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2.4 Trade Regulations

Eligibility for Conducting Foreign Trade

Import transactions in Brazil are subject to regulation, authorisation and inspection by the Ministry of Finance’s Federal Revenue Secretariat (Receita Federal do Brasil - RFB) and the Ministry of Development, Industry and Foreign Trade (MDIC)’s Foreign Trade Secretariat (Secretaria de Comércio Exterior - SECEX). To obtain such an authorisation, the importer must follow import procedures, which currently are conducted electronically by means of the Integrated System for International Trade (Sistema Integrado de Comércio Exterior), known as the Siscomex. Paperwork is still required, however, and original shipment documents must be kept for five years for an eventual Customs review

RFB Exporters and Importers Registry

The first requirement for a company to be allowed to import goods into Brazil is to enrol in the so-called RADAR system. RADAR was created to keep all the company’s operations on file for prospective oversight (whenever needed) and to have a prior evaluation of the company before giving the import and export authorisation. Currently, the enrolment process may take up to two months.

In order to register in RADAR, the company must present the following documents as required by the General Co-ordination of Customs System (Coordenador-Geral do Sistema Aduaneiro) - Coana Act 3/2006.

  • Company’s act of incorporation.
  • Registry at the Brazilian Board of Trade.
  • Identification document of the company representative.
  • Power of attorney to represent the company (if applicable).
  • Identification document of the person responsible for accounting and tax matters.
  • Company’s balance sheet.
  • Company’s income statement.
  • Company’s capital payments or capital increase statements.
  • Copy of payments of electric bills and Municipal Real Estate tax (IPTU).
  • Copy of state value-added tax (ICMS) and Municipal Service tax (ISS) payments

After registering, the company must appoint a representative to operate the customs clearance services through the Siscomex. According to RFB Regulatory Instruction 650/2006, the company’s representative may be: (i) a licensed customs broker; (ii) an officer or employee of the company; (iii) an employee from a controlled company; or (iv) a government employee for special representation of public companies.

Each representative will have access through his/her National Individual Register (Cadastro de Pessoa Física – CPF) number and will be connected to the represented company’s corresponding National Legal Entity Register (Cadastro Nacional de Pessoa Jurídica – CNPJ). A foreign company can obtain a CNPJ number at the RFB as long as it has a representative address in Brazil with a power of attorney to represent and administer the company.

A natural person not representing a company can also import through a Siscomex registry since his/her importation is not considered commerce.

SECEX Exporters and Importers Registry

Once enrolled in RADAR, the company should also enrol in the SECEX Exporters and Importers Registry (Registro de Exportadores e Importadores), known as REI. Enrolment is automatic upon the execution of the company’s first import transaction. Such a registration will enable the company to directly operate within the Siscomex system, a computerised system through which customs clearance and import licensing operations are processed.

Import Taxes

Brazil applies import duties as well as a wide range of indirect taxes on import and local transactions. Generally, export transactions are not subject to taxes. Products imported and/or circulated in Brazil are essentially subject to the following taxes.

  • Import duties.
  • Federal value-added tax (IPI).
  • Social Contributions PIS and COFINS.
  • State value-added tax (ICMS).
  • Municipal Services Tax (ISS).

Import Duties

Import duties are levied by the federal government on foreign goods entering the Brazilian territory. According to Brazilian customs regulations, a taxpayer is defined as the importer who promotes the entry of goods into Brazilian territory. As a general rule, the taxable value for Brazilian customs purposes is the customs value in accordance with the WTO Valuation Code. Import duties are not recoverable for goods sold within Brazil and are consequently a cost for the importer except in certain cases, such as re-exportation under a special customs regime.

In general, the customs value of goods is determined on a CIF (cost, insurance and freight) basis, pursuant to one of the six methods described in the WTO Valuation Code. The first method, the so-called transaction value, applies to most import transactions (around 90%). It consists of the effective price paid or payable for the acquisition of a good, which includes several costs, such as charges and expenses on the sale, international transport and insurance costs.

Pursuant to customs valuation legislation, there are some situations where the first method will not be accepted, namely import operations not related to a sale or import operations between related parties influencing the parameters of the transaction. Article 15 of the WTO Valuation Code determines under which conditions entities should be considered as being related parties for customs purposes. Examples include mutual officers or directors of one another’s business, companies being legally recognised as partners in business, employer and employee, a company being subsidiary of the other, etc.

According to Article 2 of the WTO Valuation Code, whenever the first method (transaction value) is not applicable, the second method, known as the transaction value of identical goods method, must be used. When this method is used, the value of identical goods previously imported will be considered as the customs value of the goods to be imported. Moreover, the comparison goods must have been exported at or about the same time and be a product of the same country as the goods being valued.

According to Article 3 of the WTO Valuation Code, whenever the second method (transaction value of identical goods) is not applicable, the third method, known as the transaction value of similar goods method, must be used. When this method is used, the transaction value of similar goods previously imported will be considered as the customs value of the goods to be imported. Moreover, the comparison goods must have been exported at or about the same time and be a product of the same country as the goods being valued.

According to Article 5 of the WTO Valuation Code, whenever the third method (transaction value of similar goods) is not applicable, the fourth method, known as the deductive value method, must be used. The deductive value is understood as the resale price of the goods to be imported, minus the following costs incurred in the country of importation: (i) the usual commission or reseller’s mark-up; (ii) inland transport and related costs; and (iii) duties and taxes in the country of importation.

