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Pursuing its export promotion policy the
Brazilian Government has established fiscal and
credit incentives to exporting enterprises. The
major fiscal incentives are exemptions from the
Industrial Products Tax (I.P.I.), Tax on Mer-
chandise Circulation (I.C.M.), income tax, im-
port duties, “Sole Tax”, and Tax on Financial
Operations (“IOF”). The major credit incen-
tives are special loans for the production of
manufactured goods destined for exportation;
medium- and long-term financing for Brazilian
exporters by the Foreign Trade Department of
the Bank of Brazil (CACEX); and financing of
market research and economic studies by
CACEX. The exemptions from the Industrial
Products Tax (I.P.I.), Tax on Merchandise Cir-
culation (I.C.M.) and import duties are of major
interest to the U.S. exporters.

I.P.I. exemption under this provision is
granted to: exports; domestic sales of machinery
and equipment paid under long term financing by
international or foreign government institutions,
domestic sales to foreign flag ships and planes
calling at Brazilian ports, domestic sales to tour-
ists paid by travelers checks, imports of machin-
ery and equipment, raw material, packaging and
scientific instruments by Brazilian exporters

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raw materials and intermediate products. Dividends attributable to profits under the approved export program will be exempt from the supplementary income tax on dividend remittances abroad.

Goods imported into the Northeast and Amazon regions of Brazil with approval by their respective agencies—the Superintendency for Development of the Northeast (SUDENE) and the Superintendency for Development of Amazonia (SUDAN)—are eligible for reduction and duty-free entry.

valued at up to 10% of the firm's increase in exports over the previous year; and capital goods imports for the purpose of expanding, installing or reequipping exporters' plants. Also a tax credit against the I.P.I. and I.C.M. is granted for exports and transactions considered to be the same as exports. The amount of the I.P.I. credit is equal to the I.P.I. liability, up to a maximum tax rate of 15% which would have been assessed if the merchandise had been sold in Brazil. Under specified conditions, an exporter can also transfer his I.P.I. tax credits to another establishment.

I.C.M. exemption is granted to: exports; domestic sales of machinery and equipment paid for under long term financing; domestic sales to foreign flag ships and planes calling at Brazilian ports; and imports exempt from the import tax or entering under the "draw back” or temporary admission system. The I.C.M. tax credit is granted by the states and equal to the I.P.I. tax credit but not exceeding the following maximum tax rates: 14.5% in 1971; 14.0% in 1972, 13.5% in 1973 and 13.0% in 1974. Import duty exemptions are granted to: capital goods imported with the purpose of expanding or reequipping exporters' plants; exporters' imports of machinery industrial instruments, raw materials, packaging and intermediary products valued at a maximum of 10% of a firms increase in exports over the previous year; importation of components for export merchandise; and Brazilian products returned to the country for specific reasons. DecreeLaw 1,219 published in the Diario Official of May 16, 1972, sets forth the further fiscal incentives and creates the Commission for Fiscal Incentives for Special Export Programs (BEFIEX) under the Ministry of Finance, to administer this export incentive program.

Under this program manufacturing enterprises whose export programs receive the approval of the Ministry of Finance may be exempted from payment of import duties and industrial products taxes on imports of machinery, equipment, parts, and

materials not exceeding one-third of the annual average net value of the exports. The costs of insurance contracted with Brazilian insurance companies and/or transportation made on Brazilian flag vessels, vehicles, or aircraft may be included in calculating the value of exports. Imports benefitting from the exemptions of this decree are not subject to the provisions of the "Law of Similars" but are restricted to those approved by the Ministry of Industry and Commerce, in the case of machinery, equipment, and parts, and by the Customs Policy Council, in the case of

Basis of Duty Assessment

The primary standard of valuation is the “normal price of the goods." This is “the price which those goods or similar goods fetch at the time of importation, at a sale carried out in conditions of free competition for delivery at the port or place of entry of the goods into the country." "Conditions of free competition" means those conditions in which the only payment to be made by the purchase is the settlement of the sale price; the price is fixed independently of any commercial, financial, or other relations, contractual or not, apart from those established for the purpose of the date in question, between the buyer and the seller and no charges arising from later re-sale, transfer or use of the product sold shall be imputable, directly or indirectly, to the seller. The law also states that the invoice price may be taken as indicative of the normal price (Decree-Law No. 37, November 18, 1966).

