Manaus Free Trade Zone faces higher costs after tax rule change

Brazil's federal tax authority has issued a new interpretation of Complementary Law No. 224/2025 that applies a linear 10 % reduction of fiscal incentives to the zero‑rate PIS and Cofins regime for goods and inputs destined for the Manaus Free Trade Zone (ZFM). The change means that suppliers from other states will now be subject to these contributions, a cost that is expected to be passed on to manufacturers operating in Manaus.

Industry bodies, including the Federation of Industries of the State of Amazonas (FIEAM) and the Manaus Food Industry Union (SIAM), warn that the measure will sharply raise production costs, weaken the zone's competitiveness, and could translate into higher food prices for consumers in the state. They cite concerns that imported inputs would retain tax‑free status, creating market asymmetries. The groups plan legal and political action, referencing constitutional protections for the zone’s tax benefits and prior Supreme Court and Superior Court of Justice rulings that excluded PIS/Cofins on such transactions. The dispute is set to continue into 2026, with potential challenges brought before the Supreme Federal Court.