How to export from Brazil
Learn in this article what are the documents, norms, advantages and payment modalities to export from Brazil.
After experiencing a steady growth, the current economic crisis in Europe and the protectionist barriers to Argentina has decreased the Brazilian exports in 17%.
Brazil has been historically known for its exports of commodities. Last year, almost half of the total national exports was composed by six products:
- Iron ore
- Crude oil
- Soy
- Meat
- Sugar
- Coffee
Even though commodities correspond to 69% of the Brazilian exports, Brazil also exports technological goods, such as aircrafts.
Advantages
The advantages of exports are many, being the most important the strengthening and development of the internal market. Also, exporters are given fiscal incentives, such as the decrease of the tax aliquot to 1,5% over the billing of companies exporting clothing, shoes, bags and furniture.
Here are some of these advantages in details:
Exports eliminate product seasonality as a company producing goods for cold weather will be able to produce them the entire year as it will have different markets where to sell them, becoming independent of the national seasons.
Exports increase productivity and the quality of the goods.
As production increases, so does the negotiation options to the purchase of raw material, decreasing costs and increasing profit.
As the company has to adapt to the demands of the destination market - what forces the exporting country to improve its goods -, the quality of the product will increase significantly. Also, when entering the international market, companies acquire technologies required to adapt to the demanding market of developed countries and these practices are internalized and become regular procedures.
Exporting companies may use mechanisms that contribute to tax exemption that are called fiscal incentives in the internal market. Some of the taxes exporter may be exempted of are PIS, ICMS, IPI, COFINS and IOF.
Norms and Certification
The markets regulation is based on Normalization Systems, which are the rules and procedures required for the products or services to achieve a desirable quality level. In Brazil, ABNT technical norms help national companies to achieve higher levels of quality and conformity.
When it comes to foreign trade, technical and environmental norms can be a problem to the Brazilian exports and are called “non-tariff technical barriers” that work as a way to protect the market. Some examples are the norms regarding labeling, package type and other specific requirements.
ISO (International Standardization Organization) is an entity that clusters standardization associations from 158 countries. ISO approves international norms in all technical fields, with the exception of electricity and electronics, which are in charge of IEC (International Electrotechnical Commission).
Types of Commercialization
There are two major ways of insertion in the international market: the direct and the indirect commercialization.
Direct Commercialization
Occurs when the exporter leads the entire process of exporting, from the first contact with the importer to the conclusion of the sales operation. In this case, the exporter takes care of each and every detail, from the commercialization to the delivery of the product, including collection practices, what demands administrative care, human resources endeavor and time.
Direct commercialization occurs in five ways:
- The exporter has direct contact with the importer
- Through an exports’ intermediate or an importer representative
- Through a sales branch abroad
- Sales through the mail
- E-commerce
Indirect Commercialization
In this case, the company has to subcontracts a third party, specialized in finding buyers in foreign markets. This modality requires the participation of a trading company that acquires industrial goods or manufacturers in the domestic market for further export.
Indirect Commercialization happens in the following ways:
- Export Consortium
- Sales to trading companies
- Sales in the domestic market to other companies that will export
- Representatives of foreign buyers
Aiming the development and encouragement of the Brazilian exports activity, the federal government has extended the same tax exemptions and benefits granted to effective exports to the domestic operations of goods acquisition destined to the foreign market.
Payment Modalities
Anticipated payment
The importer issues the transaction value and sends it to the exporter, who provides the export of the good and its documentation. The exporter must provide the exchange contract with a bank before shipping the goods. This payment modality is not very usual as it places the importer in a position in which he depends on the exporter.
Remittance without draft
The exporter ships the goods, prepares the documents regarding the operation and sends the papers to the importer. The payment will be remitted by the importer when he has received the documents and the goods. In this case, if the remittance is full upon delivery, the importer is responsible for binding the exchange contract to the import declaration.
This is a high-risk operation for the importer because, in case of insolvency, there is no debt claim that could sustain any lawsuit.
Documentary collection
Happens when banks are in charge of handling all the documents. The banks involved in this kind of operation are mere international debt collectors for an export operation whose transaction has already been agreed between the importer and the exporter, being totally exempted from the responsibility over the result of the documentary collection.
