Key approaches to duty and tax relief and suspension in Brazil

One of the mechanisms by which sales and logistic operating expenses can be cut down when bringing goods into Brazil is through the special customs regimes.
In the broadest sense of the term, these regimes are specific operations related to goods -received and issued- that are not intended to constitute definitive commercial transactions at an initial stage. However, they share two common characteristics: (1) tax and tariff relief on imports, (2) suspension schemes for improving trade competitiveness.
Taking advantage of the various special customs regimes offered by the Brazilian government.
The granting of a suspension has quite significant consequences for the importer. Among the main benefits of these type of regimes we detach the reduction of operating costs due to the total suspension (total suspension) or partial waiver (partial suspension) of taxes and duties, and the possibility of dismissal of immediate payments. As a result, the competitive capacity is improved, the business expanded and financial profits increased.
About imports, as the obligation of duty payment always originates when the goods arrive in the Brazilian territory, the major advantage comes from its suspension. Depending on what the customs tariff states, these regimes may substantially reduce the expenses, typically to around 60% of the CIF value.
What are the main special customs regimes?
Brazilian customs regulations provide several special customs regimes under which certain tax and customs benefits apply. Below is an overview of some of them:
1. Temporary admission: It allows the entrance of certain goods in the country for a specific purpose and for a pre-stated period (goods to be re-exported), with total suspension on the payment of customs taxes levied on imports or partial suspension in the event of economic use. 
2.  Certificated Customs Deposit (DAC): This kind of operation allows the permanence of the goods in Brazil (in bonded warehouses), as long as they were previously sold to a foreign country. Under this regime, goods are presumed exported for all fiscal, credit and exchange means.
3.  Drawback: It allows the import and purchase into the internal market, with suspension or exemption of duties and taxes over raw materials or supplies used or to be used in the manufacturing process of goods exported or to be exported. Today, there are four categories: integrated, suspension or exemption, for shipbuilding and for internal market supplying.
4.  Customs warehouse: It allows, on both imports and exports, the deposit of goods on specific places, with suspension of payment of duties and under fiscal control. The goods can be stored up to one year, with a one-year renewal. A third renewal can be granted under special conditions.
5. Temporary export: It allows the export of national or already nationalized goods with suspension of tax payment, as long as they return in a pre-stated period to the same Brazilian state from where they left.
6. Blue line (express customs forwarding): It is a special regime created by Brazilian federal tax authorities to ease customs procedures.  Under prior habilitation acquired by the interested company, the blue line regime speeds up the customs clearance process.
7. Customs procedure for industrialized warehouses under computerized control (RECOF): This procedure allows the import and purchasing of goods to be industrialized in Brazil, with the suspension of the following federal taxes: II, IPI, PIS & COFINS.  The benefit may also apply to AFRMM (Freight Additional Destined for Merchant Navy). After manufacturing, the goods can either stay in Brazil or be re-exported.
8. REPETRO: It is an export, import and temporary admission special customs regime of goods targeted to activities related to research and mining of oil and natural gas, without the incidence of federal taxes, such as: II, IPI, PIS and COFINS, and AFRMM 1 (Freight Additional Destined for Merchant Navy).
9. REPORTO: This regime aims to increase investments in the recovery, modernization and enlargement of Brazilian ports that reduce the risks of logistic and infrastructure restrictions. These benefits also concern the goods for the rail infrastructure, positions 8601, 8602 and 8606, including rails.
10. REPLAT (Special Customs Procedure of Customs Warehouse on Platforms used to the Research and Mining of Oil and Natural Gas): this regime allows companies headquartered in foreign countries to import and purchase -with suspension of taxes- goods to be used in the activities described above.

 What are the impediments for the application of the procedures?
Any violation of the law is subject to fines and other penalties. Therefore, it is important to dedicate the maximum attention to the documents that will state to customs authorities the value of the goods, which will in turn fix the value of the duties to be suspended.
Despite the consolidation done by customs regulation and the clear guidelines that rule the application of the regimes, the lack of knowledge of the regimes’ schemes constitutes a major problem. Most frequently asked questions are whether or not an authorization is required or how to process applications: requests for authorizations and previous licenses, completion of the documentation for each regime and, most often, types and time limits for each regime.
In order to verify whether a company can benefit from more efficient structures and regimes, careful planning of the supply chain is recommended before importing and exporting. Yet exporters spend considerable time and resources to grasp the nature of Brazilian imports, which put them in disadvantage against their competitors. In KALEIDO, Ideas & Logistics, we offer best practices and lessons learned on administration of such fiscal instruments. We provide assistance with any Plea / habilitation, audit & consultancy matters.

Vera Lucia Grein Mercier
Brazil Commercial Director
T (+55) 41 3076 4576


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