investors guide of manaus free trade zone - maio 2017
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INVESTOR’S GUIDE OF MANAUS
FREE TRADE ZONE
Manaus – Amazonas – Brasil
2017
GOVERNO DO ESTADO DO
AMAZONAS
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DAVID ANTÔNIO ABSAI PEREIRA DE ALMEIDA
Governor of the State of Amazonas
JOSÉ JORGE DO NASCIMENTO JÚNIOR
Secretary of State for Planning, Development, Science, Technology and Innovation
ESTEVÃO MONTEIRO DE PAULA
Executive Secretary of Science, Technology and Innovation
GUSTAVO ADOLFO IGREJAS FILGUEIRAS
Executive Secretary of Development
FARID MENDONÇA JÚNIOR
Deputy Executive Secretary for International Policies
Technical team:
Farid Mendonça Júnior - Deputy Executive Secretary for International Policies
Marconde Carvalho de Noronha - Adviser for International Policies
SEPLANCTI - Address:
Rua Major Gabriel, 1870 – Praça 14
Zip Code: 69.020-060 Manaus-Amazonas
www.seplan.am.gov.br - (92) 2126-1211
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SUMMARY
PRESENTATION 04
1) MANAUS FREE TRADE ZONE AND THE NEW ECONOMIC AND ENVIRONMENTAL
MATRIX
05
2) TAX INCENTIVES 06
2.1) FEDERAL INCENTIVES 06
2.1.1) IMPORT TAXES (II) 06
2.1.2) MANUFACTURING TAXES (IPI) 07
2.1.3) INCOME TAX (IR) 08
2.1.4) EXPORT TAXES (IE) 08
2.1.5) PIS/COFINS 08
2.2) AMAZONAS STATE’S INCENTIVES 10
2.2.1) ICMS 10
2.3) EXTRA-TAX INCENTIVES 13
3) GENERAL CONDITIONS FOR THE ACCESS OF TAX INCENTIVES 13
3.1) FEDERAL INCENTIVES 13
3.2) AMAZONAS STATE’S INCENTIVES 13
4) FINANCING SOURCES 14
5) COMPARATIVE PAYMENT OF TAX BETWEEN MFTZ AND THE REST OF THE COUNTRY 15
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Presentation
With the purpose of guiding potential domestic and foreign investors interested in
establishing themselves in the State of Amazonas, we have prepared this guide in order to provide
knowledge about the legal instruments for the important model of the Manaus Free Trade Zone,
which supports regional economic development and provides the basis for the expansion of the
Manaus Industrial Hub and that will contribute to leverage the New Economic and Environmental
Matrix, inspired by the premises of Sustainable Development.
We seek to gather in this guide the parameters that conduct and ensure to the investors the
correct ways to contribute and invest in all opportunities that Amazonas can provide. With the
presence of great players, the Manaus Free Trade Zone – MFTZ model continues to produce goods
and services that compete in the world market and serves the national market.
With the prospect of attracting new investments to the State of Amazonas
With the perspective of attraction of new investments in the State of Amazonas, it is
expected a concrete economic leverage with significant amount of investments in the dynamic
industry installed in the Manaus Industrial Hub – PIM, as well as in activities that add value to
natural resources, with environmental conservation, without destroying the Amazonas Biome and
its ecological environment, following the precepts of Sustainable Development.
For the Amazonas State Government, national and foreign investments must also be
applied according to the premise of promoting integrated regional development with focus, through
public policies, on building a path where the priority resources aim to generate positive effects for
the local families.
JOSÉ JORGE DO NASCIMENTO JÚNIOR
Secretary of State for Planning and
Economic Development
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1) MANAUS FREE TRADE ZONE AND THE NEW ECONOMIC AND
ENVIRONMENTAL MATRIX
The state of Amazonas has the third largest industrial hub in the country, in one of the
most preserved environments on the planet, with 97% of its forest cover untouched. More than 500
industries are concentrated in the Manaus Industrial Hub, most of which are transnational
corporations, which use local, national and imported inputs, using federal and state tax incentives
through the legal instruments of the Manaus Free Trade Zone (MFTZ).
Created by the Federal Government and managed by SUFRAMA, the Manaus Free Trade
Zone (MFTZ) is a model of economic development in the Western Amazon to promote productive
and social integration of the region to the country, guaranteeing national sovereignty over its
borders. Extended until 2073 by Constitutional Amendment nº 83/14, it is the only area in Brazil
that has tax incentives guaranteed by the Federal Constitution, including benefits in all spheres,
considered an exception area compared to other regions of the country.
