Supreme Court settles 50-year battle and establishes ZFM in action led by Wilson Lima

Marcela Leiros – From Cenarium Amazon Magazine

MANAUS (AM) – The Federal Supreme Court (STF) has resolved an impasse that had lasted for almost 50 years in the Manaus Free Trade Zone (ZFM) in an action led by the governor of Amazonas, Wilson Lima (União Brasil). The Court unanimously validated the use of credits from the Tax on the Circulation of Goods and Services (ICMS) from the Manaus Free Trade Zone (ZFM) without the consent of other Brazilian states during a plenary session on Monday 11, published on Tuesday 12.

The lawsuit was filed against the state of São Paulo over decisions by the São Paulo State Tax Court (Tribunal de Impostos e Taxas do Estado de São Paulo – TIT) that invalidated ICMS credits relating to purchases of goods from Amazonas, covered by tax incentives under the Manaus Free Trade Zone regime. The Supreme Court’s decision confirms Complementary Law No. 24, of January 7, 1975, from 48 years ago, which deals with ICMS exemptions and specifically mentions the ZFM, indicating that the provisions of the law do not apply to industries in the zone.

“The provisions of this law do not apply to industries installed or that will be installed in the Manaus Free Trade Zone, and the other Federation Units are prohibited from determining the exclusion of a tax incentive, prize or stimulus granted by the State of Amazonas”, the law states.

The justices agreed with the rapporteur, Justice Luiz Fux, on the use of ICMS credits by companies in the Manaus Industrial Estate (PIM). There were ten votes in favor with no dissenting votes. In addition to being celebrated by the state government’s economic team, on the social network X, Wilson Lima celebrated the Amazonas victory, pointing out that the STF followed the Magna Carta.

“The Federal Constitution guarantees that tax incentives relating to ICMS can be granted to industries installed here without requiring the consent of the other states and the Federal District, and this will continue to be the case”, he posted.

In an interview with CENARIUM AMAZON MAGAZINE, the state secretary for Development, Science and Technology, Serafim Corrêa, stressed that the decision represents a victory for the state, in particular for the Amazonas State Treasury Department (Sefaz) and the Amazonas State Attorney General’s Office (PGE).

Corrêa, who is an economist, former mayor, former councilman and former congressman, has extensively studied the Free Trade Zone, which even resulted in a book called “Zona Franca de Manaus – História, Mitos e Realidade” (Manaus Free Trade Zone – History, Myths and Reality).

“In practice, this gives legal certainty both to those who sell to the Free Trade Zone and to those who buy from the Free Trade Zone in São Paulo”, he said. “You can be sure that what you’ve done is right, because the Supreme Court has said it’s right, and there’s no one above the Supreme Court”, said Serafim.

The STF decision was favorable to Amazonas in its lawsuit against the São Paulo State Treasury, which rejected tax credits for products from the economic model. The lawsuit was filed by the Amazonian government, which argued that the law guarantees the granting of ICMS tax incentives to ZFM companies, and prohibits other states from canceling tax credits from PIM operations.

“São Paulo has never agreed to this, but it used to ‘bite and blow’. He would assess a company, then that company would have a problem with the Manaus company, and would end up not buying from the Manaus company anymore. This went on for years and years. Recently, the TIT [Tax Court] decided that the law was unconstitutional. It’s been going on all this time, and now the Supreme Court is saying ‘São Paulo, stop talking like this, that’s enough, you’ve had enough’,” Corrêa added.

Historic attacks

The Amazonas government’s lawsuit against São Paulo had been going on for years in the Supreme Court. In August last year, Justice Rosa Weber decided monocratically not to accept the state government’s appeal, which would have forced the Superior Chamber of the TIT to recognize the ICMS credits. At the time, the Amazonas government filed an interlocutory appeal to challenge the decision.

Economist and advisor to the Amazonas Regional Economics Council (Corecon-AM), Inaldo Seixas, recalled that, despite the constant attacks on the Manaus Free Trade Zone, the existence of the economic model continues to be protected by law until 2073, unless there are changes, such as the approval of a Constitutional Amendment.

“I think this is yet another victory, this time a resounding one, unanimously ratifying the right of the state of Amazonas to grant tax incentives without needing the consent of Consefaz and other states and the Federal District”, he said. “Because not only does the Constitution guarantee differentiated treatment specifically for the Free Trade Zone, but the complementary law also guarantees this right for Amazonas, to grant tax incentives exclusively”, concluded the Corecon-AM representative.

Editing: Yana Lima
Review: Gustavo Gilona