According to Article 6 of the WTO Valuation Code, whenever the fourth method (deductive value) is not applicable, the fifth method, known as the computed value method, must be tested. The computed value is conceived as the cost (producer’s cost of materials and fabrication or other processing, including packing) of the goods to be imported plus the following amounts: (i) the usual margin for profit and general expenses in sales of goods of the same “class or kind” made by producers in the country of exportation for export to the country of importation; (ii) transportation and related costs to the point of importation; (iii) inland transport and related costs; and (iv) duties and taxes in the country of importation. Such a method, however, will not be applied if one or more of the aforementioned amounts are unknown.

If none of the previous methods can be applied to the import operation under consideration, Article 7 of the WTO Valuation Code allows the importer to use other reasonable methods, which should, to the greatest extent possible, be based on principles and general criteria used by the international commercial community.

It should be noted that the use of the following methods is forbidden.

  • The selling price in the country of importation.
  • The price of goods in the domestic market of the country of exportation.
  • The cost of production, other than computed values which have been determined for identical or similar goods in accordance with the provisions of Article 6 of the WTO Valuation Code.
  • The price of the goods for export to a country other than the country of importation.
  • Arbitrary or fictitious customs values.

With certain exceptions, the Mercosur Common External Tariff applies to trade with non-Mercosur countries. CET rates can only be modified with the consent of all members. Duty rates range from zero to 35%.

The Brazilian government approved on 25 April 2007 an increase from 20% to 35% in the most favoured nation duty rate for apparel, footwear and certain textiles. The duty increase was requested by the Brazilian Textile and Apparel Industry Association and other associations, which have complained that imports from China and other Asian countries are harming the domestic industry. The duty increase on footwear was approved by Mercosur on 18 July 2007. On September, 2007 Brazil increased the import duty for textile, from 18% to 26% and footwear from 20% to 35%.

Federal VAT (IPI)

The IPI is levied by the federal government on finished goods (imported goods and goods produced domestically). According to the IPI regulations, finished goods are the result of an industrial process even if such a process is incomplete, partial or intermediate. The IPI is levied at the point of sale of domestic products shipped from an industrial or similar establishment. For imports, it is levied at the point of customs clearance of the finished goods and is based on the CIF value plus the import duty.

IPI rates vary according to the classification of the goods in the IPI Tariff Table (which follows the classification system of the Mercosur Common External Tariff). IPI rates range from 5% to 35% and the same rates apply for domestically produced and imported goods.

IPI is a non-cumulative value-added tax, where the amount charged in each successive taxable sale transaction can generally be deducted from the IPI incurred on purchase transactions. IPI does not apply to the acquisition of fixed assets.

Social Contributions PIS and COFINS

Social contributions are levied at the federal level. They include the contribution for the social integration programme (PIS) and the social security contribution (COFINS). These contributions are levied at a combined rate of 9.25%. The following taxable events can trigger PIS and COFINS.

  • The customs clearance of products.
  • Monthly revenue registration - Exports are exempt.

Currently, most financial revenues are subject to a zero percent PIS/COFINS. Both PIS and COFINS are non-cumulative taxes (i.e., the acquisition of raw materials, as well as some specific business-related costs and expenses listed in PIS/COFINS legislation (e.g., rent, electricity, financial expenses, depreciation of operating assets, etc.) generate tax credits to be offset against the tax due on the sale of goods or services).

Some taxpayers are still subject to the previous PIS and COFINS cumulative regime (unable to claim any credits related to PIS/COFINS incurred on their expenditures) and its previous tax rates (combined rate of 3.65%), including taxpayers that opted to calculate income tax under the presumed income method.

The basis for the calculation of the PIS/COFINS is the monthly revenue of the entity adjusted by certain exclusions. On the import of goods into Brazil, the basis for PIS/COFINS calculation is the customs value of the goods plus the value of ICMS (see below). Also, the amount of PIS/COFINS due must be grossed up. In other words, the amount of PIS/COFINS due on import operations will be included in its own tax basis for calculation purposes.

State VAT (ICMS)

As a general rule, Brazilian states levy ICMS on transactions relating to the circulation of goods, including importation, inter-state and inter-municipal transport and communication services, even if the transactions and rendering start from abroad. Exports are exempt.

The ICMS taxpayer is the businessman, industrialist or producer who undertakes shipment of the goods, who imports it from abroad or renders the services mentioned above. The basis for the calculation of the ICMS is the value of the operation, including any and all amounts, expenses, accessories, interest, increases, bonuses or other benefits received by the taxpayer, but excluding those related to discounts or rebates unconditionally granted. On the import of goods into Brazil, the basis for ICMS calculation is the customs value of the good plus the import duty, IPI, PIS/COFINS and customs clearance expenses. Also, the amount of ICMS due must be grossed up. In other words, the amount of ICMS due on import operations will be included in its own tax basis for calculation purposes.

ICMS rates, which may range from zero to 25%, are generally levied at a rate of 18% in the state of São Paulo (which accounts for a large share of the Brazilian market). Under special conditions, the federal government may establish a minimum ICMS rate. Under certain conditions, the ICMS legislation provides for tax incentives for companies established in certain areas (i.e., north and northeast of Brazil), as an exemption or a reduction of the ICMS rate, financing ICMS tax payments, application of deferral system payment, and others. Those incentives vary from state to state and depend on special rules determined by the state’s legislation.

Similar to IPI, ICMS is a non-cumulative value-added tax, where the amount assessed in each successive taxable sales transaction is generally eligible to be deducted from purchase transactions. Operations involving the acquisition of fixed assets, however, allow the purchaser to take the ICMS credit only in 48 monthly instalments.

