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Brazil Import Regs.: Temporary Admissions Program

Come here to discuss the Brazil's standards of various industry, products registration and import regulations as well as tariff information.

Brazil Import Regs.: Temporary Admissions Program

Postby bridgat » Mon Nov 17, 2008 3:41 pm

On December 20, 1999, Brazilian Customs Issued Regulation 150 (Instrucao Normativa 150) establishing new procedures for imports under the Temporary Admission Program. Normativa Instruction SRF# 285 of January 14, 2003, further altered by SRF# 357 of September 3, 2003 and SRF# 550 of June 16, 2005 and SRF #611 of January 18, 2006, which provide the most current modifications of the Regulation. The regulation also covers procedures for guarantees in a temporary import. This report highlights some of the most important topics covered in the regulation.

Under the Program, import tax and the federal tax (IPI) are only charged on products that will be used directly or indirectly in the production of other products which are being rented or leased by the local importer to the international supplier. Products subject to taxes under this law include dies, matrixes, sheets, industrial tools and machinery. The taxes due for these items relate to the time frame the imported product will remain in Brazil.

Basic legislation governing Temporary Entry, includes, among other legal guidance, Normative Instructions #115 of 12/31/2001 anf SRF #285 of 1/14/2003.

Products that can be imported into Brazil under the Temporary Admission Program without payment of import and federal taxes are the following:

1) Related to scientific or technical events (shows, exhibitions and Congresses);

2) Related to projects and research approved by the National Council of Scientific and Technological Development (CNPQ);

3) Related to artistic and cultural shows and events;

4) Related to sports competitions;

5) Related to commercial or industrial trade shows and exhibitions;

6) Related to commercial promotion, including samples from company representatives;

7) Related to products used by foreign technicians to repair imported products under guarantees;

8) to replace other products imported under temporary admission status;

9) to temporarily replace imported products under guarantees;

10) to process, assemble, renew or refurbish a product imported under temporary admission (customs requires the existence of a technical service contract. In this case, the temporary admission status may only be requested by companies and not by individuals);

11) for packaging or handling other imported products, whenever these products may be re-utilized;

12) to identify, package or handle other products that will be exported;

13) to reproduce phonograms and audiovisual pieces, imported as matrixes;

14) related to temporary activities that are of interest to the agricultural sector including animals for trade fairs and exhibitions, reproduction, veterinary treatment, etc.

15) that help or save people in cases of calamity or accidents which may affect people or the environment;

16) Related to Temporary Professional Activity of a Non-resident in Brazil;

17) for use by immigrants (while immigrants wait for resident visa);

18) for use by non-resident travelers (personal luggage).

In order to enjoy the temporary admission status, importers or individual travelers have to request the Temporary Admission Program status from the Custom Secretariat.

In case of shipment of products under lease, rental, loan or a service agreement, the exporter is required to send the importer the pro-forma invoice. The importer will than complete a form (Annex II, Regulation 164/98) requesting the temporary admission program status from the Custom Secretariat. In order to obtain the status, the importer is also required to present a copy of the operational leasing, rental, loan or service contract and the commitment document (Termo de responsabilidade) or guarantee. Upon arrival of the shipment, the importer registers the import declaration and pays the due taxes.

When a foreign traveler carries personal luggage into Brazil and seeks temporary admission status, the international traveler is required to complete the 'Accompanied Luggage Declaration' Form, (Annex I, Normative Instruction # 120 of October 15, 1998), handed out by the airline. The complete form should be presented to Customs upon arrival in Brazil, and will serve as the basis for the request of temporary admission program status. Customs may require a financial guarantee from the international traveler if the type, value or amount of products being brought into Brazil is incompatible with the circumstances of the trip. (See paragraph 7 for details).

Drawback

SECEX #35 of November 24, 2006 provides the basic information governing imports utilized for subsequent Brazilian export products. SECEX#35 was modified by SECEX Portaria #18 of July 29, 2007 and SECEX Portaria#21 of August 17, 2007 covering modifications in the Drawback system. Starting October 22, 2007, Brazilian firms utilizing the Drawback system will utilize a new model format for registering information correctly validating implementaion of the Drawback transaction.

Samples and Trade Show Displays

Products for display and consumption at international trade shows and samples from commercial representatives may enter Brazil under the Temporary Admission Program. International exhibitors or companies sending samples must have an importer in Brazil and should send their local importer a pro-forma invoice listing the products being shipped. The importer is required to complete the 'Commitment Document' or provide for the financial guarantee. These imports are done through the simplified Import Declaration (A form prepared by the Brazilian Customs Secretariat) which will also serve as the basis for the request of the temporary admission status.

Other products that may be imported duty-free under the Temporary Admission Program include:

I - Vehicles of non-resident traveler by land or sea;

II- Products for testing the appropriate functioning or resistance of another product or for repairing or refurbishing other products. Note: these are not defined by Regulation 164 as economic products because they are not used in the production of other goods. These products may stay in Brazil for up to three months.

