By Bernardo Caram and Marcela Ayres
BRASILIA (Reuters) – The Ministry of Economy is preparing a decree with the objective of enforcing the 35% cut in the rates of Tax on Industrialized Products (IPI) that was announced in April, but ended up partially suspended by the Federal Supreme Court (STF). ), three sources with knowledge of the matter told Reuters.
According to one of the authorities, who spoke on condition of anonymity, the ministry decided to issue a new decree to organize the situation after the Supreme Court’s decision and provide clarity to the private sector about the collection of the tax.
The text is being prepared at the Ministry of Economy and will still undergo analysis by the Civil House. After editing, it must also be evaluated by the Supreme Court, since there has not yet been a final decision on the matter in the Court.
“The final cut will be 35% and the Manaus Free Trade Zone will continue to be preserved,” said the source, noting that the tax reduction should apply to around 4,000 items produced in the country.
Technicians from the Ministry of Economy have been arguing that the decision of Minister Alexandre de Moraes, of the STF, generated legal uncertainty and did not make clear the universe of products covered by the cut, causing companies to have different interpretations of the measure and end up collecting the tax from distorted shape.
Initially, the government reduced IPI rates by 25% in February, in a move to contain inflation and give the industry a boost. The measure contradicted companies operating in the Manaus Free Trade Zone, which are exempt from paying IPI and can generate tax credits equivalent to the incidence of the tax to deduct from the payment of other taxes.
At the end of April, the government extended the IPI cut to 35% through a new decree, but announced that products corresponding to 76% of the Free Zone’s revenues were being included in an exception list, not being affected by the additional tax reduction.
The following month, Moraes suspended the effects of the IPI cut for products manufactured by the Free Zone, at the request of the Solidarity party. In the decision, Moraes argued that the measure could affect the competitiveness of the industry installed in Manaus.
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