The calculation of Import Duties and Taxes to Brazil is not difficult, and in this article we will explain once and for all how it is done.
How to calculate Brazilian Import Duties and Taxes is the question most asked by foreigners wanting to export goods into the country. However, all too often a complicated explanation is given about the Brazilian tax system and the various rules that apply.
Ironically, the Import tax calculator provided by the Federal Revenue Service in Brazil does NOT calculate the import duties and taxes correctly in a real importation situation.
Understand the Involved Taxes
Before starting the calculation, you need to find the variables that apply for your product. Our tax index is a great place to start where we keep import duties and taxes for more than 9000 different product classifications.
You need to familiarise yourself with:
- Import Duties known as II
- Social Contribution PIS and COFINS
- ICMS which is a Value Added Sales Tax.
ICMS is the most challenging as it is a state specific tax that is dependent on the destination state in Brazil. The general overview can be found in our ICMS Rates by State article, and we also have published more detailed articles regarding the ICMS rates in São Paulo, Rio de Janeiro and Minas Gerais.
If you are unsure about the ICMS rate, we suggest using the general rate for the state of São Paulo which is 18%.
We assume you know the CIF value of your product and can convert this to BRL. This value is the cost of the goods plus the freight and insurance costs prior to its arrival in Brazil.
(CIF * (1 + II))
- PIS and COFINS:
(CIF * ( 1 + ICMS * (II + IPI * (1 + II)))) / ((1 - PIS - COFINS) * (1 - ICMS))
When completing the II, IPI, PIS and COFINS you will have the product cost in Brazil before the value-added sales tax - ICMS is calculated.
Before calculating ICMS you also have to add all other costs and fees that applied for the goods to be cleared in Brazil. AFRMM is usually the largest portion if the goods were shipped. You also have to document costs to Siscomex, handling and storage fees to the harbour or airport etc.
ICMS is the same for national or imported products. The basis is as follows:
CIF + Cost IPI + Cost PIS + Cost COFINS + Other Costs
Real Life Example
To illustrate the calculation we can use some real life numbers. For this example we assume the following variables:
- Product is wrist-watches with mechanical display.
- Destination state is São Paulo.
- Value of goods is BRL 98.000.
- Value of freight and insurance is BRL 2.000.
- The goods arrive by sea freight.
The import duties and tax rates for wrist-watches with mechanical display imported to São Paulo state is as follows:
| II ||20.00%|
The next step is to apply the calculation base that we covered in the "Calculation Base" section of this article.
| II ||100.000||20.000|
Before calculating the ICMS we need to apply the following additional costs:
- Siscomex Document fee of BRL 40
- AFRMM (25% of freight value) of BRL 500
In this example, the base for calculating ICMS is BRL 164.089 and with a 18% ICMS rate the sales price in São Paulo is then BRL 193.625.
Classification of Product
Correct classification of your goods is extremely important, and although the calculation of taxes and import duties are relatively simple, classification of goods should be done by experts.
Currently the fine for mis-classification of goods is 1% of the CIF value.
In order to get assistance with both the tax and import duty calculations, as well as the classification of goods, use our online service that is delivered in partnership with a professional Brazilian trading company.