The act of importing and exporting products is made of complex steps until finally receiving them or finalizing their shipment. In addition to involving many bureaucracies, there are also risks of non-compliance with the requirements, resulting in fines of the most varied.
However it is possible to avoid them, but what are the fines and how not to take this risk? Follow this article and learn the answer to these questions!
What infractions result in fines and how to avoid them
In a generalized way, fines happen in an import process derived from some rule provided for in the customs regulation that has not been followed.
The possibilities are of the most varied, among them may occur the incorrect classification of ncm, the failure in some of the import licenses, among many others. And finally the importer ends up adding losses in the process.
Being part of the actions involving foreign trade is somewhat complex and this scares many importers, so it is already valid the tip of having an advisory as a partner in these moments, because in addition to facilitating the procedures, they can pass all the necessary security.
In fact, knowing the paths to be followed not only streamlines processes, but making sure that the investment is safe makes the action of importing and exporting much more smooth.
However, if the will to be independent is greater, there are methods of making it happen, just follow the numerous requirements that are imposed.
The fines themselves are variable, and can be 1% of the customs value, reaching up to five hundred reais, as well as can reach 100% of the total value of the load. Anyway, it’s something to know about, but always avoided, regardless of your percentage.
The Internal Revenue Service itself, thinking about how to assist in the knowledge of risks, provides a table of fines on importation, so it is interesting to observe the items in this list to know better what is allowed or not.
We have already advanced here that accessing this file available to know the rules is a first step to start understanding the steps and risks better.
The most common fines
Let’s start with the fine already mentioned here in this article, the identification of ncm. In addition to knowing what this is about, it is important to understand where failures arise and how they happen.
For the classification it takes someone to master the techniques in fact, because it depends on it so that your merchandise follows the expected directions.
Goods without tax classification become stagnant, so they are trapped inside their establishments, which becomes a great indication of bad business.
This determination of ncm is valuable because through it are determined the taxes involved during the import or export of the product, as well as for statistical and customs controls.
The classification is also used as a means of identifying internal taxes, i.e., ICMS, IPI, PIS, Cofins and Tax Substitution.
So here we have made it clear that before continuing negotiations, make sure that this mistake will not happen.
Among these there is even more a list of occurrences that result in penalties and among the most frequent are:
- Absence of LI (Import License), which causes penalties such as up to 30% of the customs value;
- In the infringement of loss of goods is added the penalty of 50% of the import tax;
- Contempt to the customs authority is among the most serious in this list, with penalty of R $ 10,000.00 and suspension;
- The absence of cargo romaneio would cost R$ 500.00 fine;
- And in cases of LI deferred after shipment, the penalty is 30% of the customs value.
Attention to detail!
Records and documentation require a lot of attention and review both in the database and with the specific agencies according to each import segment. This is considered one of the most important steps.
Any error or omission directly entails the legal and financial security of the act of import and export.
Some of these agencies are well known when it comes to import and export, such as ANVISA, MAPA, Inmetro, DECEX, as well as commercial invoice documentation.
In addition, the commercial invoice is considered one of the most important documents in foreign trade and maritime transport of goods, being as a “contract and proof” of purchase and sale among those involved.
This document shall contain information such as: country of origin, origin, address and registered name of both the importer and the exporter, payment method determined between the parties, freight values, unit price and total of the goods.
As well as the so-called Incoterm, which are responsible for determining what is the right or duty of each party in a contract. And according to Article 557 of Decree No. 6759, other data such as quantities, volumes and weight should be included in this document.
Import laws are considered strict, as slips immediately lead to fines and penalties.
Care at this stage is able to reduce the chances of fines by up to 95%. In some cases of missing or incorrect information, a fixed fine of two hundred reais is applied.
Count on the help of a trading
As we can observe, attention and care before importing is the best and most guaranteed way for all procedures to work. Therefore, planning becomes a great ally for movements of proportions as great as those of foreign trade.
We also emphasize here that in case of doubt or fears it is valid to consider the possibility of advice so that there will be a greater reduction of risks.
Contact Open Market today and talk directly to an expert. Let’s start the safest planning for your import!
