- How to Import to Brazil
- May 23, 2014
- Law Firm: Manucci Advogados - Belo Horizonte Office
- Brazil has three different types of control over import operations:
1) the administrative control or administrative stage (by the Brazilian public administration in general: import licenses, health surveillance, quality control, etc.);
2) the customs control or customs clearance stage (by the Brazilian Federal Internal Revenue);
3) the financial control or currency stage (by the Brazilian Central Bank). All these types of control are regulated under a unified computerized system, known by its acronym, SISCOMEX.
Only Brazilian companies can obtain the import registration through the SISCOMEX - also known as “RADAR” certification, the tracking register for stakeholders of international trade operations. Therefore, if foreigners want to import to Brazil, they must either incorporate a Brazilian company or assign a local partner (or a trading company) to be responsible for the import process. To sum up, the steps to import goods in Brazil are:
1) Incorporation of an Import Company and the obtaining of the RADAR certification (or the assigning of a local Brazilian company that will perform the import operation);
2) Negotiation between exporter and importer and the drafting of the contract for the international sale of goods between both parties. There are some restrictions for this kind of contract. For example, the DDP (Delivery Duty Paid) Incoterm is prohibited in Brazil;
3) Drafting of the Pro Forma Invoice and other commercial documents by the exporter. These will have to be sent to the importer in Brazil;
4) Obtaining the Import License by the importer in Brazil (this may require special approval from Brazilian agencies such as ANVISA or ANATEL);
5) Drafting of the Foreign Exchange Operation Contract (if the payment will be made in foreign currency);
6) Shipment of the goods in the country of origin. The exporter will have to send all necessary documentation to the Brazilian importer (for example: shipping information, commercial invoice, certificate of origin);
7) Customs clearance in Brazil and the payment of all taxes. The importer will be responsible to prepare the Import Declaration (DI). At the end of the operation, the importer will receive a document from SISCOMEX called “Proof of import”, that proves that the goods have been nationalized in Brazil.
BRAZILIAN IMPORT TAXES
At the time of the customs clearance, the party in the contract responsible for the customs clearance (usually the purchaser) will have to pay all the Brazilian taxes. Basically, the following taxes can be due on any import operations:
• Import Duty: a Federal Tax of which rate varies according to classification of the goods in the Mercosul (Southern Common Market) Common Nomenclature (NCM), similar to the HS Codes;
• IPI: a Federal Tax on industrialized products, a kind of VAT (value added tax);
• ICMS: a State Tax on the circulation of products and services, which is also a VAT;
• PIS and COFINS: social contributions intended to finance social security;
• CIDE: another type of contribution for certain economic segments (for example: fuels);
• AFRMM: a tax on goods imported to Brazil by sea, intended for the renewal of the Brazilian Merchant Fleet.
These taxes will not be due on all import operations in Brazil. Many products, for example, are exempt from the IPI Tax. It is necessary to analyze each product’s NCM codes to define more precisely all the taxes that will be due. Another example are products originated from the Mercosul (Southern Common Market) Customs Union and Free Trade Zone in South America, which will be exempt from the AFRMM tax.
The import license is a type of administrative control in Brazil. There are two types of import licenses in Brazil: the Automatic license: (granted to most products imported to Brazil) and the non-automatic license. In the second case, authorization from a Brazilian Agency will be necessary, depending on the product, for example:
• The Brazilian Health Surveillance Agency (ANVISA);
• The Brazilian Telecommunications Agency (ANATEL);
• The Brazilian Institute of Environment (IBAMA);
• The National Petroleum Agency (ANP).
Importing to Brazil without an import license when it is necessary can result in several penalties for the importer, including the confiscation of the goods and governmental fines.
There are three import categories or procedures in Brazil: “Direct Import”, the “Import under Order” and “Import on Behalf of Others”. Whereas the “Direct Import” is the most common and most simple way to import in Brazil, “Import on Behalf” and “Import under Order” are two types of outsourcing of import operations. Usually this service is outsourced to a Trading Company in Brazil, that will later resell the product to another Company or purchaser.
Each of these methods will have a distinct tax liability and will affect the costs (and, therefore, the price) of the product to be purchased in Brazil. The best modality for each operation will depend on the type of product that the exporter will sell in Brazil.
On the “Direct Import”, the importer will purchase the goods with its own resources and will be responsible for the customs clearance of the goods.
The “Import on Behalf of Others” is regulated by the Normative Instructions of the Brazilian Federal Internal Revenue Nº. 225 and 247, both from 2002. In this case, the import service will be provided by a Company (the importer) that will be responsible for the customs clearance of the goods, but the purchaser will have ownership of the goods. One should notice that this operation will only be considered legal if there is a contract between the importer and the final purchaser. Both importer and purchaser must be registered on SISCOMEX.
The “Import under Order” is regulated by the National Act of the Brazilian Federal Internal Revenue Nº. 11281 of 2006 and the Normative Instruction No. 634 of 2006. In this case, the importer will purchase the goods under its own name and resell them to the final purchaser. There will be an ownership transfer operation. While “Import on Behalf” is considered a service operation, the “Import under Order” is considered a purchase operation. In this case, a contract is also necessary between the parties and both must be registered on SISCOMEX, but the final purchaser can be registered under the simplified registry.
TYPES OF PAYMENTS
Besides the three import modalities in Brazil, there are many ways to perform the payment of the operation.
• Payment in advance;
• Remittance without draft;
• Payment in full upon delivery;
• Deferred payment;
• Letter of credit;
• Financial transfer.
The modality of payment will have to be specified on the contract for the sale of goods between the exporter and the importer: