Government reduces IPI on products manufactured in Brazil

Decree published by the federal government last Friday (29) (Decree nº 11,158) establishes the items manufactured in Brazil for which the 35% reduction in the Tax on Industrialized Products (IPI) will be valid. The decree also excludes from the list the main products that are manufactured in the Manaus Free Trade Zone.

According to the government, the decree complies with a court decision (ADI 7153) that determined the preservation of the competitiveness of products produced in the Free Zone.

According to the Ministry of Economy, the decree provides legal certainty for the reduction of the IPI.

“By detailing the products that will have their rates changed, the new edition clarifies the correct application of the IPI on the invoicing of industrialized products, guaranteeing legal certainty and the advancement of tax relief measures. The text also presents specific treatment to preserve practically the entire effective production of the ZFM, taking into account the Basic Production Processes.

The measure also brings an additional reduction of the IPI, from 18% to 24.75%, for automobiles. “The increase in this percentage equates the tax reduction for the automotive sector to that granted to other industrialized products”, says the Ministry of Economy.

The ministry also explained that, with the decree, national and imported products will benefit, in addition to causing a positive impact on the Gross Domestic Product (GDP), with the reduction of the Brazil cost and greater legal certainty. “We hope to increase the competitiveness of the industry, with less taxes and increased production”.

The IPI is a federal tax that is levied on approximately 4,000 national and imported items that have undergone some industrialization process (processing, transformation, assembly, packaging or restoration). With an extrafiscal character (regulatory tax), the IPI can be used to promote an economic sector through exemption or reduction of rates so that more products produced by the sector are sold.

Translated to english by RJ983

From Brazil, by EBC News

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