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Crawling through Brazil’s trade formalities

Few will disagree that Brazil is a market of great potential offering plentiful business opportunities for Hong Kong companies. Success, however, requires better acquaintance with the rules and procedures that must be followed before their products can reach the 190 million-plus Brazilian consumers.

Getting used to the rules of the game

The entire import process in Brazil is computerised in a system known as SISCOMEX – Integrated System for International Trade (Sistema Integrado de Comércio Exterior), which has greatly simplified the import procedures by reducing the amount of paperwork, but the customs clearance in Brazil is still not as efficient and fast as one might expect.

While most Hong Kong exporters are trading with Brazil on an FOB basis and therefore can be freed from cumbersome procedures such as Radar registration[1] and import licence application, they may be called upon by their Brazilian clients to supply documents or information necessary to expedite the customs clearance process.

Among the most noteworthy complaints are the complex and time-consuming assessment of import duties (II), together with a wide range of other indirect taxes. All these are considered the root cause of clearance delays by importers, therefore worth further exploration and greater attention.

Let’s begin with import duties (II)

As a Mercosur member, Brazil utilises the Mercosur Common Nomenclature (NCM) classification, which is consistent with the Harmonised System (HS) classification. In general, the customs value of goods is determined on a CIF (cost, insurance and freight) basis. Most imports from non-Mercosur members are subject to Mercosur’s Common External Tariff (TEC) which ranges from zero to 35%.

As the primary instrument to regulate imports, it is not uncommon to see the Brazilian government propose, at the behest of domestic manufacturers, to increase the TEC. The recent proposal and subsequent final decision to increase the TEC from 20% to 35% (the upper limit or the “bound” rate under Mercosur) on 14 types of finished toys, ranging from dolls and puzzles to electric train sets, is a case in point.

Common External Tariffs (TEC) of Brazil

HS Code

Description

TEC (%) as of 2011 

01

Live animals

0 – 4

02

Meat and edible meat offal

6 – 12

03

Fish and crustaceans, molluscs and other aquatic invertebrates

0, 10

04

Dairy produce; birds’ eggs; natural honey; edible products of animal origin, not elsewhere specified or included

0 - 28

05

Products of animal origin, not elsewhere specified or included

0 – 8

06

Live trees and other plants; bulbs, roots and the like; cut flowers and ornamental foliage

0 – 10

07

Edible vegetables and certain roots and tubers

0, 10

08

Edible fruit and nuts; peel of citrus fruit or melons

6, 10

09

Coffee, tea, maté and spices

10

10

Cereals

0 – 12

11

Products of the milling industry; malt; starches; inulin; wheat gluten

10 -14

12

Oil seeds and oleaginous fruits; miscellaneous grains, seeds and fruits; industrial or medicinal plants; straw and fodder

0 – 10

13

Lac; gums, resins and other vegetable saps and extracts

2 – 14

14

Vegetable plaiting materials; vegetable products not elsewhere specified or included

6

15

Animal or vegetable fats and oils and their cleavage products prepared edible fats; animal or vegetable waxes

4 – 12

16

Preparations of meat, of fish or of crustaceans, molluscs or other aquatic invertebrates

16

17

Sugars and sugar confectionery

16, 20

18

Cocoa and cocoa preparations

10 – 20

19

Preparations of cereals, flour, starch or milk; bakers' wares

14 – 18

20

Preparations of vegetables, fruit, nuts or other parts of plants

14

21

Miscellaneous edible preparations

2 – 18

22

Beverages, spirits and vinegar

12, 20

23

Residues and waste from the food industries; prepared animal feed

2 – 14

24

Tobacco and manufactured tobacco substitutes

10 – 20

25

Salt; sulphur; earth and stone; plastering materials, lime and cement

0 – 6

26

Ores, slag and ash

2, 4

27

Mineral fuels, mineral oils and products of their distillation; bituminous substances; mineral waxes

0 – 6

28

Inorganic chemicals; organic or inorganic compounds of precious metals, of rare earth metals, of radioactive elements or of isotopes

0 – 14

29

Organic chemicals

0 – 14

30

Pharmaceutical products

0 – 18

31

Fertilisers

0 – 6

32

Tanning or dyeing extracts; tannins and their derivatives; dyes, pigments and other colouring matter; paints and varnishes; putty and other mastics; inks

2 – 14

33

Essential oils and resinoids; perfumery, cosmetic or toilet preparations

2 – 18

34

Soap, organic surface-active agents, washing preparations, lubricating preparations, artificial waxes, prepared waxes, polishing or scouring preparations, candles and similar articles, modelling pastes, "dental waxes" and dental preparations with a basis of plaster

2 – 18

35

Albuminoidal substances; modified starches; glues; enzymes

2 – 16

36

Explosives; pyrotechnic products; matches; pyrophoric alloys; certain combustible preparations

