Some Latin American governments and entities have implemented a series of fiscal and non-fiscal incentives aimed at promoting the purchase of electric vehicles, such as tax exemptions, discounts on vehicle ownership taxes, toll reductions, and unrestricted circulation.
In this summary, Mobility Portal Latinoamérica shares some of the main measures adopted in Argentina, Brazil, Chile, Costa Rica, Colombia, Ecuador, Guatemala, Mexico, and Uruguay.
While the country lacks legislation for electromobility, it’s essential to mention the Automotive Industry Promotion Law, which provides fiscal benefits such as exemption from export duties until December 31, 2031.
The decree has sparked controversy since it does not focus on the purchase of electric vehicles to facilitate the energy transition but prioritizes their manufacturing and export.
Among its objectives, the law aims to promote an export-oriented profile for better international integration, encourage the development and transfer of new technologies, and drive the adoption of new propulsion technologies such as hybrid, electric, hydrogen, gas, and biofuels.
So, what are the benefits that an electric vehicle buyer have the access to in Argentina?
They are exempt from registration fee payments, depending on the municipality where the car is registered, as it is subject to local regulations.
In this territory, electric vehicles are exempt from the Industrialized Products Tax (IPI) and the Tax on Circulation of Goods and Services (ICMS).
Additionally, there is a program of fiscal incentives for clean technologies: the program provides fiscal incentives to companies that invest in clean technologies within the country.
In 2015, the government promoted a zero tariff subsidy for the import of electric cars.
This initiative has contributed to making the country the largest market in Latin America with a fleet of 126,504 electric and hybrid vehicles, 40% of which were registered in 2022.
However, recently, the Ministry of Development, Industry, Trade, and Services (MDIC) announced the return of the import tax on electric, hybrid, and plug-in hybrid vehicles purchased outside the country.
The resolution establishes a gradual resumption of rates starting in January and creates initial quotas for tax-exempt imports until 2026, when the rate will reach 35%, the same as applicable to combustion vehicles.
Chile is considered one of the leading countries in electric mobility, primarily for being a pioneer in the electrification of public transportation.
Under the Energy Efficiency Law, the Ministry of Energy issued a resolution modifying the durability life and accelerated depreciation of electric, hybrid, and zero-emission vehicles.
Thus, the normal durability of these cars, previously set at 7 years, has been reduced to 3 years. The accelerated depreciation, formerly 2 years, is now reduced to 1 year.
It is noteworthy that in Chile, hydrogen is defined as a fuel and can be regulated by the Ministry of Energy.
Furthermore, within the framework of the Electric Energy Storage and Electromobility Law, the government proposes a temporary reduction in the circulation permit for electric vehicles so that its cost is similar to equivalent vehicles.
Regarding electric vehicles as energy storage equipment, they are allowed to inject energy into the grid and be remunerated, increasing the profitability of their acquisition.
Among its main regulations, this country has a Law of Incentives and Promotion for electric transportation.
This law includes a 100% tax exemption for electric vehicles with a cost up to US$30,000.
On the other hand, vehicles priced between US$30,000 and US$45,000 pay 50% of the sales tax, 75% of the selective consumption tax, and are not subject to the customs value tax.
An important benefit is that electric vehicles are not subject to the vehicle circulation restriction in the metropolitan area and are exempt from parking meter fees.
Finally, the “Marchamo,” the tax that allows the right of circulation in Costa Rica, was modified in recent months:
For electric vehicles that entered the country in 2022 or 2023, the law reform will be applied, resulting in a 60% exemption.
In contrast, vehicles that entered Costa Rica before 2022 will have the percentage applied according to the year they entered.
One of the main benefits for those who purchase an electric vehicle is that no tax rate can exceed 1% of the commercial value of the purchase.
In addition, similar to other Latin American countries, electric vehicles are exempt from circulation restrictions throughout the national territory and have access to preferential public parking.
This initiative stipulates that 2% of the total parking spaces should be allocated to electric vehicles.
In the same vein, electric vehicle owners receive a 10% discount on SOAT insurance premiums and reductions in technical-mechanical inspections.
Under the protection of Law 1964 of 2019, municipalities in Colombia can develop their own incentives, such as discounts on registration or local vehicle tax, special rates in parking lots, or tax exemptions.
Electric vehicles are exempt from Value Added Tax (VAT), Excise Tax (ICE), and tariffs.
Additionally, 100% electric cars are not subject to circulation restrictions and are not charged for public parking.
In this case, they also have the Electric Mobility Incentives Law. Some key points:
Hydrogen vehicles, for any use, imported, assembled, or produced in Guatemala, are exempt from import VAT and the First Registration Tax (Iprima) for up to 10 years.
For local VAT, it is only for the first sale or transfer of ownership. In the first five years, the exemption is 100%, and then gradually decreases.
In the case of hybrid vehicles, the exemption is only for Iprima, applied in the same way, with a gradual reduction of the benefit.
The Vehicle Circulation Tax will have a 100% exemption for the current year’s units and will decrease by 20% based on age, up to the model of the fifth year before the current year.
While Mexico is not known for promoting benefits when buying an electric vehicle, one of the most significant fiscal incentives it offers is through the Income Tax Law.
Regarding electric vehicles, it includes a deduction of up to $250,000 Mexican pesos on the original investment amount. Conventional vehicles only have access to a maximum of $175,000.
In 2020, a decree was published amending the General Import and Export Tax Law.
Through this, new electric vehicles are exempt from paying tariffs, while used ones have a series of reductions.
Vehicle models with hybrid or electric systems do not pay for vehicle verification.
On the other hand, in states where there is a tariff, electric vehicles are exempt from paying vehicle ownership tax.
An example of this can be seen in the State of Mexico, where this fee is not paid during the first five years. Once that period has passed, it is paid with a 50% discount.
Moreover, they are exempt from the Environmental Verification, a vehicle verification that involves semiannual emission checks and exemption from the “Today I don’t drive” program.
This country does not have a specific electric mobility strategy, but it does have a series of incentives implemented as public policies.
A noteworthy measure is the reduction of the Internal Specific Tax (IMESI) for hybrids and electric vehicles.
Electric vehicles have a 0% IMESI rate compared to 115% for diesel and gasoline vehicles, which range from 23% to 46%.
In addition, certain categories of electric vehicles pay lower rates for the Vehicle License Fee.
Those with a market value not exceeding $100,000 pay a fee at a rate of 2.25% of the average market value.
In this regard, taxis and electric motorcycles are fully exempt.
Another interesting point is that, since September 2020, the Investment Promotion Law provides benefits to projects that include electric utility vehicles with a battery density equal to or greater than 100 Wh/kg.
This contributes to reducing investment costs by a minimum of 35% through income tax exemption.
Furthermore, the Ministry of Industry, Energy, and Mining of the Republic (MIEM) grants Energy Efficiency Certificates.
Electric vehicles receive additional rewards through a financial benefit ranging from 3% to 30% of the investment.