Importing construction materials has been a strategy increasingly analyzed by Brazilian construction companies. This article explains the importance of goods imported in the sector and also outlines the fundamental aspects of the import process.
The importation of construction materials has become a strategy for Brazilians contractors because the importation was an alternative found to combat the high prices of the materials and to supply the largest demand in the country.
Trade Balance: Brazil X Foreign Products
Until 2007, the Brazilian trade balance surplus – exports less imports – of the construction sector was more then 1 billion BRL. But since 2008, the expansion of the civil construction and the appreciation of the real the import/export situation in the country has been changing with imports surpassing exports by 1.1 billion BRL.
Behind this figure, is the custo Brazil, that includes the high taxation, the appreciation of the exchange rate and the lack of infrastructure. Together, these three factors increases the price of the national production of construction materials, and therefore reduce their competitiveness – the imported product always wins in this scenario.
Since 2006, the Brazilian government has been working with a tax reduction policy for the construction industry. The reduction – that should have ended in 2012 – was extended to December of 2013. The reduction includes a temporary exemption of the IPI charged upon some construction materials and to reduce the rate of this tax to other products of this same sector.
Products with high added value, such as ceramics, fittings and metals, which have high prices in Brazil mainly by manufacturers and the lack of differentiation of inputs, gain preference in the import process. Cranes, freight elevators, racks and machines for construction of foundations, because of the shortage of domestic supply, can be added to the list of the most sought-after items to be imported to Brazil.
Each one of these products is offered by more specialized or less specialized markets and, consequently, with better or worse supply conditions in relation to the Brazilian reality. Currently, Brazil's biggest partners in the marketing of construction materials are China and Turkey focusing on steel pipes and finishing products. While Poland is very competitive in glass.
Administrative Control of Imports
If your interested in importing construction materials to Brazil you will pass through all import procedures established by the country. Some of them are general – the same for all types of goods – but a few others are specific for each type of industry sector or product.
Registration in Siscomex
The first step to import anything to Brazil is the Siscomex registry – only with the registration in the electronic system of the Brazilian federal government. The system is responsible for all import control and export activity that takes place in Brazil.
In the case of construction materials, the Licença de Importação is not required, which means that the products – after being registered in Siscomex – can be shipped to Brazil. While the goods are being transported to the country, the transporter must inform the Brazilian Federal Revenue Service, Ministério da Fazenda, the day of arrival in Brazil.
When the construction materials arrive in Brazilian territory they are offloaded to a storage area and the warehouse keeper must inform the Federal Revenue the availability of the goods. After that, the products need to be checked by the responsible organization of the government.
For construction materials the responsible government organization is the Inmetro. Inmetro will inspect the goods and if everything was as expected, the goods will receive the Inmetro license, that will permit the continuation of the process.
The last step of the administrative control is the registration of the Import Declaration – known as DI.The declaration is a document made by the importer or by his legal representative through Siscomex.
DI comprises fundamental information that permit the realization of the customs clearance of the materials.With the DI, the next step will be pay the taxes charged upon the process and the materials imported. To utilize Siscomex a tax is applicable. For each DI a tax ODF 30 BRL is charged. To each addition of Import Declaration the tax changes:
- until the second addition: 10 BRL
- third to fifth addition: 8 BRL
- sixth to tenth addition: 6 BRL
- eleventh to twentieth addition: 4 BRL
- twentieth first to fiftieth addition: 2 BRL
- from the fiftieth first addition: 1 BRL
Custom Clearance of Imported Goods
The customs clearance involves the taxation process. In this step, taxes related to the process and to the goods imported will be collected. Since a lot of construction materials are eligible for IPI rate reductions charged upon them, it is important to check what the reduction was or if the product was temporary exempt of this tax.
Other taxes will be charged upon the construction materials, such as:
- Import Duty
- ICMS – with the tax reduction provided by the Brazilian Government, the construction industry aims to achieve another reduction in the ICMS
In the customs clearance process, documents will also be checked. The most important documentation that must be presented are:
If all documentation is in accordance with the Brazilian legislation and all taxes have been paid, the Federal Revenue will issue an online authorization in Siscomex allowing the release of the materials. The document name as Proof of Import and it is responsible for promoting the nationalization of the goods imported.The warehouse keeper will confirm that the authorization was actually emitted by the Federal Revenue through Siscomex and then released the goods imported.