After shipping the goods, the exporter sends the shipping documents to another bank where the importer is located, so that they can be presented for payment. The importer must present all the collection documents to retrieve the goods from customs clearance.
Letter of Credit
The letter of credit is issued by a bank under the importer’s orders, guaranteeing the payment to the exporter if he comprises with everything that was promised to the importer. If the Letter of Credit establishes full payment, the importer is responsible for binding the exchange contract to the import declaration. If it is deferred payment, the bank is responsible for doing this process.
Required documents
Most required documents on an international sales is common to all countries, however, some demand a more complex documentation, such as a consular visa. The best way to deal with these documents is to hire a professional working specifically in this area as any mistake will result in a series of problems.
Pro-forma invoice
This document concentrates all basic information to close the deal and can be used by the importer to open the letter of credit or to effective the money transfer. For some destinations, it is used to request an import license or an inspection request.
A pro-forma invoice must contain:
- Goods’ description, such as quantity, gross and net weight, currency, unitary and total prices
- Minimum and maximum amounts per shipping
- Name of the exporter and of the importer
- Type of packing e transportation
- Payment modality
- Terms or sales conditions (INCOTERMS)
- Delivery date and location
- Loading and unloading locations
- Expiration date of the proposal
- The exporter’s signature
- A blank space where the importer will sign, expressing his agreement with the proposal
Nota Fiscal
This document must follow the good from the moment it leaves the exporter until it arrives at the shipping location. It must be issued in national currency, based on the Free on Board price conversion from Brazilian reais (BRL) to dollars (USD) on the day the nota fiscal was issued.
In case of direct exports, the nota fiscal must be issued under the name of the importer company; if the case is of indirect exports, it will be issued under the name of the company dealing with the export operation.
Commercial Invoice
Is a document representing the commercial operation and in which all information previously declared on the pro-forma invoice must presented, along with others confirming the exports. It is issued by the exporter in a non-official form, preferentially in the language of the importer country or in English. It must be filled in under the regulations of the importer country.
The document must contain the following information:
- Name and address of both importer and exporter
- Type of transportation
- Goods’ description, such as quantity, gross and net weight, currency, unitary and total prices
- Type of packing
- Payment modality
- Terms or sales conditions (INCOTERMS)
- Issuance date
- Loading and unloading locations
- Expiration date of the proposal
- The exporter’s signature
Shipping Certificate
The shipping certificate is a document issued by the carrier or by your agent. It represents the transportation contract and it is the proof that the good has been shipped. This document is accepted by the bank as a guarantee that the good has been shipped abroad.
- Name and address of both importer and exporter
- Loading and unloading locations
- Goods’ quantity, brand and volume
- Type of packing
- Good’s description and nomenclature (SH/NCM/NALADI)
- Gross and net weight
- Good’s value
- Dimension and cubature of the volumes
- Freight costs
- Freight payment methods (prepaid freight or freight collect)
- Conditions in which the good was shipped (clean on board or received in apparent good order and conditions)
Packing List
This document is filled in by the exporter and has the purpose of listing the packages and their contents, facilitating customs supervision. This packing list must contain:
- Document number
- Name and address of both importer and exporter
- Issuance date
- Loading and unloading locations
- Name of the carrier and shipping date
- Number and identification of the packages, made by numeric order, type of package, gross and net weight and the dimensions in cubic meters
Certificate of Origin
This document proves that the good effectively come from the exporting country. It is issued by accredited entities and the presentation of this document by the importer at his customhouse will decrease the import tax of the goods negotiated on the deal.
The major certificate of origin are:
- Mercosul certificate of origin: issued by federations, confederations and industry centers of commerce and agriculture.
- Aladi certificate of origin: issued by state federations of the industry and commerce.
- SGP certificate of origin: issued by Banco do Brasil agencies operating in foreign trade. It is denominated “Form A” and is a requirement for the concessions of tariff reductions in industrialized countries to developing countries.
This article was written along with Alcantara&Holstad, a Brazilian-Norwegian consultancy firm, offering advice to foreign companies interested in the Brazilian market. For more information, visit their website by clicking here