How To Import Musical Instruments to Brazil
The import of musical instruments is chosen by many companies and individuals over products offered in the domestic market. This article explains the main duties and procedures involved in this process.
Brazil might not be ranked as a the top market for the musical instrument industry - the sector’s revenue was BRL 625 million in 2012, considerably less than the USD 7 billion of the American market - but the consumption of such goods has been growing.
Some of the factors that explain this situation are the population’s income growth over the past few years along with the manufacturing and sale of cheaper domestic items, which are accessible to people with a lower consumption power. According to market research by TechNavio, the sector’s revenue is expected to grow at an annual rate of 2,6% until 2016.
But, commonly, a large share of consumers, especially those from social classes A and B, tend to choose imported instruments over national ones. The reason is simple: quality.
Many prefer global manufacturers like Gibson, Fender and Yamaha, which do not have factories in Brazil. Even though their prices are usually higher than what is charged for national brands, a considerable part of Brazilian consumers buy instruments made in other countries.
Necessary Procedures
The import of musical instruments to Brazil follows the standard procedure seen with most types of goods. For companies, two procedures can be adopted:
- Importation via DSI (Declaração Simplificada de Importação, or Simplified Import Declaration)
- Importation via DI (Declaração de Importação, or Import Declaration)
Import via DSI
Importing using a DSI is quicker and more convenient: it can be done using the Brazilian Mail Service or even a courier company. In addition, if the value of the goods is less than USD 500, it dispenses any registration at Siscomex, the informatized system to monitor foreign trade operations in Brazil.
The biggest setback, though, is the value limit. To use a DSI, the imported goods must have a value of USD 3,000 or less.
When importing via this method, the following documentation must be presented:
- Original bill of lading
- Original commercial invoice, when applicable
- Documento de Arredação de Receitas Federais, also known as DARF, which is a document that proves that all required taxes were paid, if necessary
- Nota fiscal, if necessary
- Other documents required due to international agreements or specific legislation
Import via DI
If the cargo being imported does not comply with one or more of the requirements above, the import must be done by the regular procedure, through a DI. This import cannot be done through courier or mail service and certainly requires registration at Siscomex.
When importing via this method, the documentation to be presented is:
- Original bill of lading
- Original commercial invoice, signed by the exporter
- Packing list, where applicable.
- Other documents required due to international agreements or specific legislation
Taxes
The main concern for those importing musical instruments to Brazil is the taxation. Essentially, three taxes and contributions apply to the importation:
- II - Import Tax, or Imposto sobre a Importação
- Cofins - Contribution for Social Security Financing, or Contribuição Social para o Financiamento da Seguridade Social
- PIS - Social Integration Program, or Programa de Integração Social
- ICMS - Tax on the Circulation of Goods and Services, or Imposto sobre Circulação de Mercadorias e Serviços
Note that imports of musical instruments are exempt from IPI, which is the Tax on Industrialized Products, due to rules created by the Federal Revenue. Items such as microphones and headphones are not exempt from this tax.
The main issue is the Import Tax. Companies that chose to import goods via DSI have a single tax rate charged at 60%. Many companies choose this method due to its agility and convenience, but the amount spent on taxes is usually higher than seen with a regular importation process. Goods with a value under USD 50 are exempt from taxes, but beyond that amount, the single rate charged is of 60%.
When importing via DI, all taxes and contributions are charged separately. The current II rate for musical instruments is 18% over the customs value. In relation to PIS and Cofins, the rates are similar to any other import process which destination is Brazil. There is a rate of 1,65% regarding PIS and 7,6% related to Cofins. These rates are applied over the customs value of the imported instruments.
ICMS is a state tax, so its rate varies according to the state where the operation is taking place, but it is usually between 16% and 18%. In some states, the rate applied to transactions involving the circulation of musical instruments can be lowered, as such goods are capable of generating cultural incentives. In São Paulo, for example, the applied rate is 12%.