TMT Daily "INTB: Tax reform raises the cost of producing outside Manaus;..."

Research evidence excerpt

TMT Daily "INTB: Tax reform raises the cost of producing outside Manaus;..."

Global Research

11 June 2026ab

TMT Daily Equities

Emerging MarketsINTB: Tax reform raises the cost of producing

outside Manaus; TOTVS: Google's AI price cut Telecommunications

adds to the commoditization debate Leonardo Olmos,AnalystCFA

leonardo.olmos@ubs.com

+55-11-9658 7533

INTB: Tax reform raises the cost of producing outside Manaus Gustavo Farias

Associate Analyst

What happened: According to Valor, tax experts say the tax reform's plan to end gustavo.farias@ubs.com

state tax incentives starting in 2033 could make electronics manufacturing unviable +55-11-2767 6154

outside the Manaus Free Trade Zone (ZFM). Key points:

Manaus gains a structural cost edge. Simulations show that by 2030, still in

the transition period of the reform, the total tax burden of making a

smartphone in Minas Gerais would be 26.5% higher than in Manaus, where

benefits run at least until 2073. Fiesp's legal director said the tax gap for IT

products could reach up to 419%.

How the transition works. State incentives phase down gradually between

2027 and 2032. From 2029 to 2032, ICMS is replaced by the new IBS, and states

can keep offering incentives through a compensation fund (FCBF). Starting in

2033, only Manaus incentives remain. Companies there can also access CBS tax

credits of 2% or 6% starting next year, and Suframa estimates the hub could

receive 200 new factories over the next three years.

Relocation comes with conditions. Tax experts noted not every company can

relocate to Manaus, given restrictions on certain product categories and the

need for an approved basic production process (PPB). The PPB sets a minimum

set of local production steps and must be approved by the Ministries of