Brazilian Government sanctions the New Legal Framework for Export Processing Zones - EPZ.

Law # 14,184/21, which amends Law # 11,507/2007 and provides for the tax, exchange and administrative regime of Export Processing Zones (EPZs), revokes the obligation for companies to export 80% of their production, and encourages companies producing medical oxygen to direct all their production to the domestic market, was published in the Official Gazette on 07/15/2021.

The law also allows private initiative to create EPZs, by means of public authority authorization; it adapts the internalization rule to the World Trade Organization (WTO) rules; and facilitates the construction of EPZs in areas connected to ports and airports.

Export Processing Zones are the global instrument by which countries ensure that their taxes are not "exported". China's industrial success in recent decades, for example, is due to hundreds of EPZs, a model successfully replicated in several countries, such as the United States, Colombia, South Korea, and Uruguay.

They are characterized as areas of free trade with other countries, destined for the installation of companies that produce goods to be traded abroad, and are considered primary zones for customs control purposes.

They are areas where companies are allowed to settle, relying on the suspension of taxes on the purchase of machinery, raw materials and inputs used in the production of goods to be exported. The customs treatment is differentiated and the zones are installed in regions to foster economic development.

In Brazil, the EPZ/CE, in Pecém, is in operation, and 13 more authorized ones are under effective implementation: Acre EPZ (AC); Açú EPZ (RJ); Araguaína EPZ (TO); Bataguassú EPZ (MS); Boa Vista EPZ (RR); Cáceres EPZ (MT); Ilhéus EPZ (BA); Imbituba EPZ (SC); Macaíba EPZ (RN); Parnaíba EPZ (PI); Suape EPZ (PE); Teófilo Otoni EPZ (MG); and Uberaba EPZ (MG). See in the map below the EPZs created in Brazil before and after Law 11.508/2007.

With the Legal Framework of the EPZs, the regime will be modernized and adapted to the current global context of relocation of productive value chains in the post-pandemic world. The new framework will come into force on two dates: most of the tax provisions will only come into force in January 2022. The other provisions will become effective 90 days after publication.

Note: This article is informative and general in nature, and does not constitute legal advice for any specific operation or business. For any additional information, please contact us at reginaldo@rastaxlaw.adv.br

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Credit: Wix Media