Import of Goods as Foreign Investment in Brazil
Foreign companies willing to invest in Brazil can do so by importing goods to Brazil and integrating them directly to their capital in that country. In this article, we will see how foreign investment as imported goods is regularized in Brazil.
Definition of Foreign Investment
First of all, it is important to understand how Brazilian law defines foreign investment. Since 1962, foreign investments in Brazil are all:
- Goods, machinery and equipment owned by individuals and companies residing abroad that entered Brazil for the production of goods or services
- Financial and monetary resources held by individuals and companies resident abroad, introduced in Brazil for investment in economic activities
Between these two different investment modalities, there are several other types of foreign investment, such as:
- Acquisition of intangible assets older than 360 days
- Funding
- Import funding
- Foreign leasing
- Leasing, equipment rental and vessel freight
- Import of goods, without exchange coverage, for the capital contribution of Brazilian companies
- Currency loans to people residing in Brazil
- Equity in Brazilian companies
All foreign investments through the import of goods to Brazilian companies are located under the “Import of goods, without exchange coverage, for the capital contribution of Brazilian companies” type of foreign investment.
Registration of Foreign Investments
All foreign investment entering Brazil should be registered at Bacen, which is the Brazilian Central Bank and also Sisbacen which is the electronic information system of Bacen. Established in 1985, Sisbacen is where all foreign exchange transactions are immediately recorded in real-time, allowing it to both monitor and supervise foreign exchange transactions in Brazil, among other utilities.
Among the main functions of Sisbacen is the Registro Declaratório Electrônico, which is Portuguese for Electronic Declaratory Registration, RDE, which is structured in four modules:
- RDE-IED: registration of foreign direct investment in Brazilian companies
- RDE-ROF: registration of both financial transactions with external borrowing (loans, leases) and equipment rentals
- RDE-Portfolio: investments are recorded in the external capital market, financial market, investment funds and depositary receipts
- CBE: used for the annual statement of foreign assets that belong to residents of Brazil
It is important to say that foreign investments that will be made and registered are generally not subject to prior analysis by Bacen, leaving the responsibility to register it with the company receiving the foreign investment and/or by the representative of the foreign investor.
The set deadline for registration of foreign investments in Brazil varies between 30 and 90 days after the goods or currencies were nationalized.
Foreign Investment as Imported Goods
Despite foreign investments generally not being subject to prior analysis by Bacen, investments through the import of intangible goods without exchange coverage are subject to prior authorization by DECIC, which is the Department for Combating Illicit Financial and Oversight of Currency Exchange and International Capital. Investments through the import of tangible goods do not require any previous authorization by Bacen.
The registration of foreign investment through the entry of tangible goods must be done in the currency used in the investing company’s country or, upon request of the same, in any other currency.
The registration of foreign investments through the import of goods, can be made either through RDE-IED or through RDE-ROF. As for tangible goods:
- The value of the goods declared through the RDE-ROF module must be linked to the Import Declaration
- The currency stated must be the same one declared through the ROF module
Foreign investments through the import of goods, both tangible and intangible, must only be registered at module RDE-IED when intended exclusively for capital contribution.
Also, in the case of the import of used goods, these goods can not be similar to the ones produced nationally. Used goods must be added to the national economy in projects that stimulate the economic development of the country.
Finally, the foreign investments must be registered within 90 days after they were cleared from customs.