Municipal Service Tax (ISS)

ISS is levied by municipalities on providers of services of any nature, not otherwise contemplated within the other indirect taxes, namely ICMS. The ISS is also levied on the importation of services when the services are fully provided outside Brazil for the benefit of a Brazilian recipient or even if the Brazilian party takes part in the provision of the service. The exportation of services is exempt from ISS; however the service cannot be provided in Brazil with local results even if a foreign resident makes the payment.

Although the ISS is a municipal tax, this system is regulated primarily through federal legislation and each municipality establishes specific secondary obligations as well as the applicable ISS rates. There are in excess of 5,500 municipalities in Brazil.

The list of taxable services is outlined in federal law. In principle, the ISS is due in the municipality where the establishment of the service provider is located. However, in the case of civil construction and other services such as maintenance and cleaning, the ISS is due in the municipality where the service is rendered.

ISS rates vary from municipality to municipality. The maximum rate for the ISS is determined by federal law and is currently limited to 5%. The minimum rate for the ISS is determined by a constitutional amendment and is currently 2% (the rate for civil construction services can be less than two percent, however). In the São Paulo municipality, the ISS rate is generally 5% upon the value of the service rendered.

Foremanship, Warehouse Fees, Merchant Marine Fund (AFRMM) and Additional Airport Fee (ATAERO)

The AFRMM is assessed at a rate of 25% on the value of international freight at the entrance of the shipment in a national harbour, with the exception of harbours located in north and north-eastern Brazil. This fee was implemented to provide resources to the merchant marine in order to improve Brazil’s maritime transportation system.

The ATAERO is assessed at a rate of 50% of the airport fees of foremanship and warehousing services.

The foremanship and warehousing services are assessed per product unit, quantity per tonne or cubic number, and each harbour organisation determines the fees applicable. The law sets forth the value of airport fees for foremanship and warehousing services.

Import Restrictions

Prohibitions

Import prohibitions in Brazil are in place mainly to safeguard consumer health and well-being, or to preserve domestic plant and animal life and the environment based on the results of risk analyses. In general, import prohibitions apply irrespective of the origin of the good; for goods prohibited for sanitary or phytosanitary reasons the prohibition is limited to the countries where the risk is deemed to be present or when emergency conditions must be applied.

In general, importation of used goods is forbidden, special waivers can be considered for the importation of used machines without similar domestic production and complete assembly lines (upon special agreements). Therefore, there is the need to obtain a special import licence from DECEX.

Imports of plants and animals in danger of extinction are also prohibited, in accordance with the Convention on International Trade in Endangered Species. Brazil is a signatory to the Basel Convention prohibiting the importation of hazardous waste, in accordance with which the importation of a number of dangerous substances is prohibited or restricted under CONAMA Resolution No. 23 of 1996, which contains a detailed list of these substances. Import prohibitions of products containing ozone-depleting substances apply in accordance with the Montreal Protocol. Imports of toys replicating firearms and used tyres is also prohibited. The importation of a number of products is forbidden for the protection of animal and human health.

Several national regulatory agencies have the authority to establish specific rules prohibiting certain products to enter the country. These agencies include the National Health Surveillance Agency (ANVISA), National Oil Agency (ANP), Central Bank of Brazil (BACEN), Brazilian Institute of the Environment (IBAMA), National Institute of Technology, Normalisation and Industrial Quality (INMETRO), Ministry of Agriculture, Cattle Raising and Supply (MAPA) and Ministry of Defence.

There is not an objective list of products prohibited to be imported into Brazil, however, and each agency can establish rules determining the procedures necessary for each product, or establish a restriction on their importation. Even though a product may not be on a list as prohibited, it may require a specific authorisation in order to enter the country, as a form of controlling and eliminating the importation of this product. Below are a few examples of prohibited imports.

  • Toys replicating firearms and second-hand fire weapons - Act # 10.826 of 22 December 2003.
  • Used electrical devices for low voltage electrical installations containing parts for electrical energy conduction in ferrous materials - Administrative Rule #41 of 25 March 1996, INMETRO.
  • Weapons, ammunition and equipment of exclusive use by the national army, gas masks (except respirators against tobacco and post toxics of industrial use) and deadly weapons - Decree 3,665 of 20 November 2000.
  • Retreated tyres classified under NCM heading 4012. The importation of remodelled tyres is authorised for tyres classified under NCM 4012.11.00, 4012.12.00, 4012.13.00 and 4012.19.00 originating from Mercosur as provided by the Agreement of Economic Complementation Nº 18 - Administrative Rule #35/06, SECEX.
  • Video poker and video bingo machines, nickel machines, and any other game machines classified under NCM 9504.30, 9504.90 and 8471.60 - Administrative Rule #35/06, SECEX.

Quotas

In March 2006, Brazil and China signed a Memorandum of Understanding concerning trade in certain textile and apparel products. The MOU established quota restrictions on a number of Chinese textile and apparel products, namely silk fabrics, textured polyester filament yarn, synthetic fabrics, cut corduroy and other cut weft pile fabrics, embroidery in the piece, knitted shirts, blouses and t-shirts, man-made fibre coats and jackets, and knitted sweaters and pullovers. The quotas entered into force on 3 April 2006 and will remain in place through the end of 2008. The table below shows the agreed quota levels for calendar years 2007 and 2008.

