How to Save Money on Brazilian Import Duty: A Guide for Businesses

If you are a business owner who wants to import goods from Brazil, you might be wondering how to reduce the costs of the Brazilian import duty. This is a tax that is levied on most foreign products that enter the country, and it can vary depending on the product category, origin, and value. In this article, we will explain what the Brazilian import duty is, how it is calculated, and what strategies you can use to save money on it.

What is the Brazilian Import Duty?

The Brazilian import duty (II) is a federal tax that is applied to most imported products, based on their customs classification, origin, and value. It is one of the main taxes that importers have to pay when they clear their goods through customs, along with the Industrialized Product Tax (IPI) and the Merchandise and Service Circulation Tax (ICMS).

The import duty is calculated on the CIF (Cost, Insurance, and Freight) value of the product, which includes the price paid for the product, the insurance costs, and the freight charges. The import duty rates range from 0% to 35%, depending on the product category and the origin of the product. For example, some products from Mercosur countries (Argentina, Paraguay, Uruguay, and Venezuela) enjoy lower or zero import duty rates as part of a regional trade agreement.

The Brazilian Ministry of Economy publishes a complete list of products and their import duty rates on its website. You can also use tools like NCM Online or Simulador Tributário to find out the import duty rate for your product based on its NCM (Mercosur Common Nomenclature) code.

How to Save Money on Brazilian Import Duty?

There are several ways that you can reduce the amount of import duty that you have to pay when you import goods from Brazil. Here are some of them:

Choose products with lower import duty rates

Some products have lower or zero import duty rates because they are considered essential or strategic for the Brazilian economy or society. For example, some medicines, books, educational materials, and agricultural inputs have zero import duty rates. You can check the list of products and their import duty rates on the Ministry of Economy website or use online tools to find out which products have lower rates.

Negotiate lower prices with your suppliers

Since the import duty is calculated on the CIF value of the product, you can reduce the amount of tax that you have to pay by negotiating lower prices with your suppliers. This will also reduce your insurance and freight costs, which are part of the CIF value. You can also look for suppliers that offer discounts or incentives for bulk orders or long-term contracts.

Use trade agreements and preferential tariffs

Brazil has several trade agreements and preferential tariffs with other countries or regions that offer lower or zero import duty rates for some products. For example, Brazil is part of Mercosur, which has a common external tariff (CET) for most products imported from outside the bloc. However, each Mercosur country can also maintain a list of exceptions that have lower or zero import duty rates for some products from certain countries or regions. Brazil also has bilateral trade agreements with countries like Israel, India, Egypt, and Mexico that offer preferential tariffs for some products. You can check if your product qualifies for a lower or zero import duty rate under any of these trade agreements or preferential tariffs on the Ministry of Economy website or use online tools to find out.

Apply for special customs regimes

Brazil offers some special customs regimes that allow importers to suspend or reduce the payment of import duty and other taxes for some products under certain conditions. For example, there are regimes like Drawback, Temporary Admission, Bonded Warehouse, Ex-Tarifário, RECOF, REPETRO, among others. These regimes are usually designed to encourage exports, industrialization, research and development, infrastructure projects, or other strategic activities in Brazil. You can check if your product qualifies for any of these special customs regimes on the Ministry of Economy website or use online tools to find out.

Importing goods from Brazil can be a profitable business opportunity, but it also involves paying taxes like the Brazilian import duty. This tax can vary depending on the product category, origin, and value, and it can represent a significant cost for importers. However, there are ways to reduce the amount of import duty that you have to pay by choosing products with lower rates, negotiating lower prices with suppliers, using trade agreements and preferential tariffs, or applying for special customs regimes. By doing so, you can save money on your imports and increase your profit margin.

Brazilian Import Duty: A Key Factor for Global Demand

Brazil is one of the largest economies in the world, with a population of over 200 million people and a GDP of more than 1.8 trillion US dollars. The country is also a major player in international trade, exporting and importing a variety of goods and services. However, Brazil’s trade policy is not always favorable for foreign businesses, as the country imposes high tariffs on many imported products. In this blog post, we will explore how Brazilian import duty affects the global demand for different industries, and what are the opportunities and challenges for exporters and importers.

Brazilian Import Duty: How It Works

Brazilian import duty is a tax levied on imported goods, based on their classification in the Mercosur Common Nomenclature (NCM), which is similar to the Harmonized System (HS) used by most countries. The NCM has 10 digits, and each product has a specific code that determines its tariff rate. In most cases, Brazilian import duty rates range from 10 percent to 35 percent. Brazil’s Ministry of Economy publishes a complete list of NCM products and their tariff rates on its website.

