National tax incentives to electrify Latin America's fleet
Boosted by pollution and traffic congestion problems, several countries in Latin America have recently announced national strategies for electrified mobility, on top of the existing local and regional incentives.
In March 2018, the Colombian government launched a National Strategy for Electric Mobility. However, last year the government already approved a decree which created fiscal advantages for the import of 46,000 electric and hybrid vehicles over the next ten years. Both will have a reduced value added tax of 5%. EVs and charging infrastructure will also be exempt from import tax, while the import tax for hybrid vehicles will be reduced to 5% until 2027, and 0% after that date.
Ecuador put in place an exemption from import taxes for EVs of under $40,000, and an exemption from value added tax and ICE for EVs of under $35,000. Currently, a bill is being drafted to introduce additional benefits, such as a 0% value added tax for light cargo vehicles, which at the moment already applies for EVs and light cargo HEVs of $35,000 and above.
In Peru EVs are exempt from ISC, and in March 2018 Raúl García Carpio, vice-minister of Energy of the Ministry of Energy and Mines (MEM) announced work on a legislative framework that has to support the purchase and use of EVs, with a system of subsidising EVs which should be ready by the end of July 2018.
In January the Chilean government announced a renewed national strategy for electric mobility aimed at electrifying 40% of the private car fleet by 2050. In May the Ministry of Energy launched Ruta Energetica 2018-2022, with among others the objective to 10-fold the current number of EVs. Specific strategies are announced to be developed in the second half of 2018.
In May 2018, the Argentinian government launched a methodology to develop a National Strategy for Electric Mobility.
In the beginning of July, the Brazilian government announced the presidential signing of ROTA 2030, the new automotive strategy of the country, in which EVs and HEVs will benefit from a cut in the Tax on Industrialised Products (IPI). Nowadays the IPI is 25% for EVs and 13% for HEVs, which would decrease to an amount between 7% and 20% depending on the type of vehicle.
And while South American countries launch national strategies, Central-American countries make EVs fiscally attractive as well. “In Guatemala, hybrid and electric vehicles have a 5% tax upon initial vehicle registry while non-electric vehicles pay a 15%-20% rate,” tax partner for international accounting and business advisory firm BDO Erwin Boumans told Global Fleet. Further on, in Mexico new EVs are exempt from the federal tax ISAN, and in most states they are exempt from tax on car ownership, Tenencia.