Manaus Free Trade Zone.
What the Tax Reform preserves — and what changes.

Does the Reform abolish the Manaus Free Trade Zone? No.

The first question for anyone operating in the hub is the most direct one — and so is the answer. The Reform does not end the Manaus Free Trade Zone. The favorable treatment of the ZFM is grounded in the Constitution itself: ADCT art. 40 established the hub as a free-trade area and ADCT art. 92-A, added by EC 83/2014, extended its incentives until 2073. EC 132/2023, which structured the Reform, revoked none of that.

On the contrary: EC 132 added art. 92-B to the ADCT, which is an order to the lawmaker. Its caput determines that the laws instituting the taxes set out in arts. 156-A (IBS) and 195, V (CBS) of the Constitution shall establish the mechanisms needed, with or without counterparts, to keep, on a general basis, the competitive differential assured to the Manaus Free Trade Zone by arts. 40 and 92-A and to the free-trade areas existing on 31 May 2023. In other words: preserving the ZFM’s competitive advantage stopped being a political choice and became a constitutional obligation in the design of the new taxes.

What changes, then, is not the existence of the benefit, but its engineering. The taxes that sustained the ZFM advantage — ICMS, ISS, PIS, COFINS — are being replaced by the dual VAT (IBS + CBS): ICMS and ISS are extinguished in 2033, while PIS and COFINS give way to the CBS in 2027. The IPI, by contrast, is not extinguished — it is reduced to zero in 2027 for most products and kept selectively, as the next section explains. Because the new model is non-cumulative and relieves the burden at origin, the differential had to be rebuilt through other routes. That is what LC 214/2025 does in the sections that follow.

The IPI under the Reform: zero nationwide, retained in the Free Trade Zone

Here is the most ingenious mechanism of the preservation — and the most misunderstood. The Reform reduces the IPI rate to zero from 1 January 2027 for most products. But the IPI is not abolished: it is kept precisely on the products that have equivalent manufacturing in the Manaus Free Trade Zone. This choice is in the Constitution itself — ADCT art. 126, III, "a" (added by EC 132/2023) determines that the IPI have rates reduced to zero, except in relation to products that have incentivized manufacturing in the Manaus Free Trade Zone. The logic is simple: if the IPI goes to zero for everyone, those producing outside the ZFM stop paying it; keeping the IPI on those items, except when manufactured in the hub, rebuilds the cost gap that has always been the heart of the benefit.

Article 454 of LC 214/2025 sets the rule with surgical precision. From 2027, the IPI goes to zero only for products subject to a rate below 6.5% on the TIPI in force on 31/12/2023 that, cumulatively:

• were manufactured in the Manaus Free Trade Zone in 2024; or
• have a technical-economic project approved by the SUFRAMA Board of Directors (CAS) between 1 January 2022 and the date the law was published.

Read in reverse: products with an IPI rate equal to or above 6.5% remain taxed by the IPI even after 2027 — and that is exactly where the advantage of manufacturing inside the hub lies. Whoever produces an item in that band in the ZFM keeps the incentive; whoever produces the same item outside it pays the full IPI. There is also a floor rule: for goods with no domestic equivalent whose production is set up in the ZFM, art. 455 fixes an IPI rate of at least 6.5% — a guarantee that the protective instrument is not hollowed out precisely where the hub wants to attract new manufacturing.

It is worth noting the limit of our reading: §1 of art. 454 ties these products to the presumed CBS credit set out in art. 450, but one of its items was vetoed at sanction. The detailing of NCM codes and the official list of zero-IPI products will be published by the Executive (art. 454, §3).

Presumed IBS and CBS credits: how the benefit migrates to the dual VAT

The retained IPI solves part of the equation. The other part is rebuilding, inside the dual VAT, the relief that ICMS, ISS, PIS and COFINS gave the ZFM. Because IBS and CBS are fully non-cumulative and relieve the burden at origin, LC 214/2025 uses the presumed credit technique — a notional credit, granted by law, that the taxpayer uses to offset the tax due.

LC 214 anchors the term of these benefits to the same constitutional date: art. 439 provides that they apply until the deadline of ADCT art. 92-A — that is, 2073. And it spreads them across several provisions (arts. 444 to 450), according to the nature of the good and the stage of the chain. For verifiable reference:

• Art. 450 is the core of the regime: it grants the incentivized ZFM industry a presumed credit of IBS and of CBS on the outflow of the goods it itself produces, destined for the national territory (including the ZFM itself).
• Art. 447 grants a presumed IBS credit to a ZFM taxpayer under the regular regime that acquires manufactured tangible goods of national origin at a zero rate.
• Art. 449 grants a presumed IBS credit to incentivized hub industries on intermediate goods.

Two points deserve attention in planning. First, these presumed credits have a restricted use: they serve to offset IBS and CBS due, with no cash refund and no offset against other taxes. Second, and more important for cash flow, the law provides for a gradual reduction of part of these credits over the transition period (art. 474). In other words: the design of the benefit is not static — it adjusts year by year until the regime is fully operational.

