The Manaus Free Trade Zone: Incentives for Manufacturers and What the Tax Reform Keeps

The Manaus Free Trade Zone (Zona Franca de Manaus, ZFM) is Brazil’s main regional incentive for manufacturing. Created in 1967 and guaranteed by the Constitution until 2073, it hosts an industrial cluster of electronics, motorcycles, IT equipment and other goods that are sold across Brazil with a tax advantage over products made elsewhere. The consumption tax reform replaces most of the taxes on which those incentives were built, but the Constitution requires the new system to keep the zone’s competitive edge. This guide explains how the incentives work today and how they are being rebuilt in the new CBS and IBS.

Legal basis and duration

The ZFM was created by Decree-Law 288/1967 as a free trade area for imports and exports with special tax incentives. The Constitution’s transitional provisions maintain it, and successive amendments extended it until 2073. Only a federal law can change the criteria for approving industrial projects. The area covers part of the municipalities of Manaus, Rio Preto da Eva and Itacoatiara, in the state of Amazonas.

The incentives before the reform

Manufacturers of IT goods in the zone receive the same incentives but must invest at least 5% of their domestic gross revenue in research, development and innovation in the Western Amazon or Amapá (Law 8,387/1991).

Who can benefit

• Project approval: the industrial project must be approved by SUFRAMA’s Administrative Council (CAS), with the State of Amazonas and the City of Manaus heard.
• Basic Production Process (PPB): each product must follow a PPB, the minimum set of manufacturing operations that must take place in the plant, set by joint ordinance of the Ministries of Development and of Science and Technology.
• Excluded products: weapons and ammunition, tobacco, alcoholic beverages, passenger cars, oil, lubricants and fuels, and most perfumes and cosmetics.

What the tax reform keeps

Constitutional Amendment 132/2023 requires the laws creating the CBS and IBS to maintain, in general terms, the competitive advantage of the ZFM and of the free trade areas at the levels that existed under the abolished taxes. Two mechanisms carry this out:

IPI stays for products also made in Manaus

From 2027, IPI is reduced to zero across Brazil except for products whose manufacture is incentivized in the ZFM. Products made elsewhere that compete with ZFM products keep paying IPI, which preserves the zone’s advantage. Complementary Law 214/2025 sets the details: products with an IPI rate below 6.5% that were made in the zone in 2024, or had projects approved in recent years, go to zero, and products without a domestic equivalent made in the zone carry a minimum IPI rate.

CBS and IBS with presumed credits

Complementary Law 214/2025 (articles 439 to 457) rebuilds the incentives inside the new taxes:

• Imports by incentivized manufacturers are made with CBS and IBS suspended, converted into exemption when the goods are used in production.
• Purchases from the rest of Brazil by registered businesses in the zone are at a zero rate, with presumed IBS credits on certain inflows.
• Sales of goods manufactured in the zone generate presumed credits on the tax due: for IBS, 55% for final consumer goods, 75% for capital goods, 90.25% for intermediate goods and 100% for IT goods and products that had 100% state ICMS credit; for CBS, 6% or 2% depending on the product.
• Sales within the zone are at a zero CBS rate.
• Presumed credits can only be used against the same tax and are not refundable in cash.

The IBS percentages mirror the structure of the Amazonas ICMS stimulus credits they replace. The CBS mechanics apply from 2027, and the IBS mechanics from 2029, as ICMS is phased out. The State of Amazonas may require a contribution of up to 1.5% of revenue from 2033. Detailed rules for the CBS are in Decree 12,955/2026.

Free trade areas

Brazil also has smaller free trade areas (Áreas de Livre Comércio) in Tabatinga, Guajará-Mirim, Boa Vista and Bonfim, Macapá and Santana, and Brasiléia, Epitaciolândia and Cruzeiro do Sul, with similar mechanics. Industrial incentives there require a predominance of regional raw materials.

Is Manaus right for your group?

1. Product fit: check whether a PPB exists or can be approved for your product, and whether it is excluded.
2. Logistics: Manaus is far from the main consumer markets in the South and Southeast; freight and lead times offset part of the tax gain.
3. Model both regimes: compare the landed cost of ZFM production with imports or manufacturing elsewhere, under current taxes and under CBS, IBS and the residual IPI from 2027 (see Brazil’s tax reform explained).
4. Income tax: the SUDAM reduction requires Lucro Real and a project approved by 2028 (see Lucro Real or Lucro Presumido).
5. Compliance: incentives come with obligations, including PPB compliance, R&D investment for IT goods and detailed tax reporting.

How Solidy can help

Solidy already serves subsidiaries of multinational companies in Brazil. Our tax team models the economics of manufacturing in the ZFM against other options under the current and reformed tax systems, and our accounting team keeps the books and credit controls that incentivized operations require. Talk to specialists in your industry.