Short answer. The Zona Franca de Manaus (ZFM) is Brazil’s flagship free-trade and industrial-incentive zone in the Amazon, created to attract manufacturing through reduced federal and indirect taxation. Crucially for long-term investors, the 2026 tax reform expressly preserves the ZFM, adapting its benefits to the new IBS/CBS system rather than abolishing them. The December-2025 benefit-reduction law (LC 224/2025) also expressly excepted the ZFM from its 10% linear cut to federal incentives.
What the ZFM is
Established by Decreto-Lei 288/1967 and administered by SUFRAMA, the ZFM grants tax incentives for industrial projects in and around Manaus — historically through reduced import duty (II), IPI benefits and indirect-tax treatment, conditioned on approved local manufacturing (the “basic productive process”). [Source: Decreto-Lei 288/1967 — Planalto; SUFRAMA]
How the 2026 reform treats it
A common investor fear was that the IBS/CBS reform would erase the ZFM advantage. It does not. The reform constitutionally preserves the zone: its benefits remain until the deadline set in the transitional rules (ADCT), and LC 214/2025 adapts how they operate under the new taxes — including presumed IBS/CBS credits, zero-rating for certain internal operations, and suspension on qualifying acquisitions. IPI is kept specifically to protect products manufactured in the ZFM (a deliberate mechanism so the zone retains its edge as IPI is phased out elsewhere). [Source: EC 132/2023 (ADCT); LC 214/2025 — Planalto]
A practical point: there is no single “collect first, credit later” mechanism for every ZFM transaction. Depending on the operation, LC 214/2025 can apply zero-rating, suspension or a presumed credit. Some credits reduce tax due at import; others offset tax debits on qualifying sales. The result depends on the transaction, the product, SUFRAMA habilitation and, where applicable, the approved basic productive process. [Source: LC 214/2025, arts. 439–457; SUFRAMA Technical Notes 6 and 14/2025]
What a foreign investor should verify
Before putting a ZFM benefit into a business case, verify:
- The eligible footprint: the project or establishment must fall within the applicable ZFM rules and SUFRAMA controls.
- The product and productive process: product exclusions, national-similar rules and an applicable basic productive process can change the available treatment.
- The transaction flow: importing for local resale, acquiring national inputs, selling within the ZFM and selling to the rest of Brazil do not use identical tax mechanics.
- The cash-flow timing: model when IBS/CBS is paid, reduced or recovered instead of treating the nominal incentive as an immediate cash saving.
- The right comparison: ZFM consumption-tax incentives are distinct from SUDAM/SUDENE income-tax incentives and from the ordinary Brazil import-tax stack.
These checks should be performed for the specific product and operating chain. A Manaus address alone does not establish entitlement to every incentive.
Practical takeaway
For a foreign manufacturer weighing a Brazilian footprint, the ZFM remains a live, reform-protected incentive — but its value now depends on correctly operating the presumed-credit mechanics and meeting the productive-process conditions. Model it under the post-reform rules, not the legacy ones.
FAQ
Does the 2026 reform end the Manaus Free Trade Zone benefits? No — the reform expressly preserves the ZFM and adapts its benefits to IBS/CBS.
Who administers the ZFM? SUFRAMA, under the framework of Decreto-Lei 288/1967.
How do the benefits work after the reform? Largely through presumed IBS/CBS credits and zero-rating/suspension on qualifying operations, with IPI retained for ZFM-manufactured goods.
Does every company in Manaus automatically qualify? No. Eligibility depends on the establishment, transaction, product, SUFRAMA habilitation and, where applicable, compliance with an approved basic productive process.
Sources
Official sources reviewed for this brief: the founding legislation of the free-trade zone (Decreto-Lei 288/1967 — Planalto); the tax-reform framework preserving it (EC 132/2023; Lei Complementar 214/2025, consolidated text); the express ZFM exception from the 2025 federal benefit reduction (Lei Complementar 224/2025, art. 1, § 8); and SUFRAMA’s implementation material (Technical Note 6/2025, Technical Note 14/2025 and the SUFRAMA portal).