A new decree was issued this Wednesday; Economy assesses that 35% reduction will apply to most products in the country
The Ministry of Economy defined again the list of products that will not have the reduction of the IPI (Tax on Industrialized Products). The objective was to preserve the items manufactured in the Manaus Free Trade Zone. The quantity rose from 61 to 170 products, which represents most of the goods produced in the region.
The list includes items such as a cigarette lighter, battery charger, razor blade, cash register, wristwatch, ballpoint pen and dishwasher. Even with the limitation to 170 products, there are another 4,000 products benefiting from the 35% tax cut in the rest of the national territory. Here’s the intact (1 MB).
Free Zone products are exempt from IPI. That is, they do not pay taxes, unlike the rest of Brazil. It is a region where industries have tax incentives to set up. With the reduction of the tax burden across the country, the region becomes less attractive. Moving production from Manaus to the main consumer markets is expensive.
This is the 4th version of the decree. The document meets a determination of the STF (Federal Court of Justice). In May, Minister Alexandre de Moraes suspended the 35% tax reduction for products also manufactured in the Manaus Free Trade Zone.
The magistrate accepted the Solidarity party’s request because the measure reduces the region’s competitiveness.
After Moraes blocked the decree in May, the government issued another text. It was published at the end of July. The governor of Amazonas, Wilson Lima (União Brasil), asked to suspend again.
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 the preparation of beverages, whose rate recomposition will generate an estimated waiver of R$ 164 million in 2022, R$ 715 million in 2023, and R$762 million in 2024.
GOVERNMENT WANTS TO REMOVE IPI
The executive secretary of the Ministry of Economy, Marcelo Guaranys, reinforced that the government wants to end IPI, but that depends on tax reform.
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