Michel Temer sanctions law that threatens competitiveness of the Manaus Free Trade Zone

Law postpones the end of the "fiscal war" between states to give grace 15 years for the units of the Federation do away with exemptions that have been granted to industry, agriculture and infrastructure without the permission of Confaz.
09/08/2017 15h48 - Updated 10/08/2017 10h41
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Or President Michel Temer (PMDB) sanctioned with two vetoes, on Tuesday (8), the law that removes the exclusivity of states like Amazonas, Holy Spirit, Goias and Sao Paulo to grant tax benefits without consulting the other States. The text was published in the Official Gazette (DOU) from yesterday.

The new law regulates the reduction of charging tax on Circulation of Goods and Services (ICMS) given by States in the "war tax". No Amazon, second economists, the measure threatens the competitiveness of the Manaus Free Trade Zone (ZFM).

The new law postpones the end of “tax war” between states to give grace 15 years for the units of the Federation do away with exemptions that have been granted to industry, agriculture and infrastructure without the authorization of the National Council of Farm Policy (Confaz). The proposal was mainly defended by northeastern states, which were likely to have canceled the incentives given illegally to a company situated in the region.

Besides that, the law changes rules for permission for new tax incentives. From now on, is not mandatory that a State can the unanimous consent of all members Confaz to give a tax break. You will only need a favorable vote, for approval and ratification, two-thirds of federal units and one third of the members of federal units of each of the five regions of the country.

vetoes
The text sanctioned came with two vetoes, conform a Broadcast, news real-time service of the State Group, I had already anticipated, despite the allied base pressure leaders of the National Congress, who asked for the Planalto Palace to disobey veto orientation of government technical teams.

One of the vetoes refers to the part that matched ICMS tax incentives for investment and the grant, that is why, authorizing States to give the same incentives previously granted by other units of the Federation without a new endorsement of Confaz.

The other is related to the veto article that extended the waiver new endorsement of Confaz also to ICMS tax incentives introduced irregularly, contrary to constitutional rule.

According to the government's justifications, the vetoed portions violate the provisions of the New Tax Regime, the spending ceiling, for not presenting the budgetary and financial impact of the tax relief. Besides that, "I do not merit, cause tax distortions, to match the grants merely to fund the investment to, disfiguring their initial intent, to increase economic investment, besides representing significant impact on federal tax revenues ".

The government also claims that, if these two devices were kept in the law, "Could occur opposite result to that intended by design, aggravating and encouraging so-called 'fiscal war' between the United, rather than mitigate it ".


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