The Jair Bolsonaro government (PL) published a decree this Wednesday (24) in which it shields goods manufactured in the Manaus Free Trade Zone from reducing IPI (Tax on Industrialized Products), with the aim of unlocking a 35% cut for other products.
The measure seeks to serve Minister Alexandre de Moraes, of the STF (Supreme Federal Court). Mentioning concerns about the industrial hub, the magistrate prevented Minister Paulo Guedes (Economy) from effecting a linear cut of 35% of the IPI throughout Brazil.
The Manaus Free Trade Zone has as one of its differentials the exemption from IPI on goods produced there and, with the reduction of the tax across the country, this advantage would decrease.
The Ministry of Economy states that the new decree “guarantees a 35% reduction in the Tax on Industrialized Products for most items manufactured in Brazil and, at the same time, preserves the competitiveness of products from the Manaus Free Trade Zone”.
The folder also says that the measure complies with a court decision and ends the legal uncertainty of the national productive sector.
According to the Ministry of Economy, a total of 170 products manufactured in the Manaus Free Trade Zone will have their IPI tax rates preserved — more than what was planned by the government before Moraes’ decisions.
“In this new decree, in addition to the 61 previous products, we add another 109 products. In total, we will have 170 products whose rates remain at the original level since the first reductions in February this year”, detailed the Special Secretary for Productivity and Competitiveness, Alexandre Ywata.
According to him, the new version of the decree protects “all relevant production” in the region, which corresponds to a percentage close to 100%.
Among the items that are outside the 35% IPI cut, the decree includes soda syrup, lighter, battery charger, razor blade, cash register, wristwatch, ballpoint pen and dishwasher.
According to the government, the measure is fiscally neutral in relation to products manufactured in the Manaus Free Trade Zone, with the exception of concentrate for making beverages. In this case, the recomposition of the rate will generate an estimated waiver of BRL 164.27 million in 2022, BRL 715.40 million in 2023, and BRL 761.74 million in 2024.
As for the fiscal impact of the measure, Ywata said the amount is still being estimated. “We are reimbursing the rate of another 109 products, with this, we will possibly have a reduction of this impact of R$ 15.6 billion [total estimado no decreto anterior]a lower value that we are still calculating”, he said.
This is the fourth consecutive decree that deals with the reduction of the IPI, in the midst of STF decisions on the subject.
“The decree is in its fourth version, precisely because of the decisions coming from the Supreme with the interests of the Manaus Free Zone. economy with reduced taxes”, said the Executive Secretary of the Ministry of Economy, Marcelo Guaranys.
In February, the government reduced the IPI by 25%. In April, it increased the cut to 35%. Moraes did not allow the expansion to include goods produced in the Free Zone, at the request of the Solidarity party and citing concern for the region.
The government then published a new decree keeping the IPI reduced by 35%, but excluding 61 products manufactured in the Manaus Free Trade Zone. Even so, the STF minister suspended the effects of the new measure.
According to Moraes, the same reasons of unconstitutionality that supported the granting of the previous precautionary measure were maintained.
The IPI cuts are defended by Guedes with the justification that it is necessary to return the gains in federal revenue to the population in the form of tax reductions.
On Tuesday (23), the minister canceled a meeting he would have with businessmen at the headquarters of Abimaq (Brazilian Association of the Machinery and Equipment Industry) and justified his absence by mentioning a commitment he would have in BrasÃlia to unlock the reduction of the IPI.
The justification drew attention because the return ahead of schedule took place on the same day as a Federal Police operation authorized by Moraes that targeted Bolsonarista businessmen.
“The reduction is important, since we have always considered a tax such as the IPI inconceivable on manufacturing. It is one thing to pay tax when buying a product, but paying for having produced that item is terrible. Minister Paulo Guedes bought this flag, which makes the most competitive goods and the consumer will buy cheaper goods”, evaluates the executive president of Abimaq, José Velloso.
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