However, Brazilian import duty is not the only tax that importers have to pay. There are also other taxes and fees that apply to imported goods, such as:

Industrialized Product Tax (IPI): A federal tax that applies to manufactured goods, both domestic and imported. The IPI rate varies depending on the product, and can range from 0 percent to 300 percent.
Merchandise and Service Circulation Tax (ICMS): A state-level tax that applies to the circulation of goods and services, including imports. The ICMS rate varies depending on the state, and can range from 7 percent to 25 percent.
Social Integration Program (PIS) and Social Security Financing Contribution (COFINS): Two federal taxes that apply to the gross revenue of companies, including imports. The PIS rate is 1.65 percent and the COFINS rate is 7.6 percent.
Additional Freight for the Renewal of the Merchant Navy (AFRMM): A fee that applies to imports transported by sea or inland waterways. The AFRMM rate is 25 percent of the freight value.

The calculation of these taxes and fees is complex, and depends on various factors such as the product category, the origin country, the exchange rate, and the customs value. To simplify the process, importers can use online tools such as the Brazil Customs Duty Calculator, which estimates the total amount of taxes and fees for a given product.

Brazilian Import Duty: How It Affects Global Demand

Brazilian import duty has a significant impact on the global demand for different industries, as it affects the price competitiveness and profitability of imported products. Depending on the industry, Brazilian import duty can create opportunities or challenges for exporters and importers.

For example, Brazil is one of the largest importers of machinery and equipment in the world, with a total value of more than 36 billion US dollars in 2019. However, Brazil also imposes high tariffs on many types of machinery and equipment, such as 14 percent for computers, 16 percent for electrical machinery, and 20 percent for mechanical appliances. These tariffs increase the cost of importing these products, and reduce their attractiveness for Brazilian buyers. Therefore, exporters of machinery and equipment may face difficulties in penetrating the Brazilian market, unless they can offer competitive prices or superior quality.

On the other hand, Brazil is also one of the largest exporters of agricultural products in the world, with a total value of more than 96 billion US dollars in 2019. However, Brazil also faces high tariffs on many agricultural products in other countries, such as 27 percent for sugar in China, 35 percent for beef in Japan, and 55 percent for orange juice in the United States. These tariffs reduce the competitiveness of Brazilian exports, and limit their access to foreign markets. Therefore, importers of agricultural products may benefit from lower prices or higher availability of Brazilian products.

Brazilian Import Duty: How It May Change in the Future

Brazilian import duty is not static, but subject to changes according to the country’s trade policy and international agreements. In recent years, Brazil has been involved in several trade negotiations with other countries and blocs, such as the European Union (EU), Canada, Japan, Korea, Singapore, and India. These negotiations aim to reduce or eliminate tariffs and other barriers to trade between Brazil and its partners.

For example, in June 2019, Brazil signed a free trade agreement (FTA) with the EU, along with its Mercosur partners Argentina, Paraguay, and Uruguay. The FTA covers a market of 780 million people, and is expected to increase trade and investment flows between the two regions. According to the agreement, the EU will eliminate tariffs on 92 percent of its imports from Mercosur, and Mercosur will eliminate tariffs on 91 percent of its imports from the EU, over a period of 10 to 15 years. The FTA also covers other areas such as services, government procurement, intellectual property, and environmental protection.

The FTA with the EU is a major milestone for Brazil’s trade policy, and could have significant implications for the global demand for different industries. For example, the FTA could boost the exports of Brazilian agricultural products to the EU, such as beef, poultry, sugar, ethanol, and orange juice, as the EU will eliminate or reduce its tariffs on these products. On the other hand, the FTA could also increase the imports of EU machinery and equipment to Brazil, such as cars, chemicals, pharmaceuticals, and textiles, as Brazil will eliminate or reduce its tariffs on these products.

However, the FTA with the EU is not yet in force, as it still needs to be ratified by the national parliaments of both regions. The ratification process may take several years, and face political and social opposition from some sectors and groups. Therefore, the future of Brazilian import duty is uncertain, and depends on the outcome of the trade negotiations and the domestic dynamics of Brazil and its partners.

Brazilian import duty is a key factor for global demand for different industries, as it affects the price competitiveness and profitability of imported products. Depending on the industry, Brazilian import duty can create opportunities or challenges for exporters and importers. However, Brazilian import duty is not static, but subject to changes according to the country’s trade policy and international agreements. Therefore, exporters and importers need to monitor the developments of Brazilian import duty, and adapt their strategies accordingly.

References:

http://www.cbp.gov/linkhandler/cgov/newsroom/publications/trade/iius.ctt/iius.pdf

https://www.wto.org/english/res_e/booksp_e/tariff_profiles19_e.pdf
https://wits.worldbank.org/CountryProfile/en/Country/BRA/Year/2019/TradeFlow/Import
https://wits.worldbank.org/CountryProfile/en/BRA
https://www.export.gov/apex/article2?id=Brazil-Import-Tariffs
https://shippingbrazil.co.uk/brazil-shipping-blog/brazil-customs-duty

https://www.trade.gov/country-commercial-guides/brazil-import-tariffs

https://www.export.gov/apex/article2?id=Brazil-Import-Tariffs

https://www.privacyshield.gov/ps/article?id=Brazil-Import-Tariffs

https://thebrazilbusiness.com/article/import-duty-in-brazil