As we have already seen in another article, importing machinery and equipment in Brazil can be very advantageous. Not only for the question of financial savings, but also for the access to state-of-the-art technology sometimes not available in the domestic industry.
However, this is a complex activity that involves the payment of fees and expenses from different parties.
In this text we will talk about how we can, with knowledge and planning, reduce costs in the import of machinery and equipment, always within the legality.
How do the import taxes on machinery work?
To know the costs involved in the import of machinery and equipment, we first need to know what is the tax classification (NCM) of the machine you intend to import.
It is from the NCM that the financial cost of the import is drawn, since it is the NCM that defines the tax burden, i.e. the rate of each tax.
In all countries it is necessary to pay Import Tax (II) when nationalizing foreign merchandise. In Brazil, besides the II, other taxes that may be levied are: IPI, PIS and COFINS (federal level) and ICMS (state level). Machines with different NCMs may have different tax charges.
In addition to the taxes, to release the entry is still necessary the payment of nationalization expenses.
The most commonly applied are: AFRMM (for sea cargo only), freight forwarder expenses, warehousing, cargo handling at the bonded warehouse, customs clearance fees, and inland delivery freight.
What happens if I don't pay the import tax on machinery?
No imported product leaves the bonded warehouse without the payment of taxes and nationalization expenses.
This is why we stress so much the importance of planning and forecasting cash flow for the payment of fees and expenses as soon as the nationalization process starts, avoiding additional expenses, which are usually high.
Besides the additional costs, there is still the possibility that, more than 90 days after the cargo's presence in the bonded terminal, the process of cargo forfeiture is initiated, when the Federal Revenue Service understands that there is no intention of nationalizing the foreign cargo by the importer.
This process consists of making the cargo available to other companies that are interested in the goods by means of auction, but this is a subject that will be addressed in another moment.
How to reduce your cost when importing machinery
Many companies end up paying higher import fees and expenses due to lack of knowledge or lack of planning. Not understanding the step-by-step operation can be costly in import processes.
Let's talk about some key points that can be crucial in reducing the cost when importing machinery:
Correct tax classification (N.C.M. or H.S. Code)
The tax classification is what defines the import tax burden. Understanding exactly what the machinery and its particularities allow the correct framing of NCM (HS Code) and avoids errors that can lead to unnecessary fines and overpayment of taxes, in some cases.
Study on commercial agreements with the seller country
Studying if the country of origin has a trade agreement with Brazil can significantly reduce, or even zero, the import tax on the product.
For example: in imports of products originating from countries that belong to Mercosur, the payment of Import Tax is zeroed and the AFRMM tax is exempted, representing significant savings in the costs of machinery and equipment imports.
Ex-tariff (II reduced to zero)
Machines and equipment can be classified as capital goods, easily eligible for reduction or exemption of Import Tax (II) by ex-tariff.
This benefit is applied to items that have no similar manufactured in Brazil, and it is necessary to request it from the Ministry of Economy in advance. Target has already made this request for several of our customers with 100% success.
ICMS reduction or deferral
There is a way to reduce the amount spent to pay the import ICMS in case of operations with machinery and equipment.
Federal convention 52/1991, published with the intention of implementing industrial and agricultural production, reduces the tax calculation basis so that the final tax rate is 8.8%, instead of the 17%, 18% commonly applied for other items.
Besides the possibility of reduction, some states apply the ICMS deferment, which are differentiated forms for the collection.
In the state of Minas Gerais, for example, it is possible to request from the SEFAZ the deferment of 100% of the amount that would be paid for the state tax, i.e., there would be no immediate disbursement in cases where the request is granted.
Unfortunately, many importers and their brokers are not aware of these agreements and end up paying the full ICMS rate unnecessarily.
AFRMM Exemption
The Additional Freight for the Renovation of the Merchant Marine, or commonly called AFRMM, is paid to support the development of the merchant marine and for naval construction and repair in Brazil.
There are specific cases in which this additional is exempt, such as the importation of goods destined for scientific and technological research, for example, or not levied, such as for certain commercial sectors and regions of the country.
It is necessary to study the product to see if it can fit into any of these particularities.
Logistics Optimization
Air and sea freight have very different values, but the analysis of logistical costs must also contemplate the values of internal movement and airport taxes.
It is important to understand and study different options for the complete logistics of each import, from the initial point of departure to the final point of delivery.
Depending on the situation, for example, it is more advantageous to work with a more distant port, but one that has lower storage costs.
There is also the possibility of removing the machine to a secondary bonded area through the DTA regime, where storage costs are usually lower than in the primary zone (docking port).
Each import must be studied individually to arrive at the best logistical solution for the case.
Negotiation with freight forwarder and warehouse
Having a good commercial negotiation with the international freight forwarder is indispensable when talking about cost reduction.
It is with him that values, free time (time that the container can be used without demurrage charges), differentiated storage tables with the berthing terminal, among other points, are negotiated. It is even possible to negotiate the use of non-conventional containers for the cargo in question if it is cheaper. Have you ever thought about bringing machines in a refrigerated container off? It is a good option when they are "left over in the market", the freight value in these cases is super reduced. free time (time that the container can be used without demurrage charges), different storage tables according to the berthing terminal, among other points.
It is even possible to negotiate the use of non-conventional containers for the cargo in question if it is cheaper. Have you ever thought of bringing machines in a refrigerated unplugged container?
It is a good option when they are "in surplus in the market", the shipping costs in these cases are greatly reduced.
Checking the documentation and cargo before shipment
Checking the cargo and the documentation before the shipment is very important, since it is at this point that all doubts about the contents of the shipment are removed.
Verifying that the cargo has identification plates that characterize it exactly to what was negotiated and described in the shipping documents avoids questioning by the IRS and possible extra costs in cases of parameterization in a channel other than green.
Hiring a competent customs broker
The customs broker represents the importing company at the Internal Revenue Service and although he is responsible for registering the Import Declaration when the machine or equipment arrives in Brazil, his service begins well before the shipment.
It is he who helps analyze the product's tax classification and indicates the need for import licenses. Therefore, it is easy to conclude that hiring a competent customs broker is essential for the success of the import.
Need help to reduce the cost of your machinery import?
As you can see, there are several possibilities to reduce the costs of importing machinery and equipment legally. But each case needs to be analyzed individually.
What applies to one machine may not apply to another very similar one. Different states may have different ICMS regimes for the same product. We are here to clarify your doubts and help your company reduce import costs.