Export to Brazil? Information which you need to know

Overview of Brazil

Export to Brazil Information. Brazil is one of the largest economies in the Western Hemisphere (source ITA ). According to a PWC report, Brazil is expected to replace Germany and become the 5th largest trading nation in the world by 2050 (source PWC).

In recent years, Brazil has experienced government turmoil, a downgrading of its sovereign risk rating, a recession and a flattening of demand in most retail sectors. To bring the economy back on track, the government implemented important reforms with its market-friendly agenda receiving support from Congress. Business investment confidence has returned to Brazilian markets, and the International Monetary Fund (IMF) expects Brazil to return to growth in 2017.

Brazil has a population of 218 million, with 89% of the population under 65 years of age (source cia.gov)

Brazil’s main export commodities are cars, trucks, planes, ships, satellites, offshore oil platforms, white goods, fashion goods, cosmetics and consumer electronic products.

Brazil has a large and internationally competitive agribusiness sector, oil and gas reserves, vast mineral resources with an advanced financial services sector.

Brazil’s Business Culture

In Brazil, the currency used for International trade is US dollars.

Portuguese is the language of choice when negotiations are conducted. If English is used, it can be advantageous to have an interpreter present.

It is important to keep in mind that personal contacts play an important role in Brazil and can make a difference in doing business deals. Indeed it is recommended that you are accompanied to business meetings by a local contact and that all initial written correspondence with potential business partners be in Portuguese or in English.

For business meetings dress code is semi-informal. In business discussions, it is best to use titles, if any (e.g. Professor, Doctor), and ‘Senhor’ (Mr) or ‘Senhora’ (Mrs) or use the title ‘Mr’ or ‘Mrs’ and then their first name, not their last name (i.e. Sr Carlos, Sra Julia).

In Brazil, it is always worth remembering that during meetings, there is a culture of not saying “no”, but that does not mean that your proposal is being agreed to either.

Setting up in Brazil

If you’re considering exporting to Brazil, experts recommend establishing a local presence through an agent/distributor, a representative office, or a joint venture partnership to ensure the maintenance and servicing of business contacts.

Using agents enjoys great popularity in Brazil, partly due to the wide availability of experienced and reputable sales agents. New exporters, especially smaller companies, often prefer agents because they offer a cost-effective way to enter the market and facilitate access to potential buyers. The crucial task is identifying an agent equipped with the necessary contacts and experience to match your product.

Forming a joint venture partnership with a local Brazilian company has grown increasingly popular. These partnerships are appealing because they allow for shared costs and risks. Brazilian partners can contribute valuable local market insight, expertise, and familiarity with the Brazilian business landscape. Before establishing such a partnership, seeking legal advice is recommended.

Alternatively, you can set up a representative office in Brazil, although this option can be expensive. It suits exporters wanting a high degree of control over their products and after-sales service or those dealing with commercially sensitive intellectual property.

Banking and Finance

In Brazil, several commercial banks and financial institutions are controlled by the Federal State, with the largest state-owned banks being Banco do Brasil and Caixa Economica Federal.

The private financial sector includes commercial banks, multiple service banks, investment banks, credit cooperatives and others.

Brazil Tariffs and Regulations

Brazilian Tariffs and duty rates are constantly revised and are subject to change without notice. For further information, please visit the:

Tariffs and non-tariff barriers

Tariff

Imports are subject to a number of taxes and fees in Brazil, which are usually paid during the customs clearance process. There are three taxes that account for the bulk of import costs: the Import Duty (II), the Industrialized Product tax (IPI) and the Merchandise and Service Circulation tax (ICMS). In addition to these taxes, several smaller taxes and fees apply to imports. Note that most taxes are calculated on a cumulative basis.

All products exported to Brazil are taxed by an import tax (unless otherwise specifically exempting the product from such payment). The key points to note about the import tax include:

It is levied on the customs value.
The customs value is generally assessed based on the transaction value, and that coincides with the cost, insurance and freight (CIF) value.
The import tax rate is selective and depends on the product’s tariff classification.

Brazil and its Southern Common Market (Mercosul) partners, Argentina, Paraguay, and Uruguay, implemented the Mercosul Common External Tariff (CET) on January 1, 1995. Venezuela became a full member of Mercosul in 2012. Each country maintains a separate exception list of items for tariffs.

Non-tariff barriers

Foreign exporters and Brazilian importers must register with the Foreign Trade Secretariat (SECEX)

Brazilian authorities might request additional documentation depending on the product. For instance, products potentially affecting the human body, such as pharmaceuticals, vitamins, cosmetics, and medical equipment/devices, fall under the purview of the Ministry of Health. To sell these products in the Brazilian market, the foreign company must either set up a local manufacturing unit or office in Brazil or appoint a Brazilian distributor who has authorization from the local authorities to import and distribute medical products. Moreover, companies must register these products with the Brazilian Ministry of Health, a procedure known for its complexity and lengthy duration.

Product certification, labelling and packaging

Label requirements differ based on the product category. Food, beverages, agrochemicals, pharmaceuticals, and cosmetics have special labelling rules, often requiring approval from regulatory bodies.

