The state of São Paulo published this Tuesday (11) a decree to maintain the rule for ICMS in operations with the Manaus Free Trade Zone, by not ratifying an agreement approved two weeks ago by the council that brings together the federal government and the secretaries of State farm.
The dispute over this issue has already amounted to more than R$ 10 billion in assessments applied by the São Paulo inspector and confirmed by the State’s Tax and Fees Court.
In sales to São Paulo, companies in the Free Zone must collect the difference in ICMS between what is paid to the government of Amazonas and the São Paulo tax rate. In general, 12% and 18%, respectively.
The government of São Paulo, however, argues that Amazonas grants a discount on the local rate and only charges 1% from manufacturers, who still ask for the recognition of a 12% credit to reduce taxation in São Paulo.
The company that manufactures a motorcycle in São Paulo, for example, pays 18% ICMS. The same product made in the Free Zone would collect 7% ICMS (6% in SP + 1% in AM), if the agreement were ratified by the São Paulo government, taking away the competitiveness of the local industry.
“The decision of the Confaz [Conselho Nacional de Política Fazendária] was very harmful to the federative pact. São Paulo will continue to comply with the Federal Constitution and disallow ICMS credits as a result of a tax benefit unilaterally granted by the state of Amazonas, in the context of the Manaus Free Trade Zone,” he told Sheet Felipe Salto, Secretary of Finance and Planning for the state of São Paulo.
“They are trying to shove this agreement approved by Confaz down our throats as if it were a license to kill, and we are saying that we are within our right not to ratify this agreement, which is what this decree does”, says the São Paulo secretary.
The 2017 legislation that tried to end the tax war and regularize tax incentives determined that it would be necessary to recognize the so-called “drawer benefits”, granted without the knowledge of the other governors.
Amazonas, unlike the other 26 units of the federation, did not validate its tax benefits granted without the authorization of Confaz, because of the constitutional guarantee of the Free Zone. The São Paulo government understands that this exception only applies to internal operations and not to sales to other regions of the country.
Two weeks ago, the proposal was presented at Confaz, exempting the region from submitting the approval of its benefits to the collegiate. São Paulo, Rio de Janeiro and Paraná were defeated in the vote on this proposal. To stop the decision, it would be necessary to have the support of one more state in the Southeast, but Minas positioned itself in favor of the Free Zone.
According to the São Paulo Treasury, the state understands that the agreement cannot interpret the legislation, a matter within the jurisdiction of the Judiciary, and that the necessary unanimity quorum for its approval was not observed.
“For this reason, given the insistence of the state of Amazonas in not regularizing its benefits and to give prior knowledge to all taxpayers in São Paulo, São Paulo had no alternative but to ratify the ICMS Agreement 131/22.”
Created under the military regime, the Manaus Free Trade Zone had the objective of bringing development to the region, with the installation of an industrial center based on federal subsidies to companies that settled there, in return for the lack of infrastructure in the region, which raises the cost of production.
Some studies point out that it did not bring economic advantage to Amazonas in the period, compared to other states in the country.
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