Brazil suspends tax relief for manufacturing outside of Manaus

suspends tax relief Manaus
Manaus Harbor. Photo: Shutterstock

Brazil on Wednesday suspended tax relief for over 100 products manufactured outside of the Manaus Duty-Free Zone, Brazil’s only free-trade area. The suspension came in accordance with a Supreme Court ruling.

Earlier this year, the government issued a series of decrees slashing taxes on manufactured products nationwide.

The move angered companies operating in the Manaus Duty-Free Zone, in the northern state of Amazonas, where taxes are set to zero.

The left-wing Solidariedade party sued the federal government at the Supreme Court, arguing that the tax relief reduced the competitive advantage in Manaus and affected the region’s development. Justice Alexandre de Moraes suspended tax relief for products that are also manufactured in Manaus.

The new decree reinstates higher tax rates for products such as soda concentrate, shaving razors, lighters, pens, battery chargers, watches and dishwashers — typical goods manufactured in the Manaus Duty-Free Zone. The governor of Amazonas, Wilson Lima, celebrated the decree as a “victory” for his state.