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The Brazilian economic scenario
has changed since the Real Plan implementation in 1994. The Plan brought down
inflation, reduced trade tariffs and held the exchange rate relatively stable
through 1998. With that, however, the Brazilian currency became overvalued and
the economy moved into a trade deficit. Then, with the international crisis in
early 1999, the Brazilian Central Bank was forced to abandon its exchange rate
policy and allowed the local currency, the Real (R$), to float. The average
exchange rate dropped from R$1.16 per U.S. dollar in 1998 to an average of
R$2.35/US$ in 2001. During the last years, the exchange rate has fluctuated
heavily (up to R$ 4/US$, Dec. 02) and is now (Oct. 2003) at R$2.85/US$.
The Brazilian economy has been
going through a period of transformation that is both promising and difficult.
The economy has a high growth potential with a considerable consumer market.
During the first stage of the Real Plan, the Brazilian market could absorb
almost everything, considering that per capita consumption of many products was
much lower in Brazil when compared to developed countries. Nevertheless, with
tightening economic conditions in 1998 and after the 1999 devaluation, most
imported products disappeared from supermarket shelves as they were no longer
price competitive.
Nevertheless, when analyzing the
purchases of Brazil in the local currency, the results show a positive trend .
In 1999, Brazil imported R$150 million in consumer-oriented products from the
U.S.. In 2000 and 2001, the value of these imports in Reais increased 7 percent
and 3 percent, respectively, demonstrating that despite the devaluation, local
importers put more effort and continued to be committed to bringing in foreign
products.
In the current commercial
environment, exporters introducing new products in the market need to
effectively target niche segments and offer refined high-end/value-added
products that respond to upper-level consumer demand. Proper product placement,
pricing and marketing are increasingly important factors. Foreign companies
determined to compete in this market, must learn how to move in this
up-and-down economic environment.
Exporter Business Tips
When exporting to Brazil, companies should be aware that the export/import
process is heavily impacted by the Government of Brazil (GOB) by means of
decrees and procedures – fiscal, administrative, foreign exchange – which are
implemented by different branches of the federal government to regulate the
various aspects of trade between Brazil and other countries.
The GOB is constantly modifying
Brazil’s foreign trade regulations to adjust the country’s competitiveness in
the global market. This means that Brazilian importers need to remain updated
on standards and decrees in effect.
The main Brazilian Government offices involved in importation
are:
Ministry of Development,
Industry and Foreign Trade (Ministério do Desenvolvimento, Indústria e
Comércio Exterior – MDIC)
Depending on the import product the following Ministries might
also be involved:
-
Ministry of Agriculture,
Livestock and Food Supply (Ministério da Agricultura, Pecuaria e
Abastecimento – MAPA)
-
Ministry of Health
(Ministério da Saúde – MS)
Since January 1997, the
Secretary of Foreign Trade (SECEX), the Secretary of Federal Revenue (SRF) and
the Brazilian Central Bank (BCB) have been responsible for import related
activities such as licensing, customs clearance and exchange monitoring though
the Integrated Foreign Trade System – SISCOMEX (Sistema Integrado de Comércio
Exterior) – an administrative software program with graphic interface to
complete the computer-based import document. Since this system has been
implemented, import and export procedures have become more transparent,
allowing the GOB to adopt quick measures to minimize trade deficits and frauds.
The system also enables the government to better control tax payments.
Brazilian companies interested
in importing must register with the Importers and Exporters Registry Office of
SECEX. Registrations completed prior to 1997 have been entered into the
SISCOMEX. New registrants are automatically added to the system upon the first
import transaction. It is necessary to be registered at the SRF in order to
obtain a user password to access the SISCOMEX.
