IPI – Manufacturer/ Importer Tax
Standing for Imposto sobre Produtos Industrializados, IPI is applied to national and foreign products that have been modified in some industrialised way for consumption or use.
IPI is a federal tax paid by the local manufacturer or by the importer of the goods, and the rate is based on the products NCM code. This can be anywhere between 0% to 300%
Manaus Free Trade Zone
The Manaus free trade zone has attracted more than 600 companies, including many of the world's largest enterprises, to establish production in some less than perfect production environment states like Acre, Amazonas, Roraima and Rondônia. The area includes big international companies like Nokia, Honda, Pepsi, Coca Cola, Panasonic, Harley-Davidson and many more.
The initial idea of the Manaus Free Trade Zone came in 1951 from Deputy Francisco Pereira da Silva. For a long time, the project had very little national backing or credibility and started life in a single warehouse rented from Manaus Harbour, in the Port of Manaus.
President Castello Branco signed a law redefining the Manaus Free Trade Zone in more concrete terms in 1967. The new law gave the Manaus Free Trade Zone a radius of 10,000 km with an industrial centre and an agricultural centre; it also created the base for the Manaus Free Trade Zone Superintendence (SUFRAMA).
SUFRAMA is a Public Administration agency affiliated to the Ministry of Development, Industry and Foreign Trade (MDIC). Besides promoting development strategies for Western Amazon, its primary goal is to manage and control the fiscal incentives granted to the companies established in the Manaus Free Trade Zone. Thus, it has the role of an investment-promoting agency for the area.
Manaus Free Trade Zone – Fiscal incentives
There are several highly beneficial incentives in the Manaus Free Trade Zone. The following show these benefits:
- 88% reduction in Import duty on the inputs of industrial goods
- For electronic products the Import Duty is reduced proportionally to the local added value (VAT)
- No tax on industrialized products (IPI)
- 75% reduction on the Income tax. Exclusively for reinvestments
- 0% COFINSfor incoming goods and inter-industry internal sales
- 0% PIS for incoming goods and inter-industry internal sales
In addition, businesses can receive a 55% - 100% credit on the ICMS rates if they demonstrate contributions to the funds for the support of higher education, tourism, research and development (R&D) amongst others.
Other Incentives in the Manaus Free Trade Zone
- This is a special system that allows the storage of foreign and national goods that are under tax control, with suspension of the payment of the federal and state taxes. The goods may stay there for a one-year period, extendable to a period of no more than five years.
Land for Industrial purpose
- Large areas with real estate properties that are appropriate for the establishment of ‘industrial enterprises’, sold at nominal prices. The incentive price is BRL 1.00/m2, it may be required a minimum of 30% of occupation 5 years after the project was approved.
In order to obtain approval of industrial projects within the Manaus Free Trade Zone companies will be evaluated individually based on the following parameters:
- Execution of Basic Productive Process
- Local job creation, with the concession of social benefits to the workers
- Product and standards of production compliance.
- Workforce training in order to obtain growing levels of productivity
- Profit reinvestment in the region
- Investment for scientific and technological development (R&D)
- The current status of Manaus Free Trade Zone
- Currently more than 60% of all trading within the Manaus Free Trade Zone is related to electronics and motorcycles, with chemicals and metallurgy as two other significant industries.
It is estimated that 100 000 jobs in western Amazonia are directly related to the Manaus Free Trade Zone with an additional 400 000 indirectly related jobs outside the Free Trade Zone.
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