Product

NCM

Quota Level (in Tonnes)

2007

2008

Corduroy and other cut weft pile fabrics

5801.22.00, 5801.23.00

  580

  696

Embroidery in the piece

5810.91.00, 5810.92.00, 5810.99.00

  317

  396

Knitted shirts, blouses, t-shirts, singlets, tank tops and similar garments

6105.10.00, 6105.20.00, 6105.90.00, 6106.10.00, 6106.20.00, 6106.90.00, 6109.10.00, 6109.90.00

 

2,153

 

2,691

Textured polyester filament yarn

5402.33.00

21,196

25,435

Woven fabrics of synthetic fibres

5407.20.00, 5407.30.00, 5407.41.00, 5407.42.00, 5407.43.00, 5407.44.00, 5407.51.00, 5407.52.10, 5407.52.20, 5407.53.00, 5407.54.00, 5407.61.00, 5407.69.00, 5407.71.00, 5407.72.00, 5407.73.00, 5407.74.00, 5407.78.10, 5407.82.00, 5407.83.00, 5407.84.00, 5407.91.00, 5407.92.00, 5407.93.00, 5407.94.00, 5408.31.00, 5408.32.00, 5408.33.00, 5408.34.00, 5515.12.00, 5515.21.00, 5515.91.00, 5516.21.00, 5516.22.00, 5516.23.00, 5516.24.00, 5907.69.00 

 

 

 

55,569

 

 

 

66,683

Man-made fibre jackets and coats

6101.30.00, 6102.30.00, 6103.23.00, 6104.23.00, 6104.33.00, 6201.13.00, 6201.93.00, 6202.13.00, 6202.93.00, 6203.23.00, 6204.23.00, 6204.33.00, 6210.20.00, 6210.30.00

 

 

7,879

 

 

9,455

Knitted sweaters and pullovers

6110.11.00, 6110.12.00, 6110.19.00, 6110.20.00, 6110.30.00, 6110.90.00

1,275

1,402

Silk fabric

5007.10.10, 5007.10.90, 5007.20.10, 5007.20.90, 5007.90.00

    66

    73

Source: Ministry of Development, Industry and Foreign Trade.

Imports subject to quantitative restrictions, including the quotas shown above, need a non-automatic import licence granted by SECEX before the shipment can be allowed entry into Brazil. When imports exceed the limit of a specified quota, SECEX will suspend the applicable import licence.

Administrative Rule 36 determines the allocation criteria for these quotas, as follows.

(i)             Polyester yarn

  • 70% of this category is to be distributed to importers according to their import share during January 2005-December 2007. Companies with imports accounting for 0.25% or more of total imports in this category are to be given consideration.
  • A reserve of 30% is to be maintained and allocated in accordance with import licence requests.
  • The quantity allocated per import licence cannot exceed 5% of the 30% reserve.

(ii)            All other categories

  • 80% of each category is to be distributed to importers according to their import share during January 2005-December 2007. Companies with imports accounting for 0.25% or more of total imports in each category are to be given consideration.
  • A reserve of 20% is to be maintained and allocated in accordance with import licence requests.
  • The quantity allocated per import licence cannot exceed 5% of the 20% reserve.

An agreement was reached between Brazil’s and China’s toy manufacturers on 18 August 2006 that effectively froze China’s 2005 share of the Brazilian toy market, estimated at approximately 40% (US$90 million), through 2010. China is able to increase its toy exports to Brazil only if the Brazilian market expands; otherwise China’s annual exports will be fixed at about US$90 million.

The agreement provides for an evaluation every six months of the evolution of the Brazilian toy market. This evaluation is performed by a so-called Dispute Settlement Group, which is also responsible for setting China’s annual export limits. Chinese toy exporters also agreed to comply with any relevant product certification procedures established by Brazil’s National Institute of Metrology, Normalisation and Industrial Quality. For their part, Brazilian toy producers vowed not to file any safeguard actions against toy imports from China for the duration of the agreement.

Tariff-rate Quotas

Brazil has established tariff-rate quotas for imports of the following products to correct a lack of supply in the Brazilian market.

  • Terephthalic acid and its salts. A maximum of 600,000 tonnes of terephthalic acid and its salts, classified under NCM 2917.36.00, will benefit from duty-free treatment from 23 October 2008 through 22 October 2009. Out-of-quota merchandise will be subject to a regular most-favoured-nation duty rate of 12%.
  • Anhydrous disodium sulphate. A maximum of 460,000 tonnes of anhydrous disodium sulphate for use in the production of detergents, classified under NCM 2833.11.10, will benefit from a reduced rate of 2% from 23 October 2008 through 22 October 2009. Out-of-quota merchandise will be subject to an MFN duty rate of 10%.
  • Certain steel plate. A maximum of 48,000 tonnes of carbon steel plate with a thickness between 19 and 26 millimetres, a length between 1.353 and 1.369 mm and having certain other features, classified under NCM 7208.51.00, will benefit from a reduced duty rate of 2% from 23 October 2008 through 22 October 2009. Out-of-quota merchandise will be subject to an MFN duty rate of 12%.
  • Wire of alloy steel. A maximum of 6,000 tonnes of wire of alloy steel having certain characteristics and meeting certain standards, classified under NCM 7229.90.00, will benefit from a reduced duty rate of 2% from 21 November 2008 through 20 May 2009. Out-of-quota merchandise will be subject to an MFN duty rate of 14%.
  • Electrodes. A maximum of 10,000 tonnes of electrodes used to cover electrolytic vats used in the production of primary aluminium, classified under NCM 8545.19.90, will benefit from a reduced duty rate of 2% from 21 November 2008 through 20 November 2009. Out-of-quota merchandise will be subject to an MFN duty rate of 12%.

Licensing Requirements

Once registered with SECEX, the importer must obtain an import licence for certain goods prior to the shipment of the goods. Such a licence may be obtained through Siscomex.

There are three types of import licences - exempt, automatic and non-automatic. As a general rule, goods are exempt from import licensing requirements. The criteria for each type of import declaration are listed and determined by the Siscomex system and Administrative Rule 36 of November 2007.

