Opinion – Time Machines: Automakers have billions of receivables in tax credits

Tax credits owed to companies are an anomaly of the Brazilian tax system. Roughly speaking, they are equivalent to an income tax refund: the taxpayer who overpaid is entitled to receive a partial refund. However, when there is a CNPJ in place of the CPF, this money does not simply return.

Anfavea (association of automakers) says that the amounts receivable withheld in the state of São Paulo already total R$ 5 billion – and this refers only to car manufacturers.

There is much more money held back, as this estimate does not include federal credits generated during the Inovar-Auto program, which ran from 2012 to 2017, nor debts from other states that have active production lines.

Paulo Gomes, technical director of the federal tax team at BMS Projetos & Consultoria, says that automakers lose money because they cannot keep up with changes in legislation, which was created more than 50 years ago.

Those who profit from this lack of knowledge are companies specialized in recovering these credits – such as BMS itself, which serves 18 vehicle manufacturers.

A large part of the amount owed to automakers comes from recalculations on PIS/Cofins, in addition to taxes related to the labor area that allow partial reimbursement.

According to Tatiane Allem, commercial director at BMS, R$ 300 million was recovered throughout 2021 without the need to resort to lawsuits.

Pursuing this money has become important for automakers in times of loss of profitability and greater difficulty in getting money from headquarters.

Brands are turning their investments towards electrification in European, Asian and US markets. There is therefore less capital to be invested in South America.

The problem of tax credits became known when Audi announced the decision to stop producing cars in Brazil in 2021. The announcement made in September 2020 linked the resumption to the receipt of a debt generated during the Inovar-Auto.

The plan established an import quota system. Anyone who exceeded the limit would have to pay a 30% surcharge on top of the IPI (Tax on Industrialized Products).

But there was a promise of reimbursement to companies that invested in national production. In theory, the federal government would refund the extra fee to anyone who bet on factories in the country.

The assembly lines were activated, but the money did not come back. In the end, Audi chose to resume manufacturing activities in São José dos Pinhais (PR), which will happen soon. The German manufacturer is still negotiating the receipt of the debt, which exceeds R$ 200 million.