Customs Regulation # 164 lists products automatically classified under the duty-free Temporary Admission Program without need for customs documentation, as follows:

I- Vehicles used exclusively for international cargo transportation entering Brazil;

II- Vehicles of non-resident foreign travelers, in areas where Brazil has borders with other countries;

III- Vessels, airplanes and other products used in scientific research or investigation along the coast of Brazil, authorized by the Brazilian Navy;

IV- Fishing vessels authorized to operate in Brazilian waters by the Agricultural Ministry.

According to Regulation # 164, the following products are not subject to import tax even if imported under the temporary admission status to repair or to assist in the manufacturing of other products:

A) Imports by Itaipu Binacional, for the exclusive use of Central Eletrica De Itaipu;

B) Products related to petroleum activities such as:

- Vessels for exploration, drilling, production and storage of petroleum or natural gas;

- Equipment related to petroleum research for geologic, geophysical or geodesic data;

- Equipment for drilling services or production of petroleum wells;

- Floating cranes for installation of maritime petroleum platforms; petroleum drilling and production risers;

- Fixed petroleum units;

- Floating units for oil and gas production or storing;

- Floating or semi-floating units for oil drilling or exploitation;

- Remote operation submarine vehicles (robots) for petroleum exploitation, drilling or production;

The import tax applicable on products imported under the Temporary Admission Program is calculated according to the following formula:

Tax - (Federal taxes in the normal import process times number of months in which the product will remain in Brazil) divided by (12 times the life span of the product - listed in normative instruction # 162,
dated December 31, 1998).

An example is a 12 Month leasing operation of a US$ 200,000 machine to Brazil, with 10% import tariff and 5% tax over industrial product (IPI), applicable in a normal import situation. The life span of this hypothetical machine is 5 years. In a regular import operation, the taxes due would be as follows:

CIF Price: 200,000
Import Tax: 20,000
IPI: 11,000 (5% over CIF Price & Import Tax)

Payable Taxes: US$ 31,000.

Under the Temporary Admission Program total payable taxes (import plus Industrial Product Tax) would be as follows:

(31,000 X 12) / (12 X 5) - US$ 6,200.

Guarantees

The guarantee may be a cash deposit, escrow of federal bond, an insurance policy or a guarantor. In order to protect itself against the non- adherence to the Temporary Admission Program, Brazilian Customs requires a guarantee at the amount of the import taxes that would be applicable in a normal import transaction minus the amount
collected for the temporary admission (As described in Section 6).

In lieu of providing for a guarantee, importers of products listed in Paragraph 2 of this report (temporary admission products exempt of import taxes), Are required to complete a 'Commitment Document', in which the importer is subject to penalties in case of non-adherence to the program. The commitment document (Termo De Responsabilidade) is issued by the Brazilian Customs (Annex I), of Customs Regulation 164. However in some situations the guarantee will be required. Examples where guarantees are collected in this category include: display items of exhibitors in trade shows that are not certified by the Brazilian Ministry of Trade and Industry.

Imports by federal, state or municipality government entities, foundations, diplomatic and consular missions or international representation entities of which Brazil is a member are waived of guarantees. A guarantee is not required if the normal import tax minus the temporary admission tax is less than R$ 20,000 or US$ 10,810 (US$
1.00 - R$ 1.85 on July 12, 1999).

Customs retains the guarantees in the following situations:

- If product was used for a different purpose than the one for which the temporary admission status was given;

- If the time frame that the product could stay in Brazil expired without the importer having requested time extension or concluded the Temporary Admission Program;

- If the product presented for the conclusion of the program is not the one originally imported;

The local port-of-entry or state/regional district Customs Secretariat Director (Secretaria Da Receita Federal), is the responsible party for granting the temporary admission status, for determining the time frame which the product may stay in the country, and for extending this time frame. Extensions may be granted by a different Customs Secretariat than the one establishing the initial time frame; however the First Secretariat must be advised of time extension. The time frame for temporary admission is determined as follows:

I- Products not under operational lease, rental or loan agreements may stay for up to three months. The time frame may only be extended once for a period of time equivalent to that originally determined by Customs;

II- Products under a lease, rental, loan or service contract arrangement, may stay in Brazil for the full duration of the contract and can be extended as the terms for leasing, rent, loan or services are extended.

Products imported under the Temporary Admission Program may be sent abroad for repair or refurbishing; however, the period in which the product remains abroad will not be deducted from the time frame the product is allowed to remain in Brazil. Also, Brazilian Customs will not deduct this time abroad from the initial temporary admission tax calculation.

Conclusion of Temporary Admission Program

The temporary admission status for a specific product concludes when product is:

1) Re-exported or destroyed;

2) Donated to the Finance Secretariat, or destroyed at the expenses of the party holding rights to the product, upon acceptance or approval from the Finance Secretariat. No taxes are charged in either of these instances;

3) Shifted from the Temporary Admission Program to a different Customs status. (Regulation #156 of December 22, 1998 - Instrucao Normativa No. 156) such as being imported into Brazil.
bridgat
 
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