Special Tax Zones in Brazil - Draft Article

This is the draft of an article about special tax zones in Brazil. I would welcome reader's contributions.

Special tax zones in Brazil

The Brazilian federal and state governments offer some tax benefits to promote the incorporation of new companies in areas that need economic enhancement.

Below, the reader will find a list the most important tax programs that can be chosen when establishing a business in Brazil.

	Manaus Free Zone (mostly in Amazonas State) ·        Import tax reduction, provided the product has one of its industrial stages in Manaus Free Zone – MFZ (art. 7º, Decree-Law n. 288) ·        Exemption of  PIS/ COFINS import tax if the products imported is going to be industrialized in Manaus Free Zone (art. 5º, Act n. 10.996); ·        Exemption of IPI tax (art. 9º, Decree-Law n. 288); ·        A reduced rate of 3% COFINS and 0.65%  PIS over the company’s gross revenue if the products are destined to a company also in MFZ (arts. 3º and 4º, Act n. 10.996); ·        A reduced rate of 6% COFINS and 1,3% PIS over the company’s gross revenue if the products are destined to a company outside the MFZ(arts. 3º and 4º, Act n. 10.996); ·        A reduced rate of state vat – ICMS- of 12% for products imported to the MFZ (art. 1º, Act n. 2369); ·        Exemption of the Freight Surcharge for the Renovation of the Navy Merchant (AFRMM) exceptionally, until December 31, 2015 (art. 4º Act n. 9.808).
	Santa Catarina State ·        ICMS (state vat) deferment on goods to be sold within the state intended for the construction of projects that falls within the rules of the “Pro-employment program”; ·        ICMS deferment to the next stage of sales process, if the products are destined to distribution centers in South and Southeast regions (art. 12, Act n. 13.992); ·        Extension of deadline for payment of the ICMS, up to 24 months, if the company sell its products to distribution centers in the South and Southeast regions (art. 12, Act n. 13.992).
	Espírito Santo State Espírito Santo State offers a range of tax incentives that are not expressly authorized by the CONFAZ, a Brazilian organ that regulates fiscal policy. Due mainly to the “fiscal war”, Brazilian Courts are discussing if benefits not authorized by the CONFAZ shall be considered unconstitutional. Therefore, all the benefits offered by the Espírito Santo State should be considered as risky until the final decision is rendered.
	Minas Gerais State Granting of specific benefits, on case by case basis. These benefits normally refer to ICMS exemptions.
	Rio de Janeiro State ·        ICMS deferment in the import of machinery  intended to compose the fixed assets and in the import of inputs for industrialization (Decree n. 36.451) ·        ICMS presumed credit that results on the internal tax rate of 7% and in the in  interstate rate of 12%.(Decree n. 36.451) ·        RIOINVEST: Funding for structuring investments. Program to attract investment to encourage large-scale projects on the State of Rio de Janeiro. (Decree n. 23.012/97) ·        RIOINDÚSTRIA: Financing of industrial projects and non-structuring that do not fit in Sector Programs and Regional. (Decree n. 24.937/98) ·        RIOPORTOS: Deferred payment of ICMS on imports of goods, beyond funding under the Fundes. (Act n. 4.184/03). ·        Reduces the ICMS on imports for 15% and in the case of the goods come through the Tom Jobim International Airport, to 13%. (Act n.  3.383/04)

Sudene/Adene area (Mostly in the Northeast states) ·        Reduction of corporate income tax in 75% for a period of 10 years; (art. 1º, Decree nº 6.539/08). ·        priority sector companies may apply 30% of the income tax due on reinvestment projects, (art. 115, Normative Instruction SRF nº 267); ·        Accelerated depreciation for purposes of computing the income tax (art. 31, I, Act n. 11196); ·        the credits of PIS and COFINS can be used until 12 months after the acquisition of new equipment (art. 31, II, Act n. 11196); ·        Exemption of the Freight Surcharge for the Renovation of the Navy Merchant (AFRMM) exceptionally, until December 31, 2015 (art. 4º Act n. 9.808). (Benefits, except for the first one, are valid only until 2018)