Andréa Novais

Andréa Novais


The Brazil Business

Updated

JorgeBRAZIL

Importing vessels to Brazil

Andréa Novais

Andréa Novais


The Brazil Business

Updated

That the Brazilian waterways are poorly explored we already know, but now it's time to approach the restrictions to the imports of vessels to Brazil and how does protectionism affects the development of this sector.

Background

With a coast line of more than 9 thousand kilometers and with a huge waterway network, Brazil is still far from exploring its maritime potential. Investments are still needed to modernize this system. Even though it cannot transport cargo as fast as airplanes, for example, Brazil has got 16 ports with good capacity.

Maritime transportation is responsible for almost 12% of the cargo transportation in the country, a low percentage if we consider the potential of the sector.

Two major obstacles for the development of the Brazilian maritime sector is the shipping price for container and the . Despite the decrease of US$ 300,00, the cost still remains too high when compared to foreign ports. Also, there is a great deal of bureaucracy involved and even the best Brazilian ports are not so well prepared as the European ones.

Protectionism

In 2009, Antaq, which is the National Agency for Waterway Transportation, was strongly criticized by Sinaval (Portuguese acronym for Sindicato Nacional da Indústria da Construção Naval, the union of companies working with vessels construction in Brazil) for the imports of two vessels.

Antaq defended itself by stating that importing vessels is so common in Brazil that it does not even require their permission. The only reason why it does not happen very often is the high price.

Also, still according to Antaq, even though the preference is for the internal market, if the shipyards are full, importing can be a good option.

Taxation barriers

Taxes applied to Brazilian imports are not restricted to the import tax (Imposto de Importação – II). As the Brazilian taxation system is a very complex one, apart from II, there are also PIS, COFINS and IPI as federal taxes and ICMS, as a state tax.

Before going further in the taxes, it is important to say that vessels built in the country are exempted from PIS, COFINS and ICMS.

The import tax aims to protect the national industry and applies to the CIF value of imported goods. The rate is determined by the Tarifa Externa Comum (TEC), which is the customs clearance tax used by Mercosul countries. The current import tax for cargo vessels is of 14%.

PIS and COFINS are both federal social contributions created to fund the social security. They apply to the imports of foreign goods and their rates are respectively 1,65% and 7,6%.

The tax over industrialized products (in Portuguese “Imposto Sobre Produtos Industrializados”, or simply IPI) is the tax applying to the aggregated value of industrial production. It aims to promote the equality of costs of imported industrialized products in relation to the ones manufactured by national companies.

ICMS (Portuguese for “Imposto sobre Circulação de Mercadorias e Serviços”) is the tax applying to the circulation of goods and transportation and communication services among states and municipalities. Rates vary from state to state and according to the good or service. In case of imported items, the rate is determined by the state in which the import takes place. Rates range between 7% to 18%.

All these taxes put together correspond to an approximate cost of 50% of the total value of the vessel.

Consequences

All the barriers to the imports of vessels and the over protection of the Brazilian shipbuilding industry, that obliges Brazilian companies to purchase Brazilian vessels if they want to operate in the Brazilian coastal shipping constitute a major obstacle to the growth of the maritime sector in Brazil.

Such protection intimidates the entrance of new players in the sector and prevents free competition. As the Brazilian legislation demands the usage of the Brazilian flag, the purchase of Brazilian vessels is practically mandatory. Importing is an option, but as previously mentioned, the vessel has to be new (used vessels can not be imported) and the taxation corresponds to 50% of its total value.

Also, it is required to have an authorization from Ministério dos Transportes, which is the Brazilian department of transportation.

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