Because the percentages vary by type of good and by stage, and because part of them still depends on infra-legal regulation, any credit figure presented in generic form must be checked against the consolidated text before becoming a pricing assumption.

The Amazonas funds: compensation and economic diversification

EC 132/2023 did not entrust the preservation of the ZFM to credits and the IPI alone. Within ADCT art. 92-B itself it created two funds with Union resources directed at the region — a recognition that the transition to the dual VAT may strain the local economy and that the long-term bet is to diversify the state’s productive base.

In common, the two funds are constituted with Union resources and managed by the Union, with effective participation of the states in setting the policies. The difference is in reach: the first is exclusive to Amazonas, tied directly to the ZFM; the second covers the Western Amazon (Amazonas, Acre, Rondonia and Roraima) plus Amapa. Operationalization — annual amounts, contribution schedule and application rules — depends on later regulation; figures circulating in the press are projections and should not be treated as numbers locked in law.

One point calls for honesty in planning: the basis of the funds is constitutional (ADCT, art. 92-B, §§2 and 6), but the complementary law that actually institutes them is still moving through Congress (PLP 47/2024) and, so far, has not been sanctioned. In other words, the fund is a guarantee already written into the Constitution, yet an instrument still under construction — not something a company can rely on as certain revenue today.

In the same move to update the regulatory framework, Law 15,273/2025 amended Law 8,256/1991 — among other points, including the municipality of Pacaraima (RR) — reorganizing the legal frame of the free-trade areas in light of the Reform.

What changes in practice for companies operating in the ZFM

For those who produce or source in the Manaus Free Trade Zone, the Reform is not a threat to the incentive — it is an engine swap. The benefit stops coming from an ICMS/IPI exemption and starts coming from a combination of a selectively retained IPI, presumed IBS/CBS credits and funds. This reorganizes three fronts of the operation:

• Product framing. The advantage now depends on the IPI rate band (the 6.5% threshold of art. 454) and on the item having been manufactured in the ZFM in 2024 or having a project approved by SUFRAMA. Mapping the portfolio NCM by NCM against these criteria stops being a detail and becomes the center of planning.
• Credit assessment. The presumed credits are restricted in use (they only offset IBS/CBS) and are phased down over the transition (art. 474). Cash-flow modeling must incorporate this year-by-year step-down, not treat the benefit as a fixed value.
• Supply chain. A buyer from the ZFM can capture a presumed CBS credit (art. 450); a seller shipping outside the hub needs to understand how the good is treated on entry into other states (arts. 445 and 446). The decision of where to manufacture gains new tax weight.

The adaptation window is narrow: the turning point begins in 2027, with the IPI going to zero and the CBS at full rate, and the credit adjustments stretch through the transition period. Companies that depend on the ZFM differential gain by reviewing the framing of each product line now — before infra-legal regulation locks the numbers and narrows the planning space.

The TaxUp team reads LC 214 as applied to each hub company’s concrete operation — IPI band by NCM, eligibility for the presumed IBS/CBS credit, the transition step-down (art. 474) and the impact on margin per product line — to map where the ZFM’s competitive differential is preserved and where it needs adjustment.

Practical case: an electronics manufacturer in the Manaus Industrial Hub

An illustrative scenario (figures are illustrative, meant to size up the mechanics, not a forecast). AmazonTech Electronics is an IT manufacturer accredited with SUFRAMA, in the PIM (Manaus Industrial Hub), with gross revenue of about R$500 million a year. It sells nearly 70% outside Amazonas and imports a meaningful share of its inputs. Today its differential comes from three sources: a practically zeroed IPI on outflow through the incentive, an ICMS reduction and favorable PIS/COFINS treatment.

What changes in the transition. In 2027, PIS and COFINS give way to the CBS, and the historic ICMS incentive begins to be replaced by the IBS, which is completed by 2033 — this is the point of greatest attention, because the ICMS benefit in its current form ceases to exist. The IPI goes to zero nationwide, but it is kept on products with an equivalent made in the ZFM: the competitor from outside again bears the IPI on what it disputes with Manaus, while the hub factory continues with a minimum IPI (art. 455) or a presumed CBS credit (art. 454, §1). The differential, instead of disappearing, inverts and is preserved.

The new engine. In place of the ICMS exemption and the favorable PIS/COFINS, in come the presumed IBS and CBS credits (art. 450) on the outflow of what AmazonTech produces. They are restricted in use — they offset only IBS and CBS, do not turn into cash and are not passed on to the customer — and part of them shrinks over the transition (art. 474). For AmazonTech, the concrete work is to map each product line by IPI band on the TIPI, check eligibility for the presumed credit and remodel the margin year by year through 2033, rather than treat the incentive as a fixed value. And for those who buy from AmazonTech, the reading shifts: the presumed credit stays with the manufacturer and shows up in the price, but the full non-cumulativity of the IBS/CBS (broad credit, art. 47) tends to leave the input credit cleaner — it is worth redoing the acquisition-cost spreadsheet with that logic.