The Consolidation of SECEX Administrative rules includes a list of products subject to automatic and non-automatic import licensing requirements. The list is very extensive (over 120 pages long) and dynamic. The list is designed to assist importers as they prepare for the import procedure but does not substitute for the Siscomex determinations.

Trade Remedies

1.        Anti-dumping (AD)/Countervailing (CV)

Under Brazil’s AD regulations, SECEX’s Department of Commercial Defence (DECOM) is responsible for examining requests for initiation or renewal of AD investigations or reviews. Once an investigation is initiated, DECOM is responsible for determining the margin of dumping, the existence of material injury, threat of injury or material retardation, and the causal link between dumping and injury or threat thereof. SECEX is required to terminate an investigation if there is no evidence of dumping, injury or threat of injury.

DECOM/SECEX are required to conclude AD investigations within 12 months in ordinary circumstances and 18 months in exceptional circumstances. Provisional AD measures, which can take the form of provisional duties or cash deposits/bank guarantees, may be applied no earlier than 60 days from the date of initiation of the investigation. If the DECOM/SECEX investigation reaches a final dumping and injury determination, any AD duty imposed must not exceed the margin of dumping and must be adequate to remove the injury to the domestic industry. AD investigations may be suspended if the exporters voluntarily agree to a satisfactory undertaking to revise prices or to cease exporting to Brazil at dumped prices.

Interested parties may request that SECEX conduct an administrative review of an AD duty order at least a year after the issuance of such order. The request must be accompanied by evidence that the duty is no longer necessary, injury is unlikely to subsist if the duty is eliminated or altered, or the existing duty is no longer sufficient to neutralise the dumping or subsidy. The administrative review must be concluded within one year of its initiation.

AD and CV duties must be terminated not later than five years from imposition or from the date of the most recent final affirmative administrative review. Five months prior to the expiry of the order, interested parties have the opportunity to present their views on the convenience of the initiation of a sunset review.

In November 2004, Brazilian authorities signed an agreement with the Chinese government where they committed to grant market economy status to mainland China for purposes of AD and CV duty investigations. However, the Brazilian government has not taken the necessary steps to incorporate the terms of this agreement into the national legislation and China therefore continues to be considered a non-market economy for all intents and purposes, which means that cost and pricing structures in the Chinese market are not regarded as reliable for calculating dumping margins.

As of 30 November 2008, Brazil applied the following AD measures on imports from mainland China. As of that date, Brazil did not apply any AD measures on imports from Hong Kong or CV measures on imports from mainland China or Hong Kong.

AD Duty Orders in Place as of 30 November 2008

Product

NCM Classification

Anti-dumping Measures

Date of Imposition

Date of Expiry

Barium carbonate

2836.60.00

US$105.17 per tonne

08/07/1992

01/07/2009

Table electric fans

8414.51.10

45.24%

21/08/1995

28/06/2012

Padlocks

8301.10.00

US$3.56 per unit

29/12/1995

14/11/2012

Garlic, fresh or refrigerated

0703.20.10 and 0703.20.90

US$0.52 per kilogram

18/01/1996

14/11/2012

Colour pencils and black pencils

9609.10.00

201.4%-202.3%

26/02/1997

1/

Mushrooms provisionally preserved and prepared or preserved

0711.51.00 and 2003.10.00

US$1.05 per kilogram

02/01/1998

19/12/2008

Permanent magnets, ferrite rings and discs

8505.19.10

43.0%

08/06/1998

03/06/2009

Vacuum flasks

9617.00.10

47.0%

21/07/1999

19/07/2010

Dry glyfosate acid, glyphosate wet cake, glyphosate salt and formulated glyphosate

2931.00.32, 2931.00.39 and 3808.93.24

2.9%

12/02/2003

1/

Magnesium granules

8104.30.00 and 8104.90.00

US$0.99 per kilogram

11/10/2004

11/10/2009

Magnesium ingot                  

8104.11.00 and 8104.19.00

US$1.18 per kilogram

11/10/2004

11/10/2009

Bicycle tyres

4011.50.00

US$1.45 per kilogram

02/01/1998

20/12/2008

Electric smoothing irons

8516.40.00

US$4.82 per unit

28/06/2007

28/06/2012

Manual pulley tackles and hoists other than skip hoists or hoists of a kind for raising vehicles

8425.19.10

US$114.14 per unit

24/08/2007

24/08/2012

Pre-sensitised offset plate

3701.30.21 and 3701.30.31

US$10.76 per kilogram

08/10/2007

08/10/2012

Frames and mountings for spectacles, goggles or the like, with or without corrective lenses

9003.11.00, 9003.19.10, 9003.19.90, 9004.90.10 and 9004.90.90

US$270.56 per kilogram

08/10/2007

08/10/2012

One-piece, fauber-type cranks for bicycles

8714.96.00

US$1.56 per kilogram

11/10/2007

11/10/2012

Slotted drive shaft plus drill bits*

8207.19.00, 8207.50.11, 8207.50.19 and 8207.50.90

US$33.34 per kilogram

21/11/2007

21/11/2012

Hairbrushes

9603.29.00

US$15.67 per kilogram

13/12/2007

13/12/2012

Loudspeakers

8518.21.00, 8518.22.00 and 8518.29.00

US$2.35 per kilogram

13/12/2007

13/12/2012

Certain polyvinyl chloride polymers (PVC-S)

 

3904.10.10

10.5%-21.6%

28/08/2008

28/08/2013

1/ A review of these AD duty orders is currently under way. Each order will remain in place until its respective review has been completed.