Until publication of the regulation of these provisions, a Finance Ministry directive states that the basis for calculation of the import duty, in the case of ad valorem rates, shall be the price by which the merchandise is normally offered for sale in the wholesale market of the exporting country, plus expenses to the port of embarkation for Brazil, insurance and freight (c.i.f.), less, when applicable, taxes applied to internal consumption and recoverable export.



Information regarding Brazilian duties applicable to specific products may be obtained free of charge from the American Republics Division, Office of International Commercial Relations, U.S. Department of Commerce, Washington, D.C. 20230; or from any Dep

nent of Commerce Field Office. Inquiries should contain a complete product description, including BTN, SITC, or U.S. Schedule B Export Commodity numbers, if known.


prices for certain dyes in lieu of previously existing minimum values. When Customs officials challenge

the declared value of imported goods they have 8 days to determine a new valuation. The importer then has 30 days in which to protest the new value, and a decision must be rendered within another 30 days. While the value is in dispute, the importer's declared value is pro visionally accepted for the purpose of clearing the goods, but the importer must post bond or make a deposit covering the claimed differences pending a final determination of the Jutiable value.

Appeals concerning the valuation of imported merchandise are heard by the First Chamber of the Brazilian Superior Tariff Council. If the Council decides against the importer, he may appeal to the Minister of Finance, who will refer the matter to the Customs Policy Council. If the Minister decides against the importer, he may appeal to the courts. If the final decision goes against the importer, he must pay a fine amounting to either 50 or 100% of the difference between the declared value and the verified value.

Special discounts for quantity purchases or for advance payment are not allowable in calculating the dutiable value (Secretario da Receita Federal, Instrucao Normativa No. 4, September 12, 1969).

In order to control prices, published catalogs or price lists, if available, must be submitted to the Foreign Trade Department of the Bank of Brazil (CACEX) before an import permit is granted. In the absence of a published catalog or price list, a pro forma invoice is permitted, (CACEX Comunicado 343, May 10, 1971). While, in general, the invoice value is accepted as the base for dutiable value, Brazilian lawprovides two supplementary methods of valuation to be used in special cases. On certain specified products, minimum values established by the Customs Policy Council are used as the dutiable value unless the invoice price is higher. The Customs Policy Council has broad authority to establish minimum values as a basis for the assessment of ad valorem duties. This authority has been exercised in cases of dumping, in cases where price fluctuations made it difficult to establish the dutiable value, and to prevent harm to a domestic industry. Minimum values have been established for more than 200 products. Recent information indicates, however, that no new products are being added to the list of minimum values, that the number of products subject to minimum values has been reduced, and that the minimum value of some products, principally dyes, has been lowered.

In addition to the minimum value system, Brazilian law provides for base prices, also referred to as reference prices or index prices. Whenever Brazilian production of a commodity is prejudiced by a general drop in import prices or by substantial price differences among several supplying countries, the Customs Policy Council may establish a base price, which is determined from the normal wholesale price in the country of origin, from export prices to third countries, from production costs, or from c.i.f. import values. It is to be recalculated every 6 months and may be removed by the Council if the abnormal price characteristics no longer exist. On entries for which the declared value is less than the established base price, a specific duty, equal to the difference between the declared value and the base price, is levied in addition to the usual ad valorem duty calculated on the base price. As of August 1971, base prices had been established for 12 items, including aluminum, nylon textiles, tools, certain chemicals, and toys. More recently, the Customs Policy Council has established base

Conversion of Foreign Values

The official rate of exchange, as established by the monetary authorities, has been managed by adjusting the rate by small amounts at frequent but irregularly-timed intervals. The rate as of the date of this printing was 5.88 New Cruzeiros (buying) and 5.915 New Cruzeiros (selling) per one U.S. dollar.

