When exporting products that were made or re-processed in Brazil, they are subject to Export Duty. In this article, we will take a look at Export Duty from Brazil.
The Export Duty is a federal tax charged on Brazilian exports that were produced in Brazil or that were nationalized and then exported after reprocessing. Thus, the triggering event of the Export Duty is the exit of goods from Brazilian territory, except for baggage. The Export Duty is calculated at the moment it is registered as an Export Declaration on Siscomex.
The taxpayers of the Export Duty are the exporter located in Brazil, whoever the law regards as the legal exporter or the person promoting the exit of goods from Brazilian territory.
The calculation basis for the Export Duty is the FOB value that the product, or its similar, would have at the time of its export, not its production cost. When the price of the product is difficult to evaluate or is likely to suffer from sudden oscillations in the international market, the government, through an act by the National Monetary Council, will establish specific criteria or establish a minimum agenda for determination of the calculation basis of the product.
For purposes of determining the tax calculation basis, the selling price of the exported goods cannot be inferior to the cost of acquisition or production of the same product, plus taxes and other contributions levied, as well as a 15% profit margin on the sum of costs.
Tax rate for Export Duty
The basic tax rate for the Export Duty is 30% but, this may be reduced or even increased to a maximum of 150% in order to meet the objectives of its exchange rate policy and foreign trade policy.
Due to the fact that the Brazilian trade balance depends mainly on exports and that the tax is extra fiscal - meaning that its collection is not calculated and made part of the tax collection forecast - the tax is not highly considered by the government, which makes it common for Export Duty to have a tax rate of 0% in order to encourage exports of certain goods.
Exporters pay the Export Duty after the registry of the Export Declaration and before the goods are exported. The deadline for payment of the Export Duty is 15 days from the date of the registration of the Export Declaration on Siscomex. The DARF, Portuguese for Document for the Collection of Federal Revenues, attesting the payment of the Export Duty should be presented, along with other necessary documentation, for export customs clearance.
Goods subject to Export Duty
The following goods are subject to Export Duty, but the destination of the goods may impact on the tax rate.
Subject to Export Duty when exported to any country
The following goods are subject to the Export Duty when exported to any country: hides and skins of cattle, horses and sheep - NCM codes 41.01, 41.02, 41.03, 4104.11 and 4104.19, - at a tax rate of 9%.
Subject to Export Duty when exported to South America, Central America and the Caribbean
The following goods are subject to the Export Duty when exported to South America, Central America and the Caribbean: all firearms, their parts and ammunition - NCM chapter 93 - at a tax rate of 150%.
The goods mentioned above have special tax treatment when exported to Argentina, Chile and Ecuador, being exempt from the Export Duty.
General Regime for Tax Relief
The tax treatment given to Brazilian exports is in line with export policies of other countries as it seeks to relieve taxes due on exported products through exemption on indirect taxes. Thus, Brazilian law provides that there is no incidence of IPI, ICMS, PIS/PASEP and COFINS over exports. Besides that, the exporter gets a tax credit equal to the taxes paid when buying inputs that were directly employed in the manufacture of the exported goods.
Exporting to Mercosul
Since 2010, it was decided that all countries that are members of Mercosul are free to decide which export policy they will apply to their exports. Thus, there is no special treatment given to Brazilian exports when these are directed to other Mercosul countries.