IT IS THE ONLY BRAZILIAN AREA THAT
HAS TAX INCENTIVES GUARANTEED BY
THE FEDERAL CONSTITUTION
It is a free trade area for importation and exportation and with special tax incentives,
established with the purpose of promoting an industrial, commercial and agricultural center within
the Amazon region, with economic conditions that allow local development and the countryside
too. The distance from the consumer centers of its products was one of the factors to establish this
model, according to art. 1 of Decree-Law No. 288 of February 28th, 1967, which regulates this
model of development.
It benefits and encourages large and small enterprises in an area of 10.000 km², which
covers the entire city of Manaus and part of the counties of Rio Preto da Eva and Itacoatiara. Due to
the wide range of tax incentives, MFTZ has several segments, especially electronics, naval and
nautical, computer, two wheels, chemical, thermoplastic, watchmaker, disposable lighters and pens,
packaging, among others.
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The extension of MFTZ provided the opportunity to aggregate proactive management
strategies capable of promoting its regional potential, demonstrating the absolute advantages of
natural and human resources, as well as the competitive advantages of its legal framework for
socioeconomic growth and, besides that, constituting a New Economic and Environmental Matrix
of Amazonas, rich in opportunities for good business throughout the State, providing a combination
of biodiversity and development of technology, innovation and intellectual capital.
2) TAX INCENTIVES
Basically, the tax incentives granted in the MFTZ are:
2.1) FEDERAL INCENTIVES
2.1.1) IMPORT TAXES (II)
a) Exemption in the entrance of foreign goods into MFTZ;
a.1) Intended for domestic consumption;
a.2) Destined for assembly, including improvement, agribusiness and fishing, installation and
industrial and service operation of any nature;
a.3) Storing for re-export.
Excluded from such benefit:
- Weapons and ammunition;
- Tabacco;
- Alcoholic beverages;
- Passengers vehicles;
- Perfume products, prepared and raw material for cosmetics, except for the ones classified in the
positions between 3303 and 3307, from the Mercosul´s Common Naming – NCM, exclusively
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intended for the internal usage at MFTZ or when made with regional flora and fauna raw material,
according to the basic productive process – PPB.
b) Reduction in the output of MFTZ´s manufactured products (to any part of the national territory).
b.1) In the manufacture of computer goods under the application of a reduction coefficient
proportional to the participation of skilled labor and national input;
b.2) Reduction of up to 88% (eighty eight percent) of inputs for industrialization;
b.3) Cars, tractors and other ground vehicles - reduction coefficient increased by five percentage
points (5%);
2.1.2) MANUFACTURING TAXES (IPI)
a) Tax Exemption on Industrialized Products:
a.1) For all goods produced at MFTZ for domestic consumption or for the commercialization
anywhere in the country, except weapons, ammunition, tobacco, alcoholic beverages, passenger
vehicles, prepared cosmetics or cosmetic raw material, except for those produced using regional
fauna and flora raw materials.
a.2) At the entrance of foreign goods for consumption and local market sales, fish processing,
mineral resources and forestry raw materials, agriculture and aquaculture, tourism and storage for
export, construction and ship repair and internment with accompanied baggage.
a.3) For all goods produced in the MFTZ whether they are intended for domestic consumption or
for marketing in any part of the national territory.
Exception: weapons and ammunition, tobacco, alcoholic beverages, passenger vehicles, products of
perfumery and cosmetics.
a.4) For products elaborated with agricultural and livestock raw materials and plant extracts,
regionally produced, having this benefit valid only for places in the Western Amazon;
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a.5) IPI credit calculated, as if it would be paid, for the purchase of products elaborated with
agricultural and livestock raw material and plant extracts, regionally produced, whenever such
products are used as raw materials, intermediary products or packaging materials in
industrialization at any part of the national territory, of products effectively subject to the payment
of this tax.
2.1.3) INCOME TAX (IR)
Reduction of 75% in Income Tax and Additional Nonrefundable, exclusively for reinvestments.
Common throughout the Legal Amazon.
2.1.4) EXPORT TAXES (IE)
For the export of products produced in the Manaus Free Trade Zone, tax rate is reduced to 0% (zero
percent).
