The Federal Government enacted a 25% reduction in the Tax on Industrialized Products (IPI, in the Portuguese acronym) for most domestically-produced and imported industrialized goods. It seeks to promote economic recovery in line with budget constraints.

The Federal Government, through Decree n.º 10.979/2022 (amended by Decree n.º 10.985/2022), enacted a 25% reduction in the Tax on Industrialized Products (IPI, in the Portuguese acronym) applied to most domestically-produced and imported industrialized goods. According to the Ministry of Economy, the reduction stems from the 2021 increase in tax revenue for the Federal Government, enabling the cutback as a means to promote consumer demand and industrial recovery without compromising the government’s budget.

As provided in the first article of the decree, the 25% IPI reduction comprises all industrialized products subject to the tax, except the passenger automobiles in heading “87.03” of the IPI classification, which are subject to an 18.5% reduction, and tobacco-based products (in chapter 24 of the IPI classification), which are not covered by the reduction. Specific provisions of the IPI tax, detailed in the Annex of the decree, were also revised. According to the Federal Government, the reduction accounts for a BRL 19.5 billion cut in tax revenue for 2022, 291 million of which are specific to the automotive industry.

Additionally, a new IPI classification comes into force on May 1, enacted by Decree n.º 10.923/2021.