In April, President Jair Bolsonaro issued three consecutive decrees cutting taxes on manufactured products by 35 percent. These measures sound better to voters than to business owners — and they come across as even worse to companies in the Manaus Free Trade Zone, in the northern state of Amazonas.
Backed by the centrist party Solidariedade, a group of companies operating in the Free Trade Zone will fight the tax cut in the Supreme Court. According to them, if companies in the Manaus Free Trade Zone already have zero-tax on manufactured goods, a cut for companies elsewhere in Brazil could be a fatal blow to them.
Due to high costs and a crisis-fueled market, some companies have already left Manaus, such as Sony and Panasonic. Most of the Free Trade Zone’s revenue now comes from the beverage sector, such as the soda industry.
If the decree continues to be enforced, the party warns, it could spell the end of the Manaus Free Trade Zone, in effect for the last 55 years.