Free Zone
Zona Franca de Manaus
Brazil's tax-free manufacturing zone — II, IPI, and ICMS exemptions that change the math on electronics, two-wheelers, and more.
Updated May 2026
The Zona Franca de Manaus (ZFM) is a free trade zone in the Amazon that operates under completely different tax rules than the rest of Brazil. For certain sectors — electronics, motorcycles, components, chemicals — the ZFM is the reason the operation exists. Products manufactured there enjoy import duty exemption, IPI reduction, and ICMS credits that no other Brazilian location can match.
Essential terms
?What is ICMS?
ICMS (Imposto sobre Circulação de Mercadorias e Serviços) is a state-level VAT charged on imported goods. Rates vary by state (typically 17–20%, up to 25% for some products). ICMS cascades on top of other import taxes, significantly increasing landed cost.
ICMS rates by state?What is an NCM code?
NCM (Nomenclatura Comum do Mercosul) is Brazil's 8-digit tariff classification code. The first 6 digits match the international HS (Harmonized System) code — the remaining 2 are Mercosur-specific. Every import tax rate in Brazil is determined by the NCM code.
HS → NCM lookup tool?What is a CNPJ?
CNPJ (Cadastro Nacional da Pessoa Jurídica) is Brazil's national business registry number — equivalent to an EIN (US), Company Number (UK), or Handelsregisternummer (Germany). Every company that imports into Brazil must have a CNPJ.
CNPJ registration guideGuaranteed until 2073
The 2023 tax reform (EC 132/2023) explicitly preserved the ZFM's tax incentives until 2073. While the rest of Brazil migrates to CBS + IBS, the ZFM keeps its special regime. IPI — being eliminated everywhere else — is maintained specifically to preserve ZFM competitive advantages.
What is the Zona Franca de Manaus?
Created in 1967 (Decree-Law 288), the ZFM is a 10,000 km² industrial and commercial zone centered on the city of Manaus, capital of Amazonas state. Its purpose was to develop the Amazon region by attracting industry through massive tax incentives.
Today, the ZFM hosts over 600 industrial plants generating R$ 160+ billion in annual revenue, employing 500,000+ people directly and indirectly. Major players: Samsung, LG, Honda, Yamaha, Philco, Positivo, Flex.
Tax incentives: how they work
| Tax | Regular import (SP) | ZFM import | Condition |
|---|---|---|---|
| II (Import Duty) | 0-35% | Exempt (88% reduction for inputs) | Must be for industrial use in ZFM |
| IPI | 0-300% | Exempt | On goods produced in ZFM |
| ICMS | 17-22% | Credit/exemption | Amazonas state grants ICMS credit |
| PIS/COFINS | 11.75% | Reduced or exempt | For inputs used in ZFM production |
Landed cost comparison: Manaus vs. São Paulo
Same product, same origin, dramatically different costs. Example: electronic components (NCM 8542.31.10), CIF USD 100,000, sea freight.
| São Paulo (regular) | Manaus (ZFM) | |
|---|---|---|
| CIF (R$) | 570,000 | 570,000 |
| II (16%) | 91,200 | 10,944 (88% reduction) |
| IPI (15%) | 99,180 | 0 (exempt) |
| PIS + COFINS | 66,975 | 0 (exempt) |
| ICMS | 181,746 | 0 (credit) |
| Total taxes | R$ 439,101 | R$ 10,944 |
| Savings | R$ 428,157 (97.5%) |
Simplified calculation for illustration. Actual ZFM benefits depend on the PPB (Basic Production Process) and SUFRAMA approval.
Key sectors in the ZFM
Electronics & IT
The ZFM's largest sector. TVs, smartphones, tablets, printers, audio equipment assembled from imported components.
Key players: Samsung, LG, Philco, Positivo, Flex
Motorcycles & vehicles
Honda and Yamaha produce all Brazil-sold motorcycles in Manaus. Components imported duty-reduced.
Key players: Honda, Yamaha
Chemical & plastics
Raw materials and intermediates processed in ZFM for national distribution.
Key players: P&G, Gillette
Optical & precision
Optical media, precision instruments, and medical devices assembled from imported parts.
Key players: Multilaser, various Asian JVs
The PPB requirement: not automatic
ZFM tax incentives aren't automatic. To qualify, the product must follow a PPB (Processo Produtivo Básico) — a minimum set of manufacturing steps that must be performed in the ZFM. The PPB is defined per product category by MDIC.
For a smartphone, for example, the PPB might require: PCB assembly (SMT), display integration, software loading, and final testing — all performed in Manaus. Importing a fully assembled phone and just putting it in a box doesn't count.
The PPB ensures that ZFM incentives go to genuine manufacturing, not just rebadging.
SUFRAMA: the ZFM regulator
SUFRAMA (Superintendência da Zona Franca de Manaus) is the federal agency that administers the ZFM. Key functions:
- Approves industrial projects and issues tax incentive authorizations
- Monitors compliance with PPB requirements
- Manages the ZFM's CNAE (economic activity classification) registry
- Issues the SUFRAMA PIN (Projeto Industrial) that activates tax benefits
Your Brazilian buyer in the ZFM must have SUFRAMA approval for their specific product before importing with incentives.
What this means for exporters
If your product is a component, raw material, or intermediate good used in ZFM manufacturing:
- Your buyer's landed cost is dramatically lower. The tax incentives make imported inputs much cheaper in Manaus than in São Paulo — even accounting for the higher logistics cost of shipping to the Amazon.
- You may already have customers there without knowing it. Many ZFM operations purchase components through trading companies or distributors. Find out if your product ends up in Manaus.
- The competition is between locations, not between suppliers. A Korean component maker isn't just competing against a German one — they're competing against the tax difference between ZFM and regular import.
- Logistics matter. Manaus is served by ocean freight (up the Amazon River) and air freight. Transit time from Asia is often shorter via direct ocean routes than from Europe.
ZFM and the 2026-2033 tax reform
The tax reform (EC 132/2023) explicitly addresses the ZFM:
- IPI is preserved for products with ZFM equivalents — everywhere else in Brazil, IPI is being eliminated. This means products made in the ZFM maintain their IPI exemption advantage over the rest of Brazil.
- ZFM incentives guaranteed until 2073 — the reform cannot reduce existing benefits.
- New Contribuição de Intervenção no Domínio Econômico (CIDE) may replace some ZFM mechanisms, but the net tax advantage is maintained.
In practice: the ZFM's competitive advantage is constitutionally protected for the next 47 years. This is not a temporary incentive — it's a structural feature of the Brazilian economy.