2.1.5) PIS AND COFINS
a.1) Zero-Rated for sale of goods intended for consumption or industrialization in MFTZ by a legal
entity established by another Brazilian State.
a.2) Zero-Rated in case of commercialization of raw material, intermediary products and packaging
materials produced at MFTZ and employed in the industrialization process by any industrial
establishment settled in Manaus, according to the Project approved by SUFRAMA.
a.3) Suspension of PIS-import and COFINS-Import: Import levied on goods destined for
incorporation into new fixed assets of legal entities established at the MFTZ. This benefit is
converted into zero-rated after 18 (eighteen) months from the merger of the assets into fixed assets.
a.4) Suspension of PIS/PASEP-import and COFINS import in case of importations made by
company installed at MFTZ, related to raw materials, intermediary products and packaging
materials, used on the industrialization process for industrial establishments settled here, according
to projects approved by SUFRAMA.
a.5) In the acquisition of products that were industrialized at MFTZ, according to Project approved
by SUFRAMA, the legal entity subject to the incidence of non-cumulative contribution to PIS and
COFINS credits may deduct credits calculated over the acquisition value, with rates of 1% and
4,6%, respectively.
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a.6) This rule does not apply, however, in relation to cases involving products taxed at different
rates (fuel, auto parts, beverages, medicines, among others), specified in §§ 1 and 3 of article 2 of
Law # 10.637/2002 and Law # 10.833/2003. A company settled outside MFTZ, which accounts its
Income Tax with the “real profit regime” and holds it revenue, total or partially, excluded from the
system of non-cumulative incidence of contributions, shall the credited of 1,65% from PIS and
7,6% from COFINS.
a.7) The rate of PIS / PASEP and COFINS will not be levied on exports and can use them as a
credit on domestic operations.
SUMMARY TABLE – PIS AND COFINS
RECIPIENT PIS
(RATES)
COFINS
(RATES)
1) Sales of goods to a company settled at MFTZ. 0,65% 3%
2) Sale to a company outside MFTZ, which assesses PIS
through non-cumulative system.
0,65% 3%
3) Sales to entity company settled outside MFTZ, which
assesses the income tax on an assumed profit basis.
1,3% 6%
4) Sales to a company settled outside MFTZ, which
assesses the income tax on a real profit basis and holds
it’s total or partial revenue excluded from PIS non-
cumulative system.
1,3% 6%
5) Sales to a company settled outside MFTZ, adjusted to
the SIMPLES system. 1,3% 6%
6) Sales to federal, state, district and municipal
Administration Agency. 1,3% 6%
2.2) AMAZONAS STATE’S INCENTIVES
2.2.1) TAX ON OPERATIONS RELATED TO THE MOVEMENT OF GOODS AND ON
SERVICES OF INTERSTATE, INTERMUNICIPAL AND COMMUNICATION SERVICES
(ICMS)
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The State Tax Incentive Policy is regulated by Law # 2.829/03 and regulated by Decree # 23.
994/03 and its subsequent amendments.
a) Stimulus Credit: It is a tax return normally determined by the difference between debits and
credits arising from transactions in the period. The credit stimulus represents a percentage of the
outstanding balance due, which can vary from 55% (fifty five percent) to 100% (one hundred
percent). Operationally, in each month of calculation, the taxpayer collects only the difference
between the outstanding balance and the value of the credit stimulus.
a.1) 100% (one hundred percent) for the following products:
a.1.1) Agribusiness products and others products alike, forestry and wildlife products, medicines,
cosmetic and perfumery preparations that use, among others, raw materials produced in and / or
arising from the regional flora and fauna, industrial fish products and forest-based industry;
a.1.2) Printed circuit board mounted for use with computers;
It also applies the stimulus credit level corresponding to 100%, until they are restored the
competitiveness, in the following products:
• Boats;
• Mobile phones;
• Information, technology and automation products;
• Car stereos;
• Clothing and footwear;
• Utility Vehicles;
• Toys;
• Industrial Sewing machines;
• Air conditioners - window or wall type and "split";
• Stoves;
• Washing and dishwasher machines;
• Freezers and refrigerators;
• Cathode ray tubes;
• Balls and other Christmas ornaments, lights, Christmas lights for decoration and Christmas
trees.
• Speakers;
• Jute or malva wires, screens and bags, industrialized Brazilnut, peeled or not peeled;
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• Fitness equipment;
• Bicycles;
• Tires ans inner tubes;
• Aluminum containers and semi-trailers;
• Odorizers and repellents;
• Products intended for occupational safety;
a.2) 90.25% (ninety point twenty-five percent) for the products listed in Items I, IV and VII; LAW #
2.826/03:
• Intermediary goods;
• Brewed and ground coffee, vinegar, crackers and cookies, macaroni and other food pastries;
• Recorded or blank media.
a.3) 75% (seventy five percent) for the products listed in sections II, III, V and VI; LAW #
2.826/03:
• Circuit boards assembled in audio and video appliances, except those intended for mobile
telephones, information, technology and automation goods.