To learn even more about the latest news about foreign trade in Brazil and worldwide, follow the Open Market blog and follow our social networks.
We’re on Facebook, Instagram and LinkedIn.
Despite being pointed out as one of the sectors that would suffer the most from the social isolation measures resulting from the fight against the pandemic, the truth is that the construction segment managed to recover quickly. The demand even grew in the second half of 2020, even boosted by the injection of income from the Emergency Aid.
Thus, unlike other sectors, more than 54% of building materials retailers recorded an increase in sales in July when compared to the same period in 2019. In May, the percentage was 42% of retail leaders reporting growth. Only in one since the pandemic began (April) has there been a downturn in demand. The data referred to here are from the Anamaco Thermometer (Associação Nacional dos Comerciantes de Material de Construção – National Association of Construction Material Merchants), a monthly survey conducted in partnership with the Brazilian Institute of Economics of the Getulio Vargas Foundation (Ibre/FGV).
One of the highlights of September 2020 in this survey was for paints and varnishes. The paint segment had 57% optimistic signals regarding sales behavior. Also according to the Anamaco Thermometer, high sales growth was registered in the last three months in this segment – from 45% to 48%. According to a specialist in the sector, the rising numbers are linked to small repair works, but also to renovations and heavy works.
With this generalized increase in demand, there is a shortage of inputs and raw materials in the market, which makes the current context a good time for
import
. Whether because such inputs are not available in Brazil, or because they are sold abroad at more competitive prices, the truth is that this is a business with potential to be explored. Pigments, resins, additives and solvents, and raw materials such as styrene acrylic, polysiloxane, polyvinyl acetate, and titanium dioxide (TiO2) are examples of important items for the paint industry.
The latter, titanium dioxide, is especially relevant. It is a white pigment that gives whiteness to the paint, and is the exclusive dye of white paints. Local production of this input is insufficient to meet Brazil’s demand. China is the country that concentrates the world’s largest reserves of this ore, and is one of our country’s main suppliers.
Thinking of helping those who want to take advantage of this business opportunity, in today’s post we continue our series “
Import
“and show the main procedures that must be followed when importing inputs and raw materials for the paint industry. Read on to learn more!
Taxes
First, let’s start by identifying which taxes are levied on the import of inputs.
Import Tax
Import tax (II) is levied on the importation of foreign goods. Its calculation base is the customs value – that is, according to the IRS, “all payments made or to be made as a condition of the sale of the goods and not necessarily made in cash.
The rate is indicated in the Common External Tariff (TEC) table, ranging from zero to 35%, depending on the type of imported goods. It is worth pointing out that this is also an advantage of importing from Mercosur member countries. Except for a small list of exceptions, the vast majority of products have a 0% tax rate.
Tax on Industrialized Products
The Tax on Industrialized Products (IPI) is levied on imports with customs clearance of products of foreign origin.
The calculation base is composed of the sum of the customs value and the II value. The rates can be found in the Table of Incidence of the Tax on Industrialized Products (TIPI).
PIS (Social Integration Program) and Cofins (Contribution for social purposes)
In general, the following rates apply:
PIS: 2.1%;
Cofins: 9.65%.
Tax on Circulation of Goods and Services
The Circulation of Goods and Services Tax (ICMS) is the only state tax levied on import operations. The taxable event occurs upon customs clearance of the input. The tax rate is determined by the state in which the product will be sold.
The ICMS calculation basis is complex and was adjusted to avoid a disproportion in tax collection among the Brazilian states. The formula is:
(Customs value + II + IPI + PIS + COFINS + Siscomex fee + expenses incurred until the moment of customs clearance) ÷ (1 – ICMS rate due).
The IRS provides an online simulator for tax expenses, which is worth checking out.
Finally, it is important to mention that the state of Santa Catarina has economic stimulus programs, among them the Special Tax Treatment (TTD) and the Pro-Employment, which includes reduction and even suspension of certain taxes, reducing tax costs for importers.
Tips for importers
Next, we list a step-by-step for companies that want to import raw materials for the paint industry.
