Bank of America researchers reported that Brazilian vehicle rental operators will largely avoid material sales-tax burdens until the mid-2030s, despite an eventual rise in effective sales tax rates to an estimated 8-9% under the country’s planned reform.
At present, major car rental firms such as Localiza and Movida face a near-zero effective tax burden. Vamos, which operates a fleet of trucks, currently endures an effective tax rate of roughly 1%. Under the broader tax-reform framework, Bank of America projects the effective sales tax for vehicle rental companies will settle in the long run at approximately 8-9%.
The gap between today’s tax incidence and the projected long-run rate is explained by a transition regime introduced by the government in January. That mechanism defers much of the reform’s impact: car rental firms are expected to pay effectively no sales tax until 2035, while Vamos is expected to remain free of this tax until 2033.
Complementary Law 214/2025 establishes a transition regime for value-added taxation on fixed assets acquired in the period from 2026 through 2032. Under those rules, CBS is triggered only when a vehicle is sold at a price above its acquisition cost. Meanwhile, IBS applies only to the portion of the sale price that exceeds the acquisition cost multiplied by a reduction factor. The result is that fleet rental assets held by Localiza would only be taxed after 2033 and by Movida after 2034, while Vamos’ used trucks would remain shielded for the duration of the transition.
Bank of America’s analysis includes pass-through and yield estimates. The analysts estimate pass-through to customers of 15-27% for car rentals. For truck rentals, they model a 0.2 percentage point increase in rental yield, set against a reported rental yield of 2.4%.
The VAT reform itself is structured as a non-cumulative system, enabling corporates to deduct VAT credits paid along the value chain. Bank of America’s calculations suggest this treatment improves the economics of fleet rental relative to ownership: fleet rental becomes roughly 10% cheaper than ownership for corporate clients, with truck rental becoming about 11% cheaper once the reform is in effect.
These changes leave Brazilian rental operators with limited immediate tax exposure while shifting longer-term effective rates higher. The transition design delays fiscal effects for operators and alters corporate calculations about renting versus owning fleets.