Government prepares new IPI reduction after STF suspends previous cut

Paulo Guedes, Minister of Economy
Paulo Guedes, Minister of Economy.| Photo: Fabio Rodrigues Pozzebom/Agência Brasil

The Ministry of Economy is preparing a new decree to reduce by 35% the Tax on Industrialized Products (IPI) on 4,000 products that are not manufactured in the Manaus Free Trade Zone, according to the newspaper “O Estado de S.Paulo”. The idea is to replace cuts that had already been made previously, but that were suspended by the Federal Supreme Court (STF).

Two decrees have already been published with tax reductions. In February, the government made the first cut of 25%, valid for all products, with the exception of cigarettes. Representatives and politicians linked to the Manaus Free Trade Zone complained that the measure generated a loss of competitiveness in the region, where the tax is reduced.

In April, there was a second reduction of over 10%. At the request of the Solidarity party, however, Minister Alexandre de Moraes, of the STF, suspended the effects of the decrees.

The new text should detail the items that will have the tax burden reduced, excluding those that compete with those manufactured in the Free Zone. “The Supreme Court asked for special attention, which we attended. Excluding the products actively produced in the Manaus Free Trade Zone, we can lower the IPI tax on almost 4,000 products, and that is exactly what we are doing”, said the Minister of Economy, Paulo Guedes, on Thursday (21) during the presentation of the June federal revenue figures. The decree is expected to be published next week.

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