Source: MDIC

AD Investigations under Way as of 30 November 2008

Product

NCM

Date of Initiation

Preliminary AD Margins

Staple fibres of viscose rayon, not carded, combed or otherwise processed for spinning

5504.10.00

18/03/2008

US$0.18 per kilogram

Certain new pneumatic rubber tyres of a kind used on buses or lorries

4011.20.90

16/05/2008

 

Certain general-use disposable plastic syringes

9018.31.11 and 9018.31.19

19/06/2008

 

New pneumatic rubber tyres of a kind used in motor cars

4011.10.00

10/07/2008

 

Graphite electrodes

3801.10.00 and 8545.11.00

18/07/2008

 

Viscose single yarn

5510.11.00

13/08/2008

 

Bi-axially oriented polypropylene film

3920.20.19

28/08/2008

 

Ballpoint pens

9608.10.00

30/10/2008

 

Source: MDIC

2.        Safeguards

On 1 September 2002, Brazil imposed a safeguard quota on imports of desiccated peeled coconut, whether or not grated, classified under NCM 0801.11.10. Imports from many sources, including Hong Kong, are subject to the quota, but imports from mainland China and many other producers were excluded because they are covered by the exception contained in Article 9.1 of the WTO Agreement on Safeguards, which provides that “safeguard measures shall not be applied against a product originating in a developing country Member as long as its share of imports of the product concerned in the importing Member does not exceed 3%, provided that developing country Members with less than 3% import share collectively account for not more than 9% of total imports of the product concerned.” The safeguard quota was originally scheduled to expire on 31 August 2006 but was subsequently extended for an additional four years, through 31 August 2010.

Period

Quota (in tons)

01/09/2006 to 31/08/2007

4,778

01/09/2007 to 31/08/2008

5,017

01/09/2008 to 31/08/2009

5,256

01/09/2009 to 31/08/2010

5,495

Source: WTO

Brazil and Argentina signed a bilateral agreement in February 2006 (known as the Mechanism for Competitive Adaptation, Productive Integration and Balanced Expansion of Commerce – or MAC) that allows each side to temporarily restrict imports of specific products from the other side if those imports are deemed to cause “important injury” to the domestic industry.

On 4 September 2008, Brazil initiated a safeguard investigation of recordable optical media (single recording CD-Rs and DVD-Rs) classified under NCM 8523.40.11 from all sources.

Preferential Treatment

Brazil is a member of Mercosur, a free trade union with five member states: Brazil, Argentina, Uruguay, Paraguay and Venezuela. This commercial block was formed in 1991 with the signature of the Treaty of Asunción. Mercosur was composed by four countries for many years until Venezuela joined the group in July 2006. Venezuela’s full integration to Mercosur still hinges on congressional approval by the Brazilian and Paraguayan legislatures, which effectively means that Venezuela currently has no voting rights for Mercosur matters.

Mercosur was initially established as a free trade arrangement and later became a free trade zone on 1 January 1995 when the Common External Tariff was created. The CET is applicable only to importations coming from non-Mercsour countries. However, the CET allows for temporary exceptions that were negotiated in order to establish transition periods for certain sensitive sectors, namely capital goods and information technology goods and telecommunications.

A number of tariff concession schemes are in place, mainly to reduce the cost of imported capital goods or goods not produced in the Mercosur area. Tariff concessions are also granted through a number of customs regimes, which allow for the temporary importation or the warehousing of imports without prior payment of customs duties. A similarity test to determine whether comparable goods are produced domestically may be applied on imports enjoying tax exemptions or reductions.

Mercosur has free trade agreements with a range of countries, including Bolivia, Chile, Colombia, Cuba, Ecuador, Mexico and Peru. Brazil also provides certain duty breaks to ALADI members for goods not covered under the aforementioned agreements. Mercosur is conducting FTA negotiations with the European Union, India, the Southern African Customs Union, the Gulf Co-operation Council, Morocco and Israel.

Product Standards/Certification Requirements

Certain specific products must comply with applicable standards and certification requirements as required by the corresponding national regulatory agency, including ANVISA, ANP, IBAMA, INMETRO and MAPA. The certifications will depend on the type of product imported. There is a certification of quality from IMETRO, a sanitary certification from MAPA, and a plague control certification from ANVISA, among others.

 

Labelling

Brazilian legislation requires that the name of the country of origin on each imported article be included on the product’s label, packaging and brand. A fumigation certificate for wood packing is also required. The packing must have this certificate or it could require fumigation in Brazil. If the package does not have the fumigation certificate it will be destroyed.

Products for domestic consumption must also comply with specific requirements established by the Consumer Defence Code, which requires any product that could cause harm to consumer health or safety to include a clear and exhaustive description of any potential hazards.

Brazil also has specific labelling requirements for a range of products, regulated by various agencies. As a matter of illustration, CONMETRO Resolution 2 of 6 May 2008 internalising the new Mercosur Technical Regulation on Textiles and Apparel establishing labelling requirements. These products must be labelled with the following information: the importer’s name and tax identification or its registered brand, the country of origin, the product’s fibre content indicated in percentage terms, care instructions and the product’s size.

Documentation

Entry Process

As a general rule, all goods entering Brazil are subject to customs clearance, a fiscal procedure through which the accuracy of the importation declared by the importer and the documents related to certain import transactions are verified. Normative RFB 206/2002, last amended by Normative RFB 731 dated 3 April 2007, sets forth the proper procedures that should be observed to clear imported goods in Brazil.

The following steps must be followed to obtain the customs clearance of the goods.