• Capital goods;
• Industrialized consumer food products;
• Agriculture-based industrialized products and others alike, forest and fauna products,
medicine, cosmetics and perfumes that, among others, are produced with raw materials from the
State countryside and/or originated from the regional fauna and flora, industrialized fish and
products from Forest-based industry, if these are produced in the State´s countryside, the credit
stimulus shall be of 100%;
a.4) Until 55%:
• All the other industrialized consumer goods not included in the previous items.
b) Deferral: It is the transferring of the payment of ICMS due, to the time of withdrawal of the
goods. Applied in the following cases:
• In the import of raw and secondary materials, intended for the industrialization of
intermediary goods;
• Production of the products with stimulus credit at the rate of 100%;
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• In the outflow of intermediary goods, when they are intended for the integration of industrial
establishment that receives incentive as well;
• In the outflow of “in natura” regional raw material coming from Amazonas´s countryside,
intended for industrial establishments which receive incentives, for the assembly of threads, fabrics,
“juta” and/or “malva” fiber bags; processed or peeled Brazilian nut and also for the production of
products with stimulus credit at the rate of 100%.
c) Exemption:
c.1) In the entry of machines or equipment, intended for the MFTZ industry permanent asset, for
direct and exclusive use in its productive process; this benefit includes parts and pieces. In order to
take advantage of this benefit, the asset must remain at the company´s facilities for the minimum
period of 5 years under the penalty of paying a proportional rate, each full year the asset stays in the
industrial establishment, the taxpayer gets 20% of the exemption. Tax is not required as a result
from the output of the asset before completing the five (5) years when:
I) The asset is intended for export;
II) It is destined to another taxpayer for the industry in the State of Amazonas;
III) Use in training institution accredited by SEFAZ.
c.2) In the internal outflow of raw materials produced in the State of Amazonas or imported from
abroad, since it is covered by the support of the Western Amazon Exportation Program – PEXPAM,
of the Superintendence of the Manaus Free Trade Zone - SUFRAMA, having observed the forms
and conditions set forth in the joint resolution of the Secretariat for Planning and Economic
Development – SEPLAN and the Secretariat of Finance - SEFAZ.
d) The Calculation Basis Reduction:
d.1) 55% percent, when importing from abroad raw and secondary material, intended for the
productive process of assembled printed circuit board. For the enjoyment of this tax benefit, the
company must have specific registration in the Register of Taxpayers of the State of Amazonas,
exclusive for these operations.
d.2) 64,5% when importing from abroad raw and secondary material for use in the productive
process of capital assets;
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2.3) EXTRA-TAX INCENTIVES
Possibility of acquisition of land (if available) in the Industrial District of the Superintendence of
the Manaus Free Trade Zone (SUFRAMA) at the symbolic price of 1 (one) Real per square meter,
provided that the counterparts required by the legislation are met. These lands are provided with
infrastructure for water collection and treatment, water supply network, telecommunications
network, sewage network, storm drainage and road system.
3) GENERAL CONDITIONS FOR THE ACCESS OF TAX INCENTIVES:
3.1) FEDERAL INCENTIVES:
a) Approval of a technical-economic project with the Board of Directors of SUFRAMA (CAS) in
cases related to the II, IPI and PIS / COFINS incentives. In these cases it is imperative that the
product to be manufactured by the company has a Basic Production Process (PPB) - a minimum set
of manufacturing operations that characterizes the effective industrialization of a given product -
established through Interministerial Ordinances, signed by the Ministers of Development, Industry
and Foreign Trade (MDIC) and Science, Technology and Innovation (MCTI).
b) Approval of technical-economic project with the Deliberative Council of the Superintendency of
the Amazonian Development (CONDEL), in cases related to the IR incentives.
3.2) STATE’S INCENTIVES:
a) Approval of a technical-economic project with the State Council of Development of the State of
Amazonas (CODAM), in cases related to ICMS incentives.
b) Collection of contributions to funds:
b.1) Fund for Support to Micro and Small Enterprises and Social Development of the State of
Amazonas (FMPES);
b.2) Fund for the Promotion of Tourism, Infrastructure, Services and Interiorization of the
Development of Amazonas (FTI); and
b.3) University of Amazonas’ State (UEA).
