The Federal Supreme Court (STF) Minister Alexandre de Moraes revoked on September 16th the injunction, signed by him in early August, which suspended the 35% reduction in the rate of the Tax on Industrialized Products (IPI).
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The suspension had been determined because the list of products included in the tax reduction included several items that are also produced in the Manaus Free Trade Zone. By lowering the general tax level for other industries in the country, the decree reduced the competitiveness of companies located in the Free Trade Zone. The minister’s decision brings back into force the decree issued by President Jair Bolsonaro (PL), which allowed the IPI reduction only for products that do not compete with those of the Manaus Free Trade Zone.
Manaus Free Trade Zone
The Manaus Free Trade Zone (ZFM) is a tax benefit zone that was officially established in 1967 in the city of Manaus, as the name implies, in the state of Amazonas, in order to develop local industry, trade and agriculture in a region relatively isolated from the urban centers of the country and with serious logistical and supply problems. Besides the IPI exemption, local companies also have tax benefits related to: importing, exporting, financial operations, the State Tax on the Circulation of Goods and Services (ICMS), IPTU (property tax), the operating license fee, and the cleaning and public conservation service fee (the latter 3 are municipal), among others. Today, the region is not restricted only to Manaus, other states in the North are also part of the ZFM. The region concentrates factories for home appliances, vehicles, motorcycles, bicycles, TVs, cell phones, air conditioners, computers, and beverages, among other products.
