March 10, 2022

09:03

Gabriel Abreu – Cenarium Magazine

MANAUS – Governor Wilson Lima met with President Jair Bolsonaro and the Minister of Economy, Paulo Guedes, on Wednesday, 9, to define changes in the Federal Decree 10.979/2022 that reduced the Tax on Industrialized Products (IPI) by 25% throughout the country. The act will be reissued to preserve the competitiveness of industries installed in the Manaus Free Trade Zone (MFTZ).

“We had a very productive meeting, with the presence of representatives of the industries of Amazonas and President Jair Bolsonaro. We had the assurance that the products manufactured in the Manaus Free Trade Zone, which already have the PPB, will not suffer this IPI reduction, which ensures competitiveness of companies installed in the Manaus Industrial Pole and the maintenance of jobs “, said the governor.

The meeting took place this afternoon, at the Planalto Palace, for about an hour, and was also attended by the president of the Federation of Industries of the State of Amazonas (Fieam), Colonel Alfredo Menezes; former federal deputy Alfredo Nascimento; and the coordinator of the Committee on Strategic Tax Issues of the Government of Amazonas (Cate), Nivaldo Mendonça.

Wilson Lima said he invited President Bolsonaro to make the signing of the new decree in Manaus, which should occur later this month of March. He pointed out that the team of technicians of the State Department of Finance (Sefaz-AM) and Cate, along with industry representatives, have already been talking to the Ministry of Economy team about the importance of the MFTZ for regional development, environmental preservation and, especially, job and income generation.

“The Amazon is not against the reduction (of the IPI tax). We understand the good intention of the Federal Government in this reindustrialization and competitiveness increase process; our biggest concern is with the Manaus Free Trade Zone”, reinforced Wilson Lima.

Study

The president of the Federation of Industries of Amazonas (Fieam), Antônio Silva, also attended the meeting and said that a new study will be conducted by technicians of the Treasury Department of Amazonas with the IRS technicians

“The meeting was very successful, the president was very concerned and determined that a new study will be done where the technicians of the Treasury Department of Amazonas and more technicians of the Federal Revenue will verify if it will be necessary to make an addition to the decree so that we will not have any damage to our development model of the Manaus Free Trade Zone. The meeting was very good, both by Minister Paulo Guedes, and by the President of the Republic”, Antonio Silva told CENARIUM.

Impacts

According to the Amazonas Government document presented to the Ministry of Economy, the decree that reduced the IPI breaks the constitutional legal security of the MFTz and also takes away the competitiveness of the industries of the PIM against products manufactured in other regions of the country and, especially, against imported products.

Currently, the IPI exemption is the main advantage of the tax incentive basket of the MFTz, as it provides a great competitive advantage, especially for products that are manufactured exclusively in Manaus, such as motorcycles, which if they were taxed would have a rate of up to 35%; televisions (which would have a rate of 10%), air conditioners (up to 35%), microwave ovens (35%), and watches (up to 25%).

The Amazonas Government technicians argue that the breach of constitutional legal security of the MFTz and the loss of competitiveness may cause the exit of companies from the PIM to other countries, since it would be more advantageous to import the finished product from abroad, generating jobs and income outside the country, to the detriment of domestic industry.

In addition to the direct damage to the MFTz, Decree 10,979/2022 will also bring negative impacts to the participation funds of states (FPE) and municipalities (FPM), since about half of the IPI tax revenue is distributed to subnational entities, especially the poorest regions of the country.

Arguments

In the document, the Government of Amazonas also argued that the ZFM has proven to be a successful model because it produces wealth, reduces regional inequalities and allows for development associated with the preservation of the largest portion of the Amazon Rainforest. Data from Inpe, from 2019, indicate that the Amazon maintains 97% of its vegetation cover, contributing to the rainfall regime and climate balance in the country, favoring agribusiness and electricity generation.

The MFTz also cannot be considered a tax haven, since Amazonas has the eighth highest federal tax burden in the country, at 14.93%. Furthermore, the incentives of the MFTz and Free Trade Areas account for 8.5% of the total tax expenditures in the country, while the Southeast accounts for more than 50% of the Brazilian tax waivers. Amazonas is also the only state that exports resources to the Union, considering the negative balance of the difference between federal tax collections and transfers received. In 2019, this negative balance was R$4.7 billion.

Economic alternatives

The Government of Amazonas also argued that the economic alternatives to replace the MFTZ will require medium and long terms until they are consolidated – a reflection of the historical absence of state and federal investments for them to develop, such as improving infrastructure and investments in research and development.

Among the potentials is mining, especially the extraction of natural gas and potash; the expansion of the agricultural and cattle-raising sector in the south of Amazonas, in a sustainable way; the development of intensive pisciculture and sports fishing, nature contemplation and adventure tourism; and the development of bio-economy and of the carbon credit market for environmental services.

Although promising for the Amazon and with regulatory advances, in the last two years, in the State of Amazonas, the sale of carbon credit has low potential for job generation. Likewise ecological tourism which, besides not generating the same levels of jobs as the industrial sector, requires a long time to reach its full potential.

In relation to the bio-economy, there is a historical absence of investments that are necessary for its consolidation, both in research and development, and in the opening of new markets with the Amazon brand. In mining, despite the enormous economic potential for the State of Amazonas, especially with oil, gas and potash, there is also a lack, for decades, of large federal investments in infrastructure, in addition to environmental barriers.

*With information from the press office