As of May 1994, there are four free trade zones in Brazil -- Manaus, in
the State of Amazonas; Macapá/Santana, in the State of Amapá; Tabatinga,
in the state of Amazonas, which borders Peru; and Guajaramirim, in the
State of Rondônia, bordering Bolivia. Four other free trade zones are
authorized but not yet functioning -- Bonfim and Paracaíma in the state of
Roraima, Brasiléia in the State of Acre and Epitaciolândia in the State of
The Manaus Free Trade Zone is the most extensively developed. Decree No.
288 of February 1967 established special incentives for a period of 30
years with the aim of creating an industrial, commercial and agricultural
center in the heart of the Brazilian Amazon. The Manaus Free Trade Zone is
a 10,000 square kilometer area which includes the city of Manaus, the
capital of the State of Amazonas in the north of Brazil. Unlike Manaus,
which has special incentives for the establishment of industries, the
other zones are only free ports for imports and exports.
The Brazilian Constitution of 1988 endorsed the fiscal benefits of the
Manaus Free Trade Zone and extended their applicability to the year 2013.
Free Trade Zone status implies that goods of foreign origin may enter into
the Manaus free port without payment of customs duties or other federal,
state or local import taxes. In addition, the Industrial Products Tax
(IPI) on certain commodities and the ICMS sales tax on most items are not
applied. With very few exceptions imported products used for processing,
re-export or transshipment which are subsequently shipped to other parts
of Brazil also qualify for these tax exemptions. The ICMS sales tax is
imposed on items produced in the free port when they are shipped out of
the free zone into other areas of Brazil.
Law No. 8387 of December 30, 1991, modified the regulations for the Manaus
Free Trade Zone by eliminating the previously existing import quota and
requiring only that prior notification is made to the Superintendent of
the Manaus Free Zone (SUFRAMA). However, in May 1995 the Brazilian
Government returned to the import quota system and presently only imports
of wheat and petroleum are not subject to quotas.
Manaus Free Trade Zone importers are allowed to supply foreign goods from
their stock in Manaus to other parts of the country regardless of
quantity. These goods, however, are subject to all duties assessed under
normal importation. There is, however, the advantage that the ICMS
(Merchandise Circulation Tax) is reduced to only 4 percent.
The Manaus Free Trade Zone was hard hit by the general lowering of tariff
and non-tariff barriers. In July 1992 the government announced a series of
measures to help the Manaus Free Trade Zone. Each industry must perform
certain basic assembly steps in the zone in order to qualify for fiscal
incentives. To protect Manaus industries, such as consumer electronics,
which are heavily concentrated in the zone, the Tax on Industrialized
Products (IPI) was raised by ten percentage points on competing products
which are either imported from abroad or produced in Brazil outside the
zone. The initial list included stereos, televisions, and VCRs, none of
which are produced in Brazil outside the zone. Computers and peripherals
were not on the list.
Fiscal incentives for Manaus include exemption from the IPI tax and from
tariffs on imported components, reduced tariffs on products shipped from
Manaus to the rest of Brazil; reduced state tax (ICMS) on products
imported from or exported to the rest of Brazil, up to ten years exemption
from federal income tax, and an exemption from import license fees.
The 1992 regulations allowed computer firms to benefit from both fiscal
benefits and the change in local content requirements. With special
government permission, computer firms, although required to perform much
basic assembly in the zone, may be permitted to import circuit boards
which use only surface mounted devices.
SECEX import licenses, issued through SISCOMEX, must be issued prior to
shipment of goods destined for the Brazilian marketplace. These licenses
are additionally subject to authorization by the Superintendent of the
Manaus Free Trade Zone (SUFRAMA), the Manaus free zone authority.
Commercial invoices and bills of lading must have "Free Zone of Manaus"
typed on them, and one of the following statements: "Zona Franca de Manaus
para Consumo" (Manaus Free Zone for Consumption) or "Zona Franca de Manaus
para Reexportação" (Manaus Free Zone for Reexport).
Brazilian restrictions on the informatics sector no longer apply to the
Manaus Trade Zone. A license and an authorization requirement for
health/sanitary controls, national security interests, and environmental
protection remain in effect.
Each passenger leaving Manaus is allowed a quota of US$ 2,000 (FOB value)
of goods of foreign origin. Products manufactured in Manaus are not
subject to the quota.
In addition to the free trade zones, 14 export processing zones have been
authorized. The Ministry of Industry, Commerce and Tourism administers
them. To date, only four have begun initial infrastructure construction;
the remainder is still in the planning stages.
Legislation regarding ZPEs requires that firms operating in the zone
export at least 90 percent of production. Up to 10 percent of production
can be sold in the domestic market, and is subject to a duty of 75 percent
ad valorem on the final price, minus the cost of imported inputs. Normal
corporate income taxes apply to profits generated in the zones. Firms
operating in the zones will be exempt from foreign exchange regulations
and will maintain dollar and local currency accounts. The official
Brazilian exchange rate must be used to convert dollar accounts for local
purchases. Foreign firms established in the zones may use their own
hard-currency resources for tax-free imports of machinery and raw
materials from abroad. Firms in the ZPE may not produce goods subject to
export quotas. License and authorization requirements remain in effect in
ZPEs for health/sanitary controls, national security interests, and
Free Trade Zone