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Brazilian Import Requirements
In Brazil, imports are subject to a number of taxes and fees, which are usually paid during the customs clearance process. There are three main taxes that account for the bulk of importing costs: the Import Duty; the Industrialized Product Tax (IPI); and the Merchandise and Service Circulation Tax (ICMS).
The IPI is a federal tax levied on both domestic and imported manufactured products. In the case of domestically produced products, it is assessed at the point where the manufacturer sells the product. In the case of imports, it is assessed at the point of customs clearance.
The ICMS is a state government value-added tax, also levied on domestic and imported products. The ICMS on imported products is assessed ad valorem on the Cost, Insurance and Freight value (CIF refers to the landed cost of a consignment), plus IPI. The ICMS rate varies among states, and in the case of São Paulo it is 18 percent. On interstate transactions, the tax is assessed at the rate applicable in the state of destination.
In order to be successful in Brazil, U.S. manufacturers must have a well-informed local representative. It is also important to have a distributor or dealer that can offer after sales services, replacement parts and repair and maintenance services. The representative must be familiar with the nationwide market and import legislation to guarantee continuous sales and stay abreast of changes in import requirements.
When signing an agent or distribution contract with a Brazilian firm, it is important to use the services of law firms that are familiar with Brazilian legislation.
Commercial distribution contracts are regulated by general Brazilian commercial law and not by specific legislation. However, there is specific legislation regulating the relationship between the foreign company and the Brazilian agent or sales representative.
Contract clauses are freely negotiated between foreign companyies and the local agent, but the monetary compensation payable to the agent in case the contract is broken is established by law and is usually very favorable to the Brazilian agent.
Innovatiom Valley in Rio de Janeiro – Brazil
Projects valued nearly US$ 500 million we announced by GE, Halliburton, Schlumberger, FMC Technologies, Usiminas, Tenaris Confab, BG Brasil, EMC Computer Systems, Siemens, LÓreal and Baker Hughes.
The Innovation Valley is neighbour to one of Brazilians most prestigious universities (Federal Univarsity of Rio de Janeiro).
Other US$ 200 million will be invested in local infrastructure.
It´s expected the creation od 5,000 direct jobs
Source: Jornal Folha de São Paulo
4 Reasons to Expand Your Business to Brazil
Matthew Davies, Managing Director, Sales, Latin America and Caribbean Division, FedEx Express, August 2, 2010
Why should you do business in Brazil? I can give you 200 million reasons. That’s the number of consumers your small business can reach in this South American country — more than five times as many as live in the state of California. But sheer scale and size aren’t the only reasons to consider this cross-border opportunity. Here are four more:
1. Exponential growth. Like China, Brazil has traditionally relied on its domestic economy, but that’s all changing fast. Currently the eighth-largest economy in the world, Brazil is expected to grow to be the fifth-largest in just a few decades. Even during the worst of the global meltdown in the past two years, Brazil’s domestic performance and output was still very solid. This goes to show that the country has plenty of room to expand its export market. Brazil’s leaders see what’s happening in China and in India to some degree, and they fully intend to stay on the cutting edge of international growth.
2. Emerging market opportunities. Right now, most of the products Brazil exports are raw materials. So the time is right for business owners to enter the country with an entrepreneurial spirit. In early May, Brazil and the U.S. announced an innovation-focused agenda that will deepen commercial relations on five core themes, including: innovation and green technology; trade facilitation and business development; intellectual property cooperation; standards and metrology; and services and small- and medium-size enterprises. If you’re in the business of developing new products and innovations that other countries have taken for granted, Brazil could be fertile ground for you.
3. Slow-but-steady improvements. Most of the opportunity is currently in the southeast, from Rio de Janeiro to Porto Alegre. But as the different local governments start to offer tax incentives and develop infrastructure, many other parts of the country will open up. Businesses need to have a solid footprint in Brazil and go through some of the challenges that companies have already gone through in China. Whether it’s the traffic and security problems, the varied tax laws, or the housing infrastructure, you must be prepared to face these challenges with a South American mindset — where time is a more fluid concept than in the U.S.
4. Collaboration potential. Entering a new foreign market can be intimidating, but you don’t have to do it alone. Many stakeholders want and need you to succeed. To navigate the cultural and logistical issues effectively, you’ll want to work with a local organization in Brazil. The U.S. Commercial Service provides market intelligence, trade counseling and “business matchmaking” to help U.S. companies get started in exporting or increasing sales to new global markets. And the FedEx country profiles provide everything you need to know about import and export restrictions, clearance information, and more.
I made the move to Brazil not because of the size of business now, but because of the future outlook. Expanding your business to any developing economic power comes with some challenges. But for those who do their research, take advantage of available resources and remain persistent, the payoff can be tremendous in the long run.
Matt Davies is the managing director of sales for the Latin America and Caribbean division at FedEx Express. He’s been with FedEx for 11 years, working in sales leadership positions in Australia, Korea, Japan, Singapore and Brazil.
Internationalization of Brazilian Companies.
Number of Brazilian Franchising Companies abroad:
Gross Domestic Product (2010, dollars):
1967: 339 billion
2010: 2,2 trillion
Sources: Internal Revenue Services, IBGE, Biggest and the best, World Bank
Sales fo the 500 biggest companies (in 2010 dollars):
1973: 188 billion
2010: 1,3 trillion
Number of formal businesses in Brazil:
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