Although unconventional and even a little bit unknown, this word can be a great help to companies working in international trade. Did you know that there is the possibility of reducing taxes on import if it is related to an export? Check out a little more about this subject in the new article we've prepared for you.
What is Drawback?
Created in 1996 by the Federal Government, Drawback is a special regime that aims to support companies that work effectively with foreign trade, more specifically those that will use certain inputs to produce items to be exported later.
This regime is intended to benefit companies in the area of international competitiveness, as it reduces the cost of production of what will be exported, making the value of the items even better than those of their competitors.
How does Drawback work?
The Drawback regime starts when the interested company requests the benefit from the Foreign Trade Secretariat (SECEX) stating that it will use the inputs to produce items to be exported. Drawback is considered effectively granted after the federal agency issues the authorization for the purchase or import via Siscomex.
To start the operation, it is necessary to request a Concession Act (CA), a digital document that can be accessed on the Siscomex portal. That are three types of CA:
Common: When beneficiary and exporter are the same companies in the CA, as well as products and inputs are listed in a similar way during the benefit claim.
Intermediate: When more than one manufacturer works in the production of the item to be exported, without necessarily exporting the final product. The product is processed at each stage, until it reaches the final stage and is exported. At this point, the exporter will declare the companies that were listed in the CA as beneficiaries.
Generic: When the production process of the item to be exported is so complex that the claiming company cannot estimate in advance exactly what the quantities and values of the inputs will be. For this type of CA, it is essential that the order is made showing why the production process is so complete that it is not possible to predict the inputs.
What are the Drawback modalities?
The Drawback regime can be claimed considering 3 modalities: Integrated Exemption, Integrated Suspension and Restitution.
In the Integrated Exemption modality, the claimant can request the non-payment of taxes on the purchase or import of inputs that will be used to replenish the stock, that is, when they has already been a previous export of product produced from items similar to the one intended to be purchased .
Example: import of raw material to restock after exporting plastic tubes produced with the same material.
In the Integrated Suspension modality, the company that requests the Drawback already does so with the intention of exporting the product that will be produced with the raw material to be purchased.
After exportation, it is necessary to prove the operation by linking the specific documentation via the system. Example: import of raw material for the production of plastic tubes that will be exported later.
The Refund modality, is the less commum and barelly used, since its concession is more bureaucratic, made directly through the Federal Revenue, and nowadays the two other modalities guarantee a similar benefit.
If the company has used raw material in the production of a good that will be discontinued, that is, if it no longer intends to have it in stock, it can request a refund of the taxes paid at the time of importation or purchase in the national market. Example: Exporting the last plastic tube units of a model that will no longer be marketed, whose raw material was acquired with full payment of taxes.
Which are the benefits of Drawback?
The main benefits of the Drawback regime are financial, as it is an ally when thinking about tax relief in the production chain.
To Drawback Exemption, the exempt taxes are: Import Tax (II), IPI, PIS/Pasep and Cofins. already in the Drawback Suspension, in addition to the taxes mentioned above, ICMS and the Additional on Freight for Renewal of the Merchant Marine (AFRMM) are also suspended for import cases.
It is also possible to highlight the gain in competitiveness in relation to foreign trade. With the exemption or suspension of taxes that would be paid on the acquisition of inputs, the Brazilian product competes better in the international market, since its value is much more competitive.
Brazilian companies that use this regime benefit from increased profits, reduced production costs, and also gain from conquering new markets.
Who is Drawback Awarded for?
To grant the Drawback benefit, some criteria must be met, mainly in relation to the effective use of inputs in the industrialization or production of an item to be exported.
The attributes observed for the concession would be those that change the nature, presentation, functioning or purpose of the product, such as: improvement, assembly, transformation, renovation or reconditioning.
In addition, it is necessary to later prove the effective exportation of the final product by submitting a document to SECEX. If this is not done, the company may suffer sanctions and still have to pay exempt and/or suspended taxes with corrected amounts.
It is worth remembering that this type of benefit is prohibited to Micro and Small Businesses that opt for Simples Nacional.
The Drawback Regime is a strong partner for companies operating in the international market, especially in exports, as the use of this benefit adds to competitiveness and cost reduction. However, it is necessary to pay attention to some specific procedures that require in-depth knowledge and analysis.
Target can help you to understand if this advantage fits within the scope of your operations, how about we talk a little about it?