The government edited this Saturday (30) a decree that determines the 35% reduction of the IPI (Tax on Industrialized Products) on products that are not manufactured in the Manaus Free Trade Zone.
The measure comes after a decision by Minister Alexandre de Moraes, of the Federal Supreme Court (STF), on the subject.
In February, the government had cut the IPI by 25%, and increased the cut to 35% in April. Moraes suspended the expansion for goods that are produced in the Free Zone, at the request of the Solidarity party, which claimed that the reduction would defy the region’s constitutional protection.
ZFM producers do not pay IPI and, therefore, would not be affected by the linear tax cut. Its competitors, however, would have relief in the tax burden, which would reduce the competitiveness of the region.
“Without the existence of compensatory measures for production in the Manaus Free Trade Zone, [a medida] drastically reduces the hub’s comparative advantage, thus threatening the very persistence of this constitutionally protected differentiated economic model,” Moraes said in the May decision.
With the new decree, the government hopes to make it possible to reduce the IPI by 35% for most products manufactured in the country. “By detailing the products that will have their rates changed, the new edition clarifies the correct application of the IPI on the invoicing of industrialized products, ensuring legal certainty and the advancement of tax relief measures”, says the Ministry of Economy.
The text also provides for the additional reduction of the IPI, from 18% to 24.75%, for automobiles. The increase in this percentage equates the tax reduction for the automotive sector with that granted to other industrialized products.
In addition, the government states that the text provides for the preservation of the effective production of the Manaus Free Trade Zone, seeking to guarantee the competitiveness of the area even with the tax reduction.
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