4 – 14

37

Photographic or cinematographic goods

0 – 14

38

Miscellaneous chemical products

0 – 14

39

Plastics and articles thereof

0 – 18

40

Rubber and articles thereof

0 – 16

41

Raw hides and skins (other than furskins) and leather

2 – 10

42

Articles of leather; saddlery and harness; travel goods, handbags and similar containers; articles of animal gut (other than silkworm gut)

20,35

43

Furskins and artificial fur; manufactures thereof

10 – 20

44

Wood and articles of wood; wood charcoal

2 – 14

45

Cork and articles of cork

2 – 10

46

Manufactures of straw, of esparto or of other plaiting materials; basketware and wickerwork

12

47

Pulp of wood or of other fibrous cellulosic material; waste and scrap of paper or paperboard

2, 4

48

Paper and paperboard; articles of paper pulp, of paper or of paperboard

2 – 16

49

Printed books, newspapers, pictures and other products of the printing industry; manuscripts, typescripts and plans

0 – 16

50

Silk

4 – 26

51

Wool, fine or coarse animal hair; horsehair yarn and woven fabric

2 – 26

52

Cotton

6 – 26

53

Other vegetable textile fibres; paper yarn and woven fabrics of paper yarn

6 – 26

54

Man-made filaments

2 – 26

55

Man-made staple fibres

2 – 26

56

Wadding, felt and nonwovens; special yarns, twine, cordage, ropes and cables and articles thereof

2 – 26

57

Carpets and other textile floor coverings

35

58

Special woven fabrics; tufted textile fabrics; lace, tapestries; trimmings; embroidery

26

59

Impregnated, coated, covered or laminated textile fabrics; textile articles of a kind suitable for industrial use

14 – 26

60

Knitted or crocheted fabrics

26

61

Articles of apparel and clothing accessories, knitted or crocheted

35

62

Articles of apparel and clothing accessories, not knitted or crocheted

35

63

Other made up textile articles; sets; worn clothing and worn textile articles; rags

2, 35

64

Footwear, gaiters and the like; parts of such articles

18 – 35

65

Headgear and parts thereof

18, 20

66

Umbrellas, sun umbrellas, walking-sticks, seat-sticks, whips, riding-crops and parts thereof

18, 20

67

Prepared feathers and down and articles made of feathers or of down; artificial flowers; articles of human hair

16

68

Articles of stone, plaster, cement, asbestos, mica or similar materials

2 – 14

69

Ceramic products

0 – 20

70

Glass and glassware

2 – 18

71

Natural or cultured pearls, precious or semi-precious stones, precious metals, metals clad with precious metal and articles thereof; imitation jewellery; coin

0 – 18

72

Iron and steel

0 – 14

73

Articles of iron or steel

0 – 20

74

Copper and articles thereof

0 – 16

75

Nickel and articles thereof

2 – 16

76

Aluminium and articles thereof

0 – 16

78

Lead and articles thereof

4 – 16

79

Zinc and articles thereof

2 – 16

80

Tin and articles thereof

2 – 16

81

Other base metals; cermets; articles thereof

2 – 8

82

Tools, implements, cutlery, spoons and forks, of base metal; parts thereof of base metal

14 – 18

83

Miscellaneous articles of base metal

2, 16

84

Nuclear reactors, boilers, machinery and mechanical appliances; parts thereof

0 – 20

85

Electrical machinery and equipment and parts thereof; sound recorders and reproducers, television image and sound recorders and reproducers, and parts and accessories of such articles

0 – 20

86

Railway or tramway locomotives, rolling-stock and parts thereof; railway or tramway track fixtures and fittings and parts thereof; mechanical (including electro-mechanical) traffic signalling equipment of all kinds

0, 14

87

Vehicles other than railway or tramway rolling stock, and parts and accessories thereof

0 – 35

88

Aircraft, spacecraft, and parts thereof

0 – 20

89

Ships, boats and floating structures

2 – 20

90

Optical, photographic, cinematographic, measuring, checking, precision, medical or surgical instruments and apparatus; parts and accessories thereof

0 – 20

91

Clocks and watches and parts thereof

18, 20

92

Instruments; parts and accessories of such articles

10 – 18

93

Arms and ammunition; parts and accessories thereof

20

94

Furniture; bedding, mattresses, mattress supports, cushions and similar stuffed furnishings; lamps and lighting fittings, not elsewhere specified or included; illuminated sign illuminated nameplates and the like; prefabricated buildings

14 – 18

95

Toys, games and sports requisites; parts and accessories thereof

0 – 35

96

Miscellaneous manufactured articles

14 – 18

97

Works of art, collectors’ pieces and antiques

4

Source: Ministry of Development, Industry and Commerce (MDIC)

 


[1] For a company to be allowed to import goods into Brazil, it is required to enrol with the RADAR system, which will keep all the importer’s operations on file for prospective oversight.

 

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