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Import tax benefits and incentives: what they are and how to use them

Despite having several benefits, importing products from other countries can be quite costly due to the high tax burden, however there are possibilities to reduce costs that many do not know about.

To make foreign trade operations even more advantageous, we've put together this article with the main information on how to do this. Find out here the details about benefits and tax incentives available to the Brazilian importer.

What are the taxes levied on importation?

Before talking directly about how to reduce costs, we need to know what taxes are levied on import operations. At the federal level, in Brazil, Import Tax (I.I), IPI, PIS and COFINS is paid.

In addition to these, there may still be charges for anti-dumping and AFRMM, which are not exactly imposed, but a protective measure for the industry and the fleet of the national navy, respectively.

The first adds cost to products that can be imported with a value much lower than those sold in the domestic market; the second is aimed at supporting the development of the merchant marine and of the Brazilian naval construction and repair industry.

At the state level, the most common tax is ICMS, but tax substitutions and collections for the Fund for Combating Poverty (FECP, FCP or FECOEP, for example) may still apply.

What are import tax incentives and benefits?

Although they look similar, there are important differences between these two. Tax incentives, whether federal, state or municipal, are created for specific demands that stimulate the economy in exchange for some social return, such as creating jobs and improving life for the population, for example.

Tax benefits, on the other hand, are exceptionally guaranteed, that is, for a certain period and without the obligation to specifically meet social demand.

What are tax incentives and benefits on import? 

The main objective of tax incentives and benefits is to increase the competitiveness of the local industry. Indirectly, this objective ends up reaching others as a chain reaction: greater competitiveness generates more jobs, which increases Brazilians' income.

With the increase in income, the economy “turns” with greater speed, adding to greater tax collection. With this, the possibility of creating new benefits and incentives increases, going back to the beginning of the cycle.

What are the main import tax incentives and benefits in Brazil?

At the federal level, the most important benefits are the ex-tariff system and the drawback. The first is directly related to the import tax and sets high rates, such as 14% and 16%, on imports of capital goods or technology and telecommunications that do not have domestic production.

It was created with the intention of generating investments in innovation, improving the productive capacity of companies, safeguarding the economic balance of the national industry.

The second, in addition to II, can suspend or even exempt all other federal and state taxes, depending on the modality: Integrated Exemption; Integrated suspension; and Restitution.

At the state level, the benefits are directly linked to the collection of entry ICMS, that is, that collected at the time of nationalization of the goods, after registration of the DI and customs clearance.

They can be applied in the form of an exemption – when there is no need for any collection – or suspension – when there is no immediate collection.

In this case, if the importer decides to change the purpose of the imported good, it will need to collect the tax by adding monetary correction. An example of this is when a company imports an item to compose fixed assets, but decides to sell it straight away: it is necessary to issue an immediate collection slip.

How to use the main import tax incentives and benefits? 

Ex-tariff: the interested company must be aware that that good does not have a similar national manufacture and apply for the benefit through access to the Electronic Information System (SEI).

In this electronic request, the import objectives, estimated values, project history and the technical characteristics of the goods to be imported will be described.

The benefit will be available after approval and publication in the official gazette, and after this moment it will be possible to import that specific asset with a zero II. If you want to get more out of the topic, check out the article we published about the ex-tariff on our blog. 

Drawback: The procedure starts by requesting a Concession Act (AC), directly via the SISCOMEX system, to SUEXT.

After analysis by the agency, the benefit may or may not be granted – the communication is made in the system itself. Once authorized, it is possible to start the operation with exemption, suspension or refund, depending on the intended modality. 

State Benefits and Incentives: as it is a state level, the form of use will depend on where the company is located and using a trading company present in these states may be an option.

In Santa Catarina and Paraná, for example, the TTD 410 and Paraná Competitivo, respectively, guarantee the collection of entry ICMS at a very low rate for goods destined for resale.

In Rio Grande do Norte there is a benefit that reduces the ICMS rate on entry and is specific for wholesale companies that fall within a certain quarterly billing.

In Rondônia, on the other hand, the benefit is guaranteed in the form of a presumed credit on the amount of ICMS provided for at the time of sale of those products. 

As mentioned, there are several ways to reduce the cost of import operations through the use of tax incentives and benefits.

However, as it requires knowledge about the procedures for each of them, it is recommended to hire a company with know-how in this topic. 

In addition to knowing the different tax benefits and incentives, a company specialized in foreign trade can analyze the individual situation of each importer and propose the best alternative for that specific situation. 

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