Bonded Warehouse For Companies Not Established In Brazil
Storing goods in bonded warehouses can be very useful for companies during foreign trade processes, even for those that are not legally established in Brazil. This article explains how this can be done.
The option of using bonded warehouses to store goods should at the very least be considered by anyone importing goods to Brazil. This regime can offer various benefits for companies and can be a valuable logistics tool.
Tax suspension is one of the main benefits. Companies are able to store goods without paying import duties, which can lead to reduced inventory expenses and other associated costs.
Another benefit widely explored by companies that are already legally established in Brazil is the possibility to perform Vendor Managed Inventory operations, known as VMI. According to the customs and bonded warehouse specialist, Avelino Oliveira, through VMI operations, a foreign company can “locate its products in a location very close to the Brazilian market and its customers”.
As a general rule, as imposed by the Federal Revenue, companies that are not legally established in Brazil cannot be beneficiaries - or consignees - of bonded warehouses and consequently, of VMI operations in such facilities.
However, there is an exception. These companies can make use of bonded warehouse services during the import process if the bonded facility operator appears as the consignee of the imported shipment. So as long this happens, a VMI operation can be done by companies that are not already established in Brazil.
Avelino Oliveira says that this can be particularly useful for foreign companies that are starting to export goods to Brazil “This is a great logistic and legal solution for those intending to establish business with Brazil prior to any local production of their products or even establishing a representative office.”
How The Process Works
Bonded facility operators are allowed to do so as long they do not import goods for consumption on their behalf. A Logistics Supplier Agreement must be signed by both operator and overseas vendor to ensure legal authenticity of the operation. This document must clearly define each party's responsibilities and rights.
According to the Oliveira, there is a standard procedure for VMI operations in bonded warehouses to be used by a foreign company that is not legally established in Brazil.
- Goods are shipped by the overseas vendor
- The Brazilian bonded facility operator are enlisted as the shipments consignee
- Goods are admitted in the regime, usually through a Customs Broker acting on behalf of the bonded facility operator
- After the admission, the overseas vendor can sell the products to Brazilian companies and make use of the Bonded Warehouse Regime’s benefits
Maintaining stock in Brazil, close to customers will in most cases significantly reduce the time between the order made and customs clearance of the goods.
Before commencing such agreement with bonded facilities operators, you must verify that the operator holds a RADAR license, as this is a requirement needed in order to perform import operations as a consignee. You will also need to make sure that the bonded facility is located close to Brazilian airports or ports of entry as this will lower inland freight expenses.