Brazilian importers may contact
foreign manufacturers, trading companies, concessionaires or any individual
interested in exporting to Brazil to determine products of interest for
importation, as well as cost, guarantees, type of payment, etc. Such contact
may be done via fax, e-mail, by telephone or personally. The importer must then
request from the foreign exporter the remittance of a document that formalizes
the transaction costs agreed upon (pro forma invoices, letters, telegrams, fax,
purchase orders or contracts). At any given time, SECEX may request from the
importer relevant information or documentation of the transaction. In case of
discrepancies, SRF may arbitrate the product value in order to establish the
tax fee.
The Import Licencing (LI) can be
either automatic or non-automatic and is executed through the SISCOMEX. In
order to grant a license, the SISCOMEX will require information regarding
commercial, financial, tax and exchange details of the transactions in order to
define the legal status.
-
Automatic Licensing:
products not subject to special control or special conditions will be
automatically licensed upon completion of the Import Declaration of Customs
Clearance in the SISCOMEX system.
-
Non-Automatic Licensing:
products or transactions subject to special importation approval or which are
required to comply with special conditions must obtain licensing prior to
shipment or before registering the Import Declaration.
Once the commercial transaction
is concluded, the importer may authorize shipment of the merchandise to Brazil.
Products and/or transactions subject to prior import approval must have
approval prior to shipment. After shipping, the exporter must send, according
to the established method of payment, the documentation that will allow the
importer to gain release of goods from Brazilian Customs.
Documentation required:
Overseas payment may be done in
advance, by collection or by letter of credit (cash or installments). The
buying and selling of foreign currency between the importer and an authorized
exchange establishment is formalized by a Foreign Exchange Contract,
according to the standards and regulations established by the Brazilian Central
Bank.
The clearance process starts
when imported products arrive in Brazil. The importer or a contracted customs
broker, using relevant documentation, shipping information, commercial invoice,
and other documents required due to special characteristics of the product
and/or transaction, will prepare the Import Declaration (DI) in the SISCOMEX
and, upon payment of the Import Tax, Excise Tax (IPI also known as Tax on
Manufacture) and SISCOMEX user fees, will register the DI. This starts the
customs clearance process.
Clearance from Customs consists
of a series of acts carried out by a Customs official who will authorize the
release of the goods to the importer after the verification of the merchandise,
verification of compliance with tax laws and of the importer’s identity. The
SRF will release an Import Warrant (CI) in the SISCOMEX that will confirm
Customs clearance. SISCOMEX will then automatically select the method of
Customs clearance:
-
Green:
customs clearance authorization is automatically issued.
-
Yellow:
mandatory inspection of documentation is required and, if no evidence of
irregularities is found, Customs clearance authorization is issued.
-
Red:
mandatory inspection of documentation and of merchandise is required before
Customs clearance authorization is issued.
-
Gray:
mandatory inspection of documentation, merchandise, and the taxable basis of
Import Tax is required before customs clearance authorization is issued.
Customs clearance authorization can be arranged before the conclusion
of the inspection of customs value, by using a guarantee issued by the
importer.
Except for the green option, all
documents, together with the receipt of the Import Declaration printed by
SISCOMEX and proof of payment or waiver of the ICMS (Value-Added Tax also known
as Interstate Movement Tax on Sales and Services), should be presented by the
importer to the Federal Revenue Office where the goods are located for the
conclusion of the customs clearance.
For goods assigned the gray
option, a Declaration of Customs Value (DVA) must be made and transmitted via
SISCOMEX to explain the commercial aspects of the transaction and to provide
additional information to justify the value.
Any corrections to the
information presented in the DI, changes in the calculation and additional tax
or fines required by law, will be conducted according to SISCOMEX procedures.
Foreign trade analysts point out the most common mistakes made by importers
during the importation process are:
-
misleading information – the
exporter sends a documentation that does not match the information the
importer entered in the SISCOMEX; and,
-
error of fiscal classification.
How to avoid:
-
the exporter may fax a copy of
the BL prior to shipment to the Brazilian importer for confirmation;
-
if the exporter is already
exporting the product, they may find it useful to confirm the first 6 digits
of the HS code, as it should be identical for WTO associated countries.
Information provided by:
F.B. Fonseca
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