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, Epitáciolândia), Roraima (Boa Vista, Bonfim) and seven Regional Coordination Units. Suframa is the authority that manages the activities at ZFM, and is part of the Ministry of Development, Industry and Foreign Trade.
This zone offers tax benefits to the companies that install themselves there. Some of these benefits are:
- 88% reduction in Import Duty on the inputs of industrial goods
- For electronic products the Import Duty is reduced proportionally to the local added value
- No tax on industrialized products (IPI)
- 75% reduction on the income tax. Exclusively for reinvestments
- 0% COFINS for incoming goods and inter-industry internal sales
- 0% PIS for incoming goods and inter-industry internal sales
Businesses can also receive a credit of between 55% – 100% on the ICMS rates, in cases where they demonstrate some contributions to funds that support higher education, tourism, R&D and others.
Companies that generate more than 500 direct jobs that are installed in the Manaus Free Trade Zone are exempt for a period of up to 10 years from the following taxes:
- Urban Property tax, IPTU
- Trash collecting fees
- Public cleaning
- General maintenance
- Fees on operating licenses
The benefits do not apply to all companies. Companies within the industries of firearms and ammunition, tobacco and its products, alcoholic drinks, automotives (except motorcycles) and products of perfumery, hairdressing and cosmetics (unless if the consumption will be made in the ZFM or produced with local raw materials), cannot obtain the Zona Franca de Manaus benefits.
In addition to this, 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.
Other incentives provided by ZFM
The Manaus Free Trade Zone also offers incentives such as bonded warehouses, a special system that allows the storage of foreign and national goods that are under tax control, with suspension of the payment of federal and state taxes. The goods may stay there for a one-year period, extendable to a period of no more than five years.
Another incentive are plots of land reserved for industrial purpose, which are large areas that are appropriate for the establishment of industrial enterprises, provided at nominal prices.
How to establish a business in the Manaus Free Trade Zone
In order to obtain the approval of industrial projects within the Manaus Free Trade Zone 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.
Approximately 100 000 jobs in western Amazônia are directly related to the Manaus Free Trade Zone, and there are estimated 400 000 indirect related jobs outside the Free Trade Zone.