Import Radar
In order for your company to be able to start export and/or import activities, it must be registered with the so-called “Radar de Importação” (Customs Intervening Party Tracker). This is a mandatory system of the Federal Government, which allows individuals and companies to conduct foreign trade operations.
To do this registration, it is necessary to gather a series of documents. If everything is in conformity, the company will have access to another system, the Integrated Foreign Trade System(Siscomex), through which it can follow the entire import process.
A Normative Instruction no. 1288/2012 is the reference legislation that lists the documents required for legal entities wishing to perform import activities – among them are documents of incorporation of the company, documents of the legal representatives, proof of paid-up capital stock, company certificates, digital certificate for the company and legal representative. On average, it takes up to 10 days to get the authorization.
Finding the supplying company
Importing virtually any product begins with looking for foreign suppliers. In some sectors, it is common to have representatives of such companies established in Brazil. In this case, the representative on national soil can do all the negotiation intermediation for the arrival of the inputs from abroad.
Another possibility is to visit fairs. These events are great opportunities to meet suppliers, to be aware of new product and technology launches, and to make quotations with different suppliers.
Negotiation
Once the potential suppliers have been identified, the next step is to initiate contacts, request quotes, and identify the one(s) best able to meet your needs.
It is important at this stage to define the Mercosur Common Nomenclature (NCM). To do this, you need to ask the suppliers for the product quotation and information about a minimum order. The NCM has eight digits and comes on the Commercial Invoice, a document issued by the exporter, which, in foreign trade, is equivalent to our Invoice. This number will influence the tax rates to be paid.
Costs
It is important to draw up a cost spreadsheet. It allows you to visualize better economic viability of the business. Take into account the factors that influence the final price of the inputs, such as taxes, international freight, International Transport Insurance, duties, internal freight, eventual storage fees, etc.
Contract and Inconterms
Once the supplier has been chosen, during the contract signing, it is important to include all possible details, such as technical requirements, responsibility for transport and insurance, guarantees, delivery time, forms of payment, among other factors.
The importer must also request the exporter to send a document that formalizes the price applied in the operation, sales conditions (Incoterms), the payment modality and the deadline for delivery of the goods. At any time, the inspection bodies can request the pertinent documentation.
Import Licensing (LI)
Depending on the type of input you want to import, you may need an Import License (LI). To find out if this is the case, it is necessary to consult the Import Administrative Treatment Simulator of the Siscomex system. This system also tells you which government agencies are responsible for the consent.
If you want to import raw materials for the paint industry and are thinking of doing it yourself, you should know that this is a risky option. This is a complex issue, which needs a technical performance, from someone who really understands the subject. Also, importing successfully requires selecting the correct location!
Know that you can count on Open Market‘s expertise. For more than 20 years in the market, we are located in Santa Catarina, a state that offers incentives and advantages for imports. We provide intelligent solutions in the management of foreign trade and, with services in the area of imports and exports, we guarantee total control of these processes. Want to know more? Contact us right now and we will be happy to answer your questions!
Be sure to read the other articles in our series on Importing. Oh, and like our Facebook page or follow us on Instagram.
Until the next post!
“Inflation stands at 0.24% in August, highest rate for the month since 2016, IBGE points out”
“Brazil records deflation for second month in a row due to falling demand”
“Interest rates have firm drop, with disinflation horizon”
These were headlines reported by Brazilian media outlets between April and June 2020. The key aspect to understanding this news is to be able to differentiate three apparently similar concepts, used to map the economic activity of a country, but which refer to very different realities: inflation, deflation, and disinflation.
Despite being very present in the media, these three words can offer confusion – firstly because they are so similar in terms of writing, and secondly because they are concepts specific to economic studies that are often not explained to the general public. On the other hand, knowing this difference is extremely important to understand the impacts that these different realities have on a country’s economic activity, especially in the area of foreign trade.
That is precisely our mission in this post. First we help you distinguish between inflation, deflation and disinflation, and then we show how these concepts, especially that of inflation, influence trade with other countries. Come with us!
Broad Consumer Price Index (IPCA)
Before dealing with the differentiation between the concepts of inflation, deflation, and disinflation, it is important to understand what the Broad Consumer Price Index (IPCA), prepared by the National System of Consumer Price Indices (SNIPC), is.
