Free Zone generates impasse in final vote on tax reform

The incidence of the Economic Domain Intervention Charge (Cide) on products that compete with similar products produced in the Manaus Free Trade Zone (ZFM) creates an impasse that could delay the final vote on the tax reform in the Chamber, or force the text to be analyzed again by the Senate.

Approved by deputies months ago, the reform needs to go through their analysis again before being enacted, as it was modified in the Senate. There, the rapporteur, senator Eduardo Braga (MDB-AM), introduced Cide to maintain ZFM’s competitive advantage. In the Chamber’s version, the additional charge to benefit the region would be made through the selective tax.

Representatives from states such as São Paulo, however, are against the measure due to the possibility of increasing the tax burden for some sectors. Furthermore, the revenue from the contribution, according to the proposal, will go to a fund that will benefit Amazonas, unlike what would happen with the selective tax, which would be shared in a less concentrated way among all states.

To the newspaper “Folha de S.Paulo”, the rapporteur of the proposed amendment to the Constitution (PEC) in the Chamber, deputy Aguinaldo Ribeiro (PP-PB) said he still does not have an estimate of the Cide rate, but it would have to be sufficient to finance the existing incentive.

“Cide is a tax that is outside the reference rate. The Free Zone has between R$20 billion and R$30 billion in benefits. If you are thinking of collecting this with this Cide, you will have to set a rate, which will be incorporated into the IBS [Imposto sobre Bens e Serviços, de competência estadual e municipal]. At least that is the understanding of some of our technical staff and the people who took the time to carry out this study”, he said.

According to him, it is not yet known whether it will be possible to reach a solution to this impasse. From a technical point of view, the ideal scenario would be to change the text, but this would lead to the need for a new vote by the Senate, which would go against the government’s intention to enact the reform later this year.

The simple suppression of the Cide section, on the other hand, would leave the protection of the ZFM industry in limbo. To “Folha”, the rapporteur said that he is trying to find a technical solution, but acknowledged that there are still no guarantees that this will be possible.

Another modification to the PEC made in the Senate, the 30% discount on the rate for independent professionals who have annual revenues exceeding R$4.8 million and are outside Simples Nacional, should also be removed by the parliamentarian.

He also defends the removal of the so-called extended basic basket, which would have reduced tax, and the maintenance of only the National Basic Basket provided for in the version approved by the Chamber, which is more restricted and will have a 100% discount on the new Value Added Tax (VAT). .

Still speaking to the newspaper, Ribeiro stated that he will maintain in the proposal the extension of the benefit to automakers in the North, Northeast and Center-West, which had been overturned in the Chamber and was reinserted in the Senate.

“[Sem a prorrogação] What you would have is an automaker with full benefit and an automaker with part of the benefit. So, in fact, we are creating equality between this benefit to avoid interfering with competition,” he said.

Ribeiro intended to file his report on Wednesday night (13), but due to disagreements with senators, he ended up postponing the presentation of the document. The rapporteur of the proposal in the Senate, Eduardo Braga, reportedly told interlocutors that he would not give up on the creation of Cide to favor ZFM.

This Thursday (14) a meeting is scheduled between Ribeiro, Braga and the president of the Senate, Rodrigo Pacheco (PSD-MG).

Before that, Congress meets in a joint session with deputies and senators to discuss the overturn of the government’s presidential vetoes on provisions of the new fiscal framework, the quality vote in Carf and the guarantee framework. A vote will also be taken to reject the veto of payroll tax relief for 17 sectors of the economy.

In a meeting with the President of the Chamber, Arthur Lira (PP-AL) and party leaders, President Luiz Inácio Lula da Silva (PT) would have accepted the overturn of the vetoes in exchange for the approval of the tax reform and provisional measure 1,185, which deals with the incidence of federal taxes on state subsidies.