Patrick Bruha

Patrick Bruha

Staff Writer
The Brazil Business


Tax Exemption In Manaus Free Trade Zone

Patrick Bruha

Patrick Bruha

Staff Writer
The Brazil Business


In 1967 the Brazilian government created a Free Trade Zone in the middle of the Amazon Rainforest in order to attract foreign investment to the area and to assist in the development of the country. Despite its location, the tax benefits presented to the industries willing to settle there have contributed in attracting more than 600 companies to the Free Trade Zone. In this article, we will look at the benefits.


The Zona Franca de Manaus, Portuguese for Manaus Free Trade Zone, or ZFM is an economic development scheme created by the Brazilian government to stimulate economic development in the western Amazonas region. It was created in 1967 and is licensed to operate until 2023. The ZFM is administered by a special government body, Suframa, with the objective of attracting investment and companies to the Zone.

The ZFM is comprised of the Manaus Industrial Pole, where Suframa is headquartered, four smaller Free Trade Zones in the states of Amazonas (Tabatinga), Amapá (Guajará-Mirim, Macapá, Santana), Acre (Cruzeiro do Sul, Brasiléia, Epitáciolãndia), Roraima (Boa Vista, Bonfim) and seven Regional Coordination Units.

As of the end of 2013 there were more than 600 companies settled in the Manaus Free Trade Zone. These companies had a combined revenue of around BRL 83.3 billion in 2013, 13.3% higher than in 2012.


Suframa is a Public Administration agency affiliated to the Ministerio do Desenvolvimento, Industria e Comércio, Portuguese for Ministry of Development, Industry and Foreign Trade. Suframa manages and controls the fiscal incentives granted to companies established in the Manaus Free Trade Zone, along with promoting development strategies for the entire Western Amazonian region. It therefore has the role of an investment promotion agency for the area.

Tax benefits

The Manaus Free Trade Zone offers special fiscal incentives for the development of industrial projects in the area. These incentives and benefits are offered by the federal government, as well as by the state and local governments. Incentives are applicable only for the products themselves, not for the company’s project to establish itself in the ZFM. Therefore, the manufacturer can only enjoy the benefits once production has started.

There are four sectors which cannot benefit from the tax benefits: tobacco products, alcoholic beverages, passenger cars and guns and ammunitions.

It is important to note that tax benefits from the ZFM are also extended to the other Western Amazon States - Acre, Rondônia and Roraima - as well as the cities of Macapá and Santana in the State of Amapá.

Federal taxes

Import Tax, II:

  • Exemption on goods imported into the ZFM if the goods imported are destined for Brazilian consumption, trade inside the ZFM or re-exportation
  • Reduction of up to 88% of the Import Tax for raw materials, intermediary products, secondary materials and foreign packaging used in the manufacturing of industrialized products in ZFM destined for Brazilian consumption

Tax on Industrialized Products, IPI:

  • Exemption for:
    • Products manufactured in the ZFM
    • Foreign goods consumed in the ZFM or in the Western Amazon
    • Goods manufactured in Brazil upon entering the ZFM or in the other smaller Free Trade Zones
    • Goods manufactured using raw and agricultural materials extracted from the Western Amazon region, except from livestock

Export Tax, IE:

All products manufactured in the Manaus Free Trade Zone are exempt from Export Tax.

Social Integration Program and Contribution For Social Security Financing, PIS and COFINS:

Exemption of contributions for operations performed inside the ZFM.

Corporate Income Tax, IRPJ:

75% reduction on Corporate Income Tax calculated on the profits made from activities in the Manaus Free Trade Zone.

State taxes

State Tax on Circulation of Goods and Services, ICMS:

  • Exemption if the goods are for consumption, industrialization or re-exportation from other Brazilian States to the ZFM
  • Restitution for industrialized products, varying from 45% to 100%, for the following goods:
    • Final consumer product
    • Capital goods as well as food, clothing and footwear
    • Intermediate goods, goods in which regional raw materials were used and certain agricultural products
    • Goods produced by micro and small technology companies, medicaments in which primarily regional medicinal plants were used and products resulting in the industrialization of fish and products manufactured within the Amazonas State
  • Reduction for raw materials

In all cases of ICMS benefits, there are contributions made to funds to support education, tourism, R&D and other activities in the region.

Local taxes

Companies that generate more than 500 direct jobs that are settled in the Manaus Free Trade Zone are exempt for a period of up to 10 years from the following taxes:

  • Urban Property, IPTU
  • Trash collecting fees
  • Public cleaning
  • General maintenance
  • Fees on operating licenses


Local content requirements may apply for the production of some goods, with a minimum value added depending on the product. In the case of motorcycles, for example, Suframa requests that at least 75% of the vehicles components be produced in Brazil.

How to establish business in the Manaus Free Trade Zone

In order to obtain the approval of industrial projects within the Manaus Free Trade Zone the companies are evaluated based on the following parameters:

  • Compliance to the Basic Productive Process (BPP): The BPP defines the minimum necessary manufacturing stages that industries are required to meet in order to manufacture a given product. The BPPs are defined by the Ministry of Development, Industry and Foreign Trade and the Ministry of Science, Technology and Innovation
  • Job creation in the area, with the concession of social benefits to the workers
  • Compliance with established norms for production and the final product
  • Ongoing training for the workforce in order to obtain growing levels of productivity
  • Reinvestment of profit in the region
  • Investment for scientific and technological development

The applicant needs to submit a business plan to Suframa for approval, through an economist registered with Corecon, the Regional Economy Council.