Good morning! How Brazilian courts cripple public finances. How much will Brazil actually save with the pension reform? Petrobras changes bylaws to speed up divestments.
How Brazilian courts cripple public finances
In a 6-4 vote, the Supreme Court decided that companies buying inputs produced in the Duty-Free Zone of Manaus are entitled to record credits on manufactured goods tax. The decision will lower federal revenue by BRL 10-16bn. With that money, it would be possible to increase the Bolsa Família cash-transfer program by 50%, or federal infrastructure investments by 60%.
The Duty-Free Zone of Manaus (the only one of its kind in Brazil) was created in 1967 by the military dictatorship to promote industrial development in the heart of the Amazon. Instead, it ends up fostering fiscal maneuvers. Many companies with complex production chains open up subsidiaries in Manaus to produce basic goods—and generate tax credits for the parent company, which is often located in a more developed area.