This article will explain you how to keep a local stock in Brazil without paying import taxes before your goods are sold to the end-customer.
In many industries clients will expect foreign suppliers to keep a local Brazilian stock just like a national Brazilian supplier would do. This will be costly for the foreign suppliers that do not only have to cover the production cost and transportation, but also import duty and other Brazilian taxes before the product is actually sold.
The Brazilian bonded warehouse regime ("Entreposto Aduaneiro") is a great logistic tool for stock management and healthier cash flow due to the duty suspension.
How do Brazilian Bonded Warehouses work?
Almost all goods that are legal to import to Brazil can take advantage of the Brazilian bonded warehouses regime.
The imported goods can be located in a bonded warehouse for up to three years but it is required with an annual renewal of the permit.
When the goods are located at the bonded warehouse they can be taken off the warehouse in partial lots for customs clearance.
While the goods are at the bonded warehouse its specific regulations for what the type of activities that the goods can undergo. This includes demonstrations and functionality tests for customers as well as labeling of the goods. There is also an opening for manufacturing operations relate to packing and re-packing of the good. This includes:
- Maintenance and repair
The documentation requirements for goods that are shipped to a bonded warehouse in Brazil are the same as if the good were being imported directly to the country.
Cash Flow Impact
Bonded Warehouses are used all over the world as an important logistic tool designed for manufactures that need a better cash flow. The cash flow effect is more significant in Brazil than in most other countries.
Let's make an example of the inventory cost electronic component that costs BRL 1 000 to produce, is sold in Brazil for BRL 5 000 including taxes and has a shipping cost (CIF) of BRL 500:
- Inventory cost abroad: BRL 1 000
- Inventory cost in Brazil after import: BRL 3 500
In addition to the cash flow advantages the possibility of partial release of the goods also give freight advantages trough bulk shipping.
Import Time Reduction
The reason why Brazilian clients demand local stock is not because they care for your cash flow, of course, but rather the lead time on their product orders, or in cases where you supply to a manufacture they would like to reduce their local inventory.
Although goods that are located in bonded warehouses need to go through the same customs clearance process as goods directly imported from abroad most companies will experience a significantly reduction in the time it takes to import goods to Brazil by utilizing the bonded warehouse regime.
The reduced processing time is partly due to the fact that federal authorities already have verified the papers before the goods were transported to the bonded warehouse. The larger bonded warehouse operators keep a very good infrastructure for importing within their facilities including customs clearance office and sometimes they even have their own bank branches in order to make the process flow as smoothly as possible.
There are many operators of bonded warehouses in Brazil, so feel free to use the contact form below to receive a recommendation of operators that would be well suited for your industry.
Other Related Information
- Brazilian Import Duty and Taxes
- Temporary Import of Goods to Brazil
- How to Import a Car to Brazil?
- Importing to Brazil