The “fiscal dollar" rate of exchange, based on the U.S. dollar, is used to determine the cruzeiro value for payment of duties on imported goods which are valued in other than Brazilian currency. The "fiscal dollar" rate of exchange is fixed monthly, based upon the behavior of the exchange market in the latest preceding month.

Purchases of foreign exchange to pay for the value of the imported goods are made at the official rate of exchange. Although the fiscal dollar rate is not directly linked to the official rate, the two are often identical.

Customs Surcharges

Port Improvement Tax-Two percent of c.i.f. value on all imports by sea.

Merchant Marine Renewal Tax-Twenty percent of net ocean freight charges on all imports by sea.

Special Customs Provisions

Entry, Transit and Reexport

Entry.-In order to clear the goods through customs without difficulty, the Brazilian importer must have all necessary documents. Documents are often delivered to the importer against his acceptance of the exporter's bank collection draft unless otherwise contracted, as in open account shipments. When the documents are sent by means other than the carrier on which the goods are shipped, they should be forwarded soon enough thereafter to insure their timely arrival at their destination.

To clear merchandise through customs, the importer or his agent must present copies of the commercial invoice (fatura comercial), including therein a declaration of the origin of the merchandise (a separate certificate of origin is acceptable but not required); a copy of the bill of lading, and a copy of the import permit (guia de importacao). It cannot be overemphasized that the documentation must be complete and correct in all requirements in order to avoid heavy fines and penalties.

Exact weight and quantity of goods, including parts and accessories for machines and apparatus in general, must be accurately and completely supplied by the exporter to the importer on either the pro forma invoice or the commercial invoice. The Foreign Trade Department of the Bank of Brazil (CACEX) will allow the importer to make his initial request for an import permit omitting quantity and weight specifications, but the goods should not be shipped and customs clearance will not occur until the importer is able to present a commercial invoice from the exporter, containing complete and accurate weight and quantity specifications.

Parcel Post Shipments and Passenger Baggage.-Parcel post shipments valued at no more than $5 are duty free and need no papers.

Other merchandise which usually enters duty-free are items such as: commercial samples; maps; books; newspapers; magazines; and other publications; used household goods and personal effects of individuals transferring residence to Brazil; and passengers' baggage. The following baggage is exempt from import tax: passenger's clothing and linen; personal jewelry; consumption goods, books, and magazines; and other objects for the passenger's professional or domestic use. Souvenirs with a value not exceeding $100 or its equivalent in other currencies plus $25 worth

of liqueur and cigarettes are also exempt from duties. The exemption does not apply to any electric or electronic equipment or machinery.

Parcel shipments of parts and accessories for ships, boats, aircraft, locomotives, machinery, equipment and instruments valued at US$3,000 or less do not require an import permit. Apparatus, instruments and utensils imported directly by individuals in professional civil societies, clinics, hospitals etc. and valued US$1,000 or less do not require import permits. International postage parcels and small packages, in volume, weight and quantity accepted by the Brazilian government in accordance with provisions of Decree No. 55,870 of March 26, 1965, and previous legislation do not require import permits.

Transit Zones.-The tariff law provides that goods in transit through the national territory by the usual channels of international trade enroute to another country are exempt from the payment of import duties. Goods in transit are granted a maximum storage period of three months in the case of perishables and one year for other merchandise, extendable for an additional six months.

The following Brazilian ports have been designated as transit zones: Belem (for Peru and Bolivia), Corumba (for Bolivia), Manaus (for Ecuador), Paranagua (for Paraguay), Porto Velho (for Bolivia), and Santos (for Bolivia and Paraguay).

Free Ports and Free Zones.-There is a free trade zone at Manaus in the Brazilian state of Amazonas. Shipments to Manaus do not require import permits. Commercial invoice and bills of ladings for shipment to Manaus must have “Free Zone of Manaus” typed on them and one of the following statements, as applicable: “Zona Franca de Manaus para Consumo" or "Zona Franca de Manaus para Consumo Re-exportacao.”