  • Import Licence (when applicable).
  • Registration of the import declaration.
  • Presentation, when requested, of the original set of shipping documents and subsequent customs analysis of the documents, goods and any other related information declared in the import declaration (e.g., customs value).
  • Final release of goods.

Registering the Import Declaration

As per Normative RFB 206/2002, the customs clearance procedure starts with the registration of the import declaration. The import declaration is the declaration presented by the importer containing the relevant data for a particular import transaction. Such declaration is presented on a standard form through SISCOMEX.

Customs Analysis of Documents, Goods and Customs Value

Annex I of Normative RFB 206/2002 sets forth the rules for customs analysis of documents and information related to the import operation, such as goods description, indication of the harmonised classification code (NCM), declared customs value, among others. The documents (original bill of lading or equivalent document, original commercial invoice dully signed, and document evidencing the payment of import duties and indirect taxes, when applicable) should be presented to the relevant RFB agency.

Upon delivery of the documents, the imported goods will be selected for clearance under one of the following entry channels.

  • Green. Customs clearance is automatically granted.
  • Yellow. Customs clearance is subject to analysis of the documents.
  • Red. Customs clearance is subject to:

i.    Analysis of the documents;

ii.   Inspection of the goods; and/or

iii.   Preliminary analysis of the goods’ customs value.

  • Grey. Customs clearance is subject to secondary customs valuation analysis.

Final Release of Goods

In accordance with Normative RFB 206/2002, upon registration of the import declaration and after customs has finished the proper analysis of the goods and documents, RFB issues an import voucher. The bill of lading write-off will be operated immediately after the registration of the import declaration.

The issuance by RFB of customs clearance is the final authorisation for the delivery of the goods to the importer. The import voucher is issued subsequent to the registration in SISCOMEX. 

Although clearance through the green and yellow channels might indicate that no physical inspection of the goods takes place, customs authorities might still decide to inspect the goods. Therefore, goods will be released after the complete analysis of documents (and goods) is finished.

Commercial Invoice and Packing List

Customs Regulation Act 4543 of December 2002 sets forth the information needed on the commercial invoice*, which includes the following.

1.        Full name and complete address of the importer and exporter.

2.      A description of the goods in Portuguese or in a official language of GATT. If the description is in another language it must include a translation to Portuguese describing the specific information of the goods as well as their commercial information, and all elements needed for their identification.

3.        Mark and any identification number of the goods.

4.        Amount and type of goods.

5.        Gross weight.

6.        Net weight.

7.        Country of origin.

8.        Country where the merchandise was acquired to be exported to Brazil.

9.        Country of departure of the merchandise for exportation to Brazil.

10.   Unit price and total price of each type of merchandise, as well as any reductions and discounts granted to the importer, if applicable.

11.       Freight and any other expenses related to the goods.

12.       Payment conditions and currency.

13.       Incoterms.

14.       Any amendments must be authenticated by the exporter.

(*) Original form, duly signed

The packing list must include information regarding the volume, gross weight and net weight.

New SISCARGA System

The RFB has established a new system, known as SISCARGA, that controls the arrival and departure of vessels, cargo transportation and cargo units at all Brazilian seaports. This new system was launched on 31 March 2008 pursuant to Normative Instruction #800.

Each supply chain participant (transport company, freight forwarder, carrier, consolidator) must insert the required information, according to the legislation. The SISCARGA system requires all shipment and cargo information to be inserted into the system. In addition, if all the information included in the cargo manifest (master bill of lading), house bill of lading (BL) and the list of empty cargo units is correctly described in the system, the carrier (or its representative) is exempt from presenting the applicable written documentation to customs. 

The electronic BL must include, among other information:

a)    Net and gross weight of the cargo in kilograms.

b)    The measurement of the cargo in cubic metres, applicable only for containers.

c)    Identification of the exporter or shipper.

d)    Description of the goods.

e)    Consignee’s registration number (CNPJ – for companies) or (CPF – for individuals).

f)     The company or bank on the order BL.

g)    Container information (ship’s convenience) and information regarding cargo units.

h)    Country of “derivation” (country where the goods were at the time of acquisition and the country where the goods were before being shipped to Brazil, regardless of the country of origin of the goods or the port of final shipment).

The BL must also include certain cargo information, including:

a)    The first four digits of the tariff code of the merchandise or, alternately, its eight-digit classification.

b)    Brand and countermark of the good.

c)     The gross weight in kilograms for all items, their respective NCMs and any potential hazards in the case of dangerous goods.

All information must be presented to the RFB in compliance with the following deadlines.

a)       Information regarding the vessel and ports of call - five days before arrival of the vessel at the port.

b)   Information on the master bill of lading and the house bill of lading:

-      Five hours before the vessel’s departure for exporting shiploads in bulk

-      Eighteen hours before the vessel’s departure for other shiploads

-      Five hours before the vessel’s departure for packing note CAB (coastal navigation), BNC (connection transfer of national shiploads) and ITR (interior navigation)

-      48 hours before the vessel’s arrival for shiploads to be unloaded or for remaining cargo on board. 

The aforementioned deadlines can be reduced depending on the route; the reductions will be proportional to the distance from one port to another.

Even though SISCARGA began operations on 31 March 2008, the deadlines above effectively entered into force on 1 January 2009, as additional time was needed to implement the system.

Brazilian customs authorities will automatically allow any necessary import or export operation according to the information inserted in the system. However, customs may block the system as a penalty for non-conformity.

The legislation also provides that the transporter, depositary or seaport operator will be subject to a penalty of BRL5,000 (approximately US$3,000), plus suspension, cancellation and other administrative penalties, for any incorrect information inserted, missed deadline or any other requirement of the legislation that is not fulfilled.

