In this article we will explain what is the regime, who can use it and what are the benefits that a company can obtain with RECOF.
RECOF is the short form for Regime Aduaneiro Especial de Entreposto Industrial sob Controle Informatizado, which can be translated to English as “Special Customs Regime for Industrial Warehouse under Computerized Control”. Instituted in December, 1997, it was directed to attend the demands of IT and Telecommunication companies.
In 2002, a normative instruction determined that other two sectors of industry would be included in the list of companies covered by RECOF: aeronautical and automobile industries. The industry of semiconductors and high tech components for IT and Telecoms were also included in the regime, characterizing the RECOF semiconductors.
RECOF allows that a specific industrial establishment imports goods that, after industrialization, will be sold to the foreign market. More than that, it determines that this importation is free of charges. The goods can be imported with or without exchange coverage (with or without remittance of foreign currency).
The industrialization operations mentioned are limited to assemblage, transformation and improvement, packing and repacking. Part of the goods admitted in RECOF, in the state or incorporated in the product obtained in the industrialization can be dispatched for consume.
The goods admitted in the regime can also have one of the following purposes:
RECOF Sys is a system developed by Softway that controls the goods that are imported and exported through RECOF. It's totally automatic in relation to data from both corporate and Federal Revenue systems. In order to provide all the necessary controls to the regime, RECOF Sys must be entirely integrated to the corporate systems (such as Importation, Exportation, Production Control and Invoicing).
Requirements to use RECOF
The main requirements for companies to be qualified to RECOF are:
- Perform industrialization, assemblage or modification processes
- Fiscal aptitude
- Export or participate in the exporting productive chain
- Commit to a minimum exportation limit
- Have a control software that meets SRF (Secretaria da Receita Federal or Secretariat of the Federal Revenue) requirements (in other words, similar to RECOF Sys)
- Have an equity equal to or higher than R$ 25 millions (Industry), R$ 5 millions (Service Provider)
- Have authorization to run the activity (granted by competent aeronautical authority, if that's the case)
- Industrialize at least 80% of the imported goods admitted in the regime
Benefits of the regime
The main benefits of RECOF for these companies are:
- RECOF allows the importation of all of the components with suspension of II (Imposto de Importação or Import Tax), IPI (Imposto sobre Produtos Industrializados or Tax on Industrialized Goods), and PIS (Programa de Integração Social or Social Integration Program)/Cofins (Contribuição para o Financiamento da Seguridade Social or Contribution for Social Security Financing)
- The national purchases have suspension of IPI and PIS/Cofins
- Allowance for transferring beneficiaries or supplier's co-qualification
- A one-year tax suspension, which can be extended to the upcoming year
- Allowance for the rectification of the DI – Import Declaration after physical checking
- The payment of the taxes for nationalized products must be made until the 10th day of the following month of the sale
- Allowance for the use of Drawback simultaneously, if required
- The tax suspension becomes export exemption
- Allowance for sales in local market or exportation that can reach 20% of the imported products without industrialization (making it possible for the percentage to be up to 30%, depending on the volume of the exportation)
- Reduction of storage expenditures in ports or EADIs (Estação Aduaneira Interior, known as Dry Port) through negotiation or due to the fact that the clearances will occur in the first period
- Acceptance of the transfer of Customs Warehouses and other special customs regimes
- Provides cash flow gains for local market sales
- Usually, exports are dismissed from custom conferences, but even when they are required, they must occur within four hours
- Significant reduction in the company inventory, considering that the entire clearance process is easier
- Possibility for admitted goods to be dispatched abroad, by plane, for tests, repairs, restorations, and demos, while keeping suspension status (according to AMBRA - Autorização de Movimentação de. Bens Submetidos ao RECOF, which is the authorization of movement of the goods admitted in RECOF)
- Importation and acquisition in the local market (SP) with suspension of ICMS (Imposto sobre Circulação de Mercadorias e Prestação de Serviços or Tax on Circulation of Goods and Services) in São Paulo state (according to RESE - Regime Especial Simplificado de Exportação or Simplified Export Regime).
These and more information (including more benefits!) can be found in the RECOF website, available both in Portuguese and in English.