It is an indicator that calculates the price variation of the basket of goods and services consumed by Brazilian families that earn between 1 and 40 minimum wages. This basket consists of the set of the main products consumed by these households and is always subject to change, since there are always new goods in the economy. Likewise, there are goods that are no longer traded or no longer relevant.
The IPCA is calculated monthly and takes into account the variation in the price of these goods and services. From this we have the calculation of inflation, deflation and disinflation rates.
Now let’s get down to what each of these concepts means.
What is inflation?
Inflation is the generalized increase in prices calculated by the IPCA.
It is caused, most of the time, by an increase in the level of activity in the economy. Basically, people start buying more, i.e. demand increases, and companies have to produce more, increasing supply. This is an example of the practical application of the law of supply and demand.
When there are more products than are interested in buying them, prices tend to fall. On the other hand, if a product is in short supply or if demand increases, its price tends to increase. Ideally, this movement of prices up and down would eventually cause the market to reach an equilibrium point, where supply equals demand.
One factor that can lead to an increase in prices is an increase in public spending, which in turn leads the government to increase taxes and thereby, The prices of products in general also increase. Furthermore, inflation is said to be inertial when people anticipate more inflation in the future and increase their spending in the present. There are also other factors, such as monopolies, sudden increases in production costs, and low production levels due to various factors.
Inflation has numerous consequences for a country’s economy, from the population’s loss of purchasing power to rising interest rates.
What is deflation?
Deflation occurs when overall product prices fall. It is, therefore, the opposite of inflation.
Why is this so? The reasons are varied, but basically deflation is associated with a fall in demand and the resulting abundance of products. In other words, due to a combination of factors or due to a single cause, people consume less. In a vicious circle, knowing that prices are falling, people postpone their purchases even more, hoping to reach a more advantageous value.
If it happens in isolation, deflation can be a mere correction of prices – in response to a too high increase in the past. However, when it is prolonged, the economy contracts, which can lead to increased unemployment and business losses. The more lasting consequences could compromise the country’s ability to invest and recover.
One of the worst deflationary crises in history took place in the United States, after the New York stock market crash of 1929. In Brazil, in the 1930s, prices fell so low that the Getúlio Vargas government had to intervene, buying and burning millions of sacks of coffee, the main product exported by Brazil at the time. This has reduced supply and forced an increase in prices.
What is disinflation?
Unlike deflation, disinflation occurs when we have the combination of two scenarios (1) inflation decreases, but (2) this increase in prices occurs at a slow pace. In this case, we have a rise in prices by a smaller percentage than was presented or expected for a given period.
Disinflation can be one-off or chronic – this has been the case in Japan for many years. Although it is often a more advantageous scenario than deflation, since the latter can be associated with a period of recession in the economy, deflation can signal that something is not going well, especially if it is persistent.
How is foreign trade affected?
In practice, in an inflation scenario, a country’s money depreciates, that is, you buy less for the same amount of money. This is associated with a devaluation of the currency mainly against the dollar, the main currency on the foreign exchange market and the basis for transactions in the global economy.
As a result, import costs increase. Thus, the presence of foreign products circulating in the national market is reduced. On the other hand, exports are gaining steam. The devalued Real is a synonym that the Brazilian product will be offered in the domestic market with a lower price and, therefore, more competitive to compete with the others. With more exports, the influx of dollars into Brazil increases and the trade balance deficit tends to decrease.
According to data from the September 2020 IPCA-15 (National Wide Consumer Price Index – 15), which measures the official inflation forecast, Brazil registered a price increase of 0.45% in September this year. This rate is higher than the 0.23% of August this year and the 0.09% of September last year. This is also the highest result for 1 September since 2012 (0.48%).
This whole scenario is encouraging for several productive sectors that wish to export. If this is the case for you and your company, you can count on Open Market‘s expertise. For more than 20 years in the market, we offer intelligent solutions in foreign trade management. With services in the import and export area, we guarantee total control of these processes. Want to know more? Contact us right now and we will be happy to answer your questions!
Be sure to follow our series on Importing. Like our page on Facebook or follow us on Instagram.
Until the next post!