4) FINANCING SOURCES
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The entrepreneurs may consider two important long term financing sources: Fundo
Constitucional de Financiamento do Norte (FNO) (Constitutional Fund for Northern Financing) and
Fundo de Desenvolvimento da Amazônia (FDA) (Fund for Development of the Amazon):
a) Fundo Constitucional de Financiamento do Norte (FNO) (Constitutional Fund for Northern
Financing): The FNO is the main source of stable financial resources for credit promotion, directed
to meet production activities with low environmental impact, whose objective is the sustainable
development of the Northern Region. Created by the 1988 Federal Constitution, which established
the obligation of the Federal Government to set aside 3% from the IR (income tax) collection and
IPI (Tax on Industrialized Products) to be applied to financing programs to productive sectors of the
North, Northeast and Mid-West regions, through their regional financial institutions for the Amazon
region.
b) Fundo de Desenvolvimento da Amazônia (FDA) (Fund for the Development of the Amazon): the
Fund is managed by the Superintendence for the development of the Amazon (SUDAM), having as
operating agent Banco da Amazônia, with the objective to enable private investments in the
Amazon. Implementation, expansion, diversification and modernization of private enterprises
located in the Amazon, according to the guidelines and priorities approved by the Executive
Council for the Development of Amazonia, limited to 60% of total investment and 80% of fixed
investment of the project.
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5) COMPARATIVE PAYMENT OF TAX BETWEEN MFTZ AND THE REST OF THE COUNTRY:
FEDERAL TAXES BRAZIL MIH (PIM) Import Taxes (II) Variable Reduced by 88%
Tax on Exports of Domestic Products (E) Variable Doesn’t exist
Income Taxes (IR) - Legal Entity 25 to 34% Reduced by 75%
Income Taxes (IR) - Individuals Until 27,5% Until 27,5%
Manufacturing Taxes (IPI) Variable Doesn’t exist
Tax on Credit, Foreign Exchange and Insurance or Securities Transactions (IOF)
0,0041+0,38% 0,0041+0,38%
Rural Territorial Tax (ITR) Variable Variable
Taxes – Single Tax Doesn’t exist Doesn’t exist
Value Added Tax (VAT) Doesn’t exist Doesn’t exist
STATE’s TAXES BRAZIL MIH (PIM) Tax Operations on Movement of Goods and Services of Interstate, Intermunicipal and Communication Services (ICMS)
17%
Reduced from 55 to
100% (Stimulus
Credit)
Property Tax on Motor Vehicles (IPVA) 1 to 3% 1 to 3%
Tax on Transmissions of Properties due to the death of someone and Donation of Any Nature (ITCD)
2 to 4% 2 to 4%
Taxes (In the case of the PIM, in general: FMPES - 6%, UEA - 1,5% and FTI - 2%)
Variable
9,5% of Stimulus
Credit
MUNICIPAL TAXES BRAZIL MIH (PIM) Urban Property Tax (IPTU) 0,5 to 4% Variable
Real Estate Tax and Real-Estate Transfer Tax (ITBI) 2% 2%
Service Tax of Any Kind (ISS) 2 to 5% 5%
Taxes Variable Variable
CONTRIBUTIONS BRAZIL MIH (PIM) Labor Contributions or over the Payroll (INSS) 20% + 8% 20% + 8%
Contributions over Revenues (PIS and COFINS) 3% and 1,65% Entry: Exempt
Exit: 3% and 1,65%
Contributions over the Net Income (CSLL) 9% 9%
Contributions on Imports 7,6 and 1,65% Doesn’t exist
Contributions to the "S" System 1% 1%
a) The general rule on the reduction of Import Tax (II) is the Rate of Reduction of Aliquot (CRA). The 88%, in fact, is an exception, however that
covers more than 99% of the products. Some products may not fit in into the 88% rule, but it is rare, since the universe of products and respective tariff positions approved before Law No. 8387/1991, is extremely unusual.
b) the credit incentive of the Tax on Operations Related to the Circulation of Goods and on Provision of Transportation and Communication Services
(ICMS) may be 55%, 75%, 90.25% or up to 100%, depending on the product. c) State’s contributions have some specific rules:
c.1) For final goods manufacturers that do not have 100% Stimulus Credit, there is no FTI in the sale and there is no FTI on the Stimulus Credit value.
There is the FTI of 2% on the FOB value of imported inputs and FTI of 1% on the value of the Tax Invoice of national inputs.
c.2) For Manufacturers of Intermediate Goods, there is no incidence of FTI in the acquisition of inputs, regardless of their origin. However, there is
FTI on sale (1% on gross sales), there is UEA on sale (1.3% on gross sales) and there is no incidence of FMPES.
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