It is also important to highlight that, in addition to any penalties, any errors made can take considerable time to be fixed and all warehousing expenses will be borne by the importer, which may indirectly affect the total price of the good.

Temporary Entry, Samples and Pre-Shipment Inspection

Temporary Entry

In general, the temporary admission regime allows the importation of goods into Brazil with full or partial suspension of the taxes due upon importation. The total suspension of TAR is approved for specific transactions such as packing, re-packing, processing, assembling, renovation, renewal, repairing and maintenance.

Under TAR rules, the title of goods should not be transferred to the Brazilian company performing the packaging activity in Brazil. Thus, the import of goods should be performed without foreign exchange coverage. As opposed to the drawback regime, TAR does not have any requirements regarding local value-added content.

Considering the importation of goods under TAR without exchange coverage, the title of the goods remains with a company established abroad (i.e., principal). Similar to drawback regime, in order to be granted a suspension of the customs duties and VAT under TAR, the company should file a Temporary Admission Granting Act (RCR) before the RFB in order to be approved.

Because the imported goods are submitted to an industrialisation process in Brazil and are imported without foreign exchange coverage, the legislation requires the presentation of a service agreement for the packaging services. Additionally, a term of responsibility that consists of an official application form provided by the local company (the beneficiary), which states the total amount of customs duties and indirect taxes suspended by means of application of TAR, should also be presented. In addition, a guarantee is required.

The TAR regime will be granted once the RCR, the service agreement and the term of responsibility are submitted to Brazilian authorities. The TAR regime should be requested before the goods are shipped from abroad to Brazil, since based on previous experience, the time for approval may take between 10 to 20 working days.

In the past, imported goods subject to a local packaging process could only remain in Brazil for a maximum of three months. With the publication of Normative Instruction 470/04, goods imported for packaging processes under TAR should adhere to the length of time stated in the service agreement for the packaging services. Within the period set for the completion of the packaging services accorded between the local company and the principal, goods must be re-exported after being subject to the packaging process.

For purposes of requesting TAR, a non-automatic import licence is required prior to shipping the goods from abroad.

In order to comply with TAR requirements, a local company needs an approval from the customs authorities at the port of export to demonstrate that the goods benefiting from TAR were re-exported in a timely fashion. After fulfilling TAR requirements, the local company should prepare a document (i.e., the term of responsibility) for the customs authorities to register the export in their system. Once the transaction is inserted into the system, the customs duties are considered exempted.

While not required by law, it is advisable for local companies to put in place a system for tracking the goods imported under TAR. Likewise, it is advisable for local companies to keep files for each import transaction implemented under TAR. Once the packaging process is completed, documents showing the export of the goods should be kept in case they are ever requested by the authorities.

Beneficiaries of the TAR regime must keep physical copies of all import and export registers for a period of five years.

The TAR regime regulates specific situations with the objective of simplifying the temporary entry of goods such as:

  • goods for cultural, artistic, scientific, commercial and sporting events;
  • relief goods;
  • packing and transportation of other goods; and
  • rehearsals and tests.

There are four possibilities to extinguish the temporary admission special regime.

  • Destruction of the goods (expenses borne by the importer) under

customs prior authorisation and inspection.

  • Transfer to a different special regime.
  • Proceed to customs clearance for consumption (nationalise the good).
  • Re-exportation of the good (exporter must also be registered in the

Siscomex system)

Samples

Brazilian federal legislation exempts samples without commercial value from import duties, provided certain requirements are met. Also exempted are non-commercial mail shipments whose FOB value does not exceed US$10.

Pre-Shipment Inspection

Brazil does not require pre-shipment inspection of imported goods except in relation to sanitary and phytosanitary measures for certain agricultural products.

Fines and Penalties

Brazilian customs regulations establish four types of penalties: (i) seizure of vehicles; (ii) seizure of goods; (iii) seizure of currency; and (iv) fines. The applicability of each penalty is proposed by the customs officer and the judicial authority determines the penalty or penalties to be applied and the amount depending on the infraction.

Infractions penalised with seizures and fines are described in the Brazilian customs regulations. Any seized goods are kept under the management of the Minister of Treasury.

The fines are intended to be proportionate to the duty amount assessed on the good. The regulations provide that fines may range from 1% in the case of specific invoice errors to 150% in the case of fraud.

There are judicial remedies, such as voluntary disclosure, that allow for fine exemptions.

Exchange Controls

The Central Bank of Brazil is responsible for authorising agents to perform operations in the foreign exchange market. These operations can be performed only through market agents authorised by the Central Bank of Brazil, according to the requirements established in the International Capital and Foreign Exchange Market Regulation (RMCCI).

According to the RMCCI, payments and receipts from foreign countries regarding imports and exports are formalised through a foreign exchange contract based on the data recorded at the Information System of the Central Bank of Brazil (SISBACEN).

A foreign exchange contract is a specific instrument executed between the seller and the buyer of foreign exchange, where the characteristics and conditions of the foreign exchange operation are determined. The buyer or the seller of foreign currency must be an agent authorised to operate in the foreign exchange market.

The contract can be signed before or after the shipment of the goods or its arrival in the country.

Payments of Brazilian imports should be processed according to the data included in the import declaration or equivalent document registered at SISCOMEX, or in the commercial operation documentation if the preceding are not available.

Imports payable in periods of more than 360 days are subject to registration at the Central Bank of Brazil, in the Financial Operations Registration (ROF of SISBACEN). Its register must be provided before the import declaration register.

 

 

 

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