applies to purchases made from 1 January 2026 for industrial and agro‑industrial uses and includes a cap to prevent deductions exceeding the equipment cost. Deputies Diego Garcia and Beto Richa highlighted that the regime improves cash flow and supports modernization and job creation.

Separately, the Lula administration introduced a quota that removes import duties on disassembled (CKD) and semi‑knocked‑down (SKD) electric vehicles. The quota, worth US$463 million, has not yet been operational because the required implementing decree has not been published, so the exemption cannot be used. Until the decree is issued, CKD units face a 14% duty and SKD units a 35% duty. The policy, criticised by domestic automakers, unions and parts‑sector groups, is seen as favouring Chinese manufacturer BYD, which is the main importer of electric vehicles.

Both measures aim to boost Brazil's industrial competitiveness through tax incentives.