Drawback Provisions.-Regulations in Decree 53,967 of June 16, 1964, provide for the total or partial refund (drawback) of import duties collected on imported goods used in the manufacture of exported products or otherwise not intended for domestic consumption. Such privileges are granted by the Brazilian Customs Policy Council and authorization should be obtained prior to shipment of the merchandise to Brazil. Drawbacks are applicable to raw materials and semi-manufactured products directly utilized in the fabrication of goods for export; pieces, parts, apparatus and machinery to be used in the manufacture of apparatus,

toms, for which foreign currency payments were made, reexportation is not authorized without reimbursement of the foreign currency paid. Once goods have been cleared through customs they are considered nationalized and import duties are not refunded if the goods are reexported.

Goods shall be considered to be abandoned if they remain in customs premises 30 days after discharge; 15 days after the date on which clearance procedures were halted because of an action, or failure to act, on the part of the importer; 60 days after the date of notification from customs; 30 days after the expiry of the period within which goods may legally be kept on customs premises.

machinery, vehicles, or equipment for export; wrapping, packing, or packaging materials, for export goods; goods imported for processing in the country and subsequent reexport; and pieces, parts, apparatus, and machinery allowed to enter Brazil temporarily, when consigned to shipyards or to maintenance and repair ships for the repair, reconditioning or reconstruction of machinery, equipment, ships, and aircraft.

Customs clearance of goods for which a drawback has been conceded is authorized with a suspension of duties, either through the execution of a performance bond backed by a responsible guarantor or the prior posting of a deposit in the amount thereof, at the option of the Customs Policy Council. In order to qualify for the fiscal benefits provided for in pertinent legislation, interested parties must submit their requests to CACEX on printed forms entitled, “Drawback Request”. “Drawback Annex” are itemized lists of the goods which might be needed in conjunction with the “Drawback Requests" to provide additional information considered pertinent by importers in justifying their requests for drawbacks.

Warehousing Charges.-Generally, warehousing charges begin from the date of the entry of the goods into the warehouses, docks and port facilities, and run until the date of the withdrawal of the goods. However, no warehousing fees will be charged for the first 8 days from the date of payment of duties; or for the first 6 days beginning with the day the goods are unloaded, if customs clearance was already obtained while the goods were still on board. Warehousing of corrosive products, explosives, inflammables and oxidizers are charged double the aforementioned rate. Merchandise destined for bonded commercial (or industrial) warehouse may request import permits prior to or after shipment of the merchandise abroad, but always before the merchandise enters the bonded warehouse.

Abandoned and Reexported Goods.-Goods imported into Brazil may be expressly or tacitly abandoned. They may be expressly abandoned in writing at any time prior to customs clearance. Tacit abandonment occurs when the merchandise is not withdrawn within the permissible warehousing period. Although customs laws permit the reexportation of merchandise which has entered the country legally, foreign trade controls make reexportation difficult. Imported goods not yet cleared through customs require authorization for reexportation. On goods already cleared through cus

Samples and Advertising Matter

Samples.-Samples and displays which have no commercial value and which are sent to recognized importers require the same documentation as do commercial shipments. The documents must be marked "Sample-Not for Sale" (Amostra-Gratis).

Commercial travelers may bring collections of samples into Brazil on a temporary dutyexempt basis. Brazilian Customs do not require presentation of an import permit for such merchandise entered duty-free. However, to guarantee withdrawal of the samples when the commercial traveler leaves the country, a bond or cash deposit must be posted in an amount equivalent to all duties, taxes and fine which would apply in case of failure to reexport the merchandise.

Samples and small parcels of minor commercial value, except those dutiable in the country of destination, may be mailed from the United States without shipping permits. Brazilian import documents are required, however, for shipments by freight, air express or small parcel post of items not allowed exemption as small parcels, even when intended as gifts. Procurement of these forms involves a considerable expenditure of time and money.

International Expositions and Fairs.-The importation of merchandise intended to represent foreign government entities or private organizations at international expositions and fairs authorized by the Ministry of Industry and Commerce is administered by CACEX. The importation of merchandise to be exhibited is restricted to one unit with equal characteristics, or a set of each type or mark, and they must be returned to the country of origin within 120 days after the closing of the exposition. In the case of

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