Brazil's Supreme Court hands down R$ 16 billion in damages to the government in the Manaus Free Trade Zone case.
By a vote of six to four, the Brazilian Supreme Court (STF) ruled that companies outside the Manaus Free Trade Zone that purchase inputs there without incurring IPI (Tax on Industrialized Products) can receive a tax credit; the Court dealt a defeat to the Federal Government which, according to the Attorney General's Office for the National Treasury (PGFN), could represent an impact of R$ 16 billion on public coffers.
247 - By a vote of six to four, the Supreme Federal Court (STF) ruled that companies outside the Manaus Free Trade Zone that purchase inputs there without the Industrialized Products Tax (IPI) being levied can receive a tax credit. This decision by the Court dealt a blow to the Federal Government, which, according to the Attorney General's Office for the National Treasury (PGFN), could represent an impact of R$ 16 billion on public coffers.
Currently, the cost of the Manaus Free Trade Zone is R$ 25 billion per year in tax waivers. With the government's defeat, the losses increase because the tax credits will benefit businesses located outside the Free Trade Zone.
The votes in favor of the measure came from ministers Dias Toffoli, president of the STF (Supreme Federal Court), Luís Roberto Barroso, Edson Fachin, Rosa Weber, Celso de Mello, and Ricardo Lewandowski. The rapporteur of the case, Marco Aurélio Mello, voted in favor of the Union along with Luiz Fux, Cármen Lúcia, and Alexandre de Moraes.