Labels must clearly display information regarding the product’s quality, quantity, composition, price, guarantee, shelf life, origin, and any potential risks to the consumer’s health and safety.

It is mandatory to include the name and contact details of the importer, along with other requisite details in Portuguese, on the back labels of most imported products.

Note the special labelling requirements for toxic food products in Brazil; adhere to these when exporting.

Ensure products bear labels with metric units or their equivalents.

Methods of quoting and payment

Quotations should be FOB and C&F (Incoterms 2000), ex-works, Brazilian port, and in US dollars. Payment terms can be in advance, collection (payment terms are freely negotiable, averaging 360 days), with or without a letter of credit coverage.

Documentary & Clearance Requirements

Documentation required:

Commercial invoice
Bill of lading
Certificate of origin – if a product is eligible for special multilateral agreements.

Export to Brazil – Customs process:

Ensuring all customs documents are in complete order is essential. Products may face delays due to various issues, including minor errors or omissions in the paperwork. Brazilian customs may impose high fees on products held, and they frequently seize shipments with seemingly inaccurate documentation. Customs reserves the right to levy fines and penalties at its discretion. For more details on customs regulations in Brazil, consult the appropriate resources.

Brazil Customs website (in Portuguese).

Duties, Taxes and fees for formal entry clearance:

Foreign-controlled companies and foreign residents generally receive the same treatment with taxation in Brazil as local companies and residents.

The government levies the Industrialized Products Tax (IPI) on most goods, applying it to the duty-paid value.The most common rate is between 10 per cent and 20 per cent, assessed on the duty-paid value. However, certain goods, such as alcoholic beverages, are subject to rates of up to 150 per cent (tariff 20 per cent + IPI 130 per cent).
Merchandise and Services Circulation Tax is also levied and varies from state to state. In Sao Paulo, for example, it is 18 per cent levied on the aggregate of the duty-paid value plus the IPI.
Merchant Marine Commission of 25 per cent of freight cost.
Warehousing charges begin at one per cent for five days and increase progressively up to 1.5 per cent for each period of 10 days after 20 useful days of storage.
Port and dock charges vary based on the types of goods and their FOB value (Incoterms 2000), rates range from three per cent to 12 per cent.
SISCOMEX Fee: fixed fees in local currency (Reals) for each import declaration, averaging US$20. You must pay a bank charge at the Bank of Brazil. The rate averages US$50.
The clearance agent’s charge of two per cent is levied on the CIF value (Incoterms 2000).
Bank fees covering letter of credit emissions and document handling may reach three per cent of the FOB price.

Imports into the Free Trade Zone of Manaus (State of Amazonas) are exempt from import duty.

Business Risks – Export to Brazil

Companies should dedicate time to exploring the Brazilian market, seeking professional advice as needed, and conducting thorough research on market entry challenges before forming any business relationships.

Companies wishing to operate in Brazil should commit to the highest level of corporate behaviour and familiarise themselves with the laws of their country and the penalties pertaining to bribery of foreign officials.

Export to Brazil – Intellectual Property Protection

Brazil has joined several international agreements to foster intellectual property rights, including the Uruguay Round Agreements, which encompass the Trade-Related Aspects of Intellectual Property (TRIPS) Agreement signed in 1994. Brazil also participates in the World Intellectual Property Organisation (WIPO) and adheres to the Berne Convention for copyright protection, in addition to being a party to the Universal Convention on Copyrights, safeguarding literary and artistic works.

While pre-marketing foreign software registration isn’t mandatory, it generally comes recommended for better protection. Companies can register through an agency overseen by the Ministry of Industry and Commerce.

Software enjoys protection for 50 years, starting from January, following its publication. This timeframe contrasts with the 70-year duration allocated for copyright protection. Notably, foreign entities can qualify for software protection in Brazil, provided their home country reciprocates these rights to Brazilian nationals.

To secure trademark ownership rights in Brazil, registration is essential. Except in specific cases, brands not previously registered are eligible for registration. The process takes place at the INPI (Federal Intellectual Property Agency) for trademarks, while trade names require registration with the local Junta Comercial (Commercial Registry).

Dispute resolution

The fraudulent use of internationally recognized trademarks remains a significant issue in Brazil. However, in the last four years, authorities have enhanced the protection of these marks significantly. Moreover, some foreign firms have successfully pursued court actions against trademark infringements.

Brazil legally protects four kinds of trademarks:

Industry trademarks, which manufacturers use to distinguish their products
Trademarks that merchants use to identify their merchandise
Service marks that safeguard services or activities
General marks that pinpoint the origin of a series of products or services, each individually distinguished by specific marks

To secure protection in Brazil, inventors must patent their inventions locally. As a participant in the Paris Convention. Brazil allows citizens from other member countries, who have already filed patents in their home nations. To have exclusive rights to apply for patents within specific periods, based on the nature of the property.

Brazil Information Resources

Export to Brazil – About the Author

Aidan Conaty is the founder of TCI China & Goodada. Godoada also provides Quality Control Inspections in Brazil. Aidan’s background is in Supply Chain Consultancy and he is a qualified accountant.

Exporting to Brazil? – Facts & Information