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GM calls for changes in the text of tax reform as conditions for investment in Brazil

General Motors (GM) is nearing one hundred years of operations in Brazil. And perhaps the brand will not be celebrated with a new round of investment in the country in 2025. The company has conditioned these contributions to the removal of clauses in Article 19 of the PEC tax reform that provide tax incentives to automakers located in the centre-west, north and north-east of the country. It is also awaiting government definitions for incentives for electric cars, which are the automaker’s main bet in its global portfolio. The company’s current investment cycle in the country ends in the centenary year and comprises R$10 billion. The automaker plans to open a new cycle, but the decision is subject to these political factors.

Fabio Rua, Vice President of Communications, Government Relations and ESG at GM South America, explains that paragraphs 3, 4 and 5 of Article 19 of the reformed PEC expand existing tax incentives and benefit certain companies, which are part of the Isonomy. It is against the principle. State and hindrance to free competition. In this sense, GM, Toyota and Volkswagen issued an open letter on November 8, defending the review of these points in the tax reform and asking to exclude these paragraphs from Article 19 of the proposal.

The companies, which have a total of 11 factories in the south and southeast regions of the country, claim the incentives distort the competitiveness of the sector, which spans several states. Created in 1997 to encourage automotive production in those regions, the incentive has already been extended several times and was scheduled to expire in 2025, but it could be extended once again in the tax reform PEC. Although they did not mention details of the measure in the open letter, the three manufacturers said the incentive for tax credits on industrial products (IPI) distorts competitiveness in the sector. In the published text, the three companies have called for the “immediate exclusion” of such paragraphs from the tax reform, saying that the measure “represents a blow from a technological and environmental point of view, as well as a tax amnesty that is harmful. Is “Development of the country”

“The Brazilian market is promising and a focal point for investment (for GM). This measure (tax incentives for some companies) delays, for example, the electrification process of automakers”, Fabio Rua said during the launch event of GM’s new Silverado pickup truck, which took place between November 8 and 9. The event was held at the paradisiacal hotel Estancia Caiman – Farm in Miranda, in the Pantanal of Mato Grosso do Sul. The executive also said that the tax reform does not benefit electrification and that there are few efforts to encourage this technology in Brazil. He criticized the federal government for doing so. “They also want to increase the import tax on electric cars. This also slows down the sector. What would be interesting would be to impose zero import duty”, he said.

GM announced that it plans to become carbon neutral in its products and global operations by 2040 and committed to setting science-based targets to achieve carbon neutrality. The main condition for this is electric car. The company will invest US$35 billion globally in the development of 30 new electric vehicles by 2025, ushering in an even more advanced generation of EVs already equipped with the Ultium platform.

According to Paula Saiani, product marketing director at GM South America, two electric SUVs in important categories for Brazil have been confirmed: “the Blazer EV and the Equinox EV, which will arrive here in 2024”. These will be assembled at a GM unit in Mexico. “This goal (decarbonization) is a commitment from GM and a requirement for our suppliers,” he concluded.

* The reporter traveled at the invitation of Chevrolet

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