Used Vehicle Import Laws In Brazil

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  » Used Vehicle Import Laws In Brazil:

Tariffs:

  • The tariff applied to cars is 35 percent.
  • The tariff applied to trucks ranges from 14-35 percent (most at 35 percent).
  • The tariff for auto parts (HTS 8407-08 and 8708) ranges from 0-19.5 percent (most in the 14-19.5 percent range).
  • Auto manufacturers with plants in Brazil that are under the Brazilian Automotive Program import at reduced tariff rates, 24.5 percent for passenger vehicles and 22.5 percent for commercial vehicles.
  • In December 1999, Brazil ended the import quota system which allowed automobile manufacturers and some independent importers to import 50,000 automobiles per year at a reduced tariff (23 percent in 1999).
  • Import Taxes for trading within the Mercosul region are not subject to import tariff.
  • Automobile and part manufacturers established in Brazil that benefited from import tariff reductions granted by the automotive program that expired in 1999, continue to enjoy a 40 percent reduction on the import tariff rate on imports of automotive parts.

 

Taxes:

  • Import taxes are charged on the CIF value of the good
  • Vehicles: 35 percent
  • Automotive parts: 14, 16, and 18 percent (levels to be reached by 2006).

The IPI (Industrial Product Tax) is a federal tax applicable to imported and locally manufactured products and varies according to the product. The IPI for auto parts ranges from 4 to 16 percent and for automobiles ranges from 5 to 25 percent. For example:

  • Vehicle category/ engine displacement Current Tax rate
  • Automobiles up to 1000 cc 10 Automobiles up to 100 HP 25
  • Automobiles of up 127 HP 25
  • Automobiles of over 127 HP 25
  • Light commercials 4X4 (pick ups) 10
  • Diesel light commercials 4X2 10

IPI is charged on the CIF price plus the import duty. It is not a cost item per se, because the paid value represents a credit to the importer. When the product is sold to the end-user, the importer debits the IPI, which is included in the final price of the product and is paid for by the end-user.

The ICMS (Merchandise Circulation Tax) is a state tax, which varies according to the state, but ranges from 17-25 percent. The most common ICMS in the state of Sao Paulo is 18 percent and is charged on the CIF price plus the IPI. The ICMS is also assessed on locally-made goods.

Although importers must pay the ICMS to clear customs, it is not an actual cost item per se, because — similar to the IPI tax — the paid value represents a credit to the importer. When the merchandise is sold to the end-user, the importer debits the ICMS, which is included in the final prices and is paid by the end-user.

 

PIS/CONFINS: Contribution of 8.26 percent.

 

Port Taxes and Costs:

  • Compulsory Contribution to Custom Broker‘s Union
  • 2 percent of CIF, or minimum of $140, maximum of $280
  • Customs Broker Average $700
  • Terminal Handling Charges Up to $400 per container
  • Merchant Marine Tax 25 percent of ocean freight
  • Warehousing and Foremanship 0.65 percent of CIF

 

Port and warehousing fees: vary according to the port or airport and on the period of time required to release imports from customs. These fees usually add up to 2 to 4 percent of the CIF price. Smaller ports outside Sao Paulo and Rio de Janeiro are usually less expensive than the ones in those states.

 

Other Measures:
An import license is required for imports of most vehicles and some auto parts. Import licenses are issued by the Brazilian Foreign Trade Secretariat (SECEX) and take approximately two weeks to obtain. They are valid for 60 days.

 

Local/Regional Content Requirements:
The Brazilian Automotive Program requires established automobile manufacturers to source 60 percent of all auto parts locally, whereas "newly-established" manufacturers are required to source 50 percent locally during the first three years of production and 60 percent thereafter.

Bilateral Quota System: The Governments of Argentina and Brazil allow local automakers to import a certain number of cars and trucks from each other duty-free. This quota is adjusted each year by the respective Governments. As of January 1, 2008, this ?flex-program? is based on a ratio of Brazil (1.00) to Argentina (1.95).

A mechanism of multiple compensations exists under the authority of Argentine Decree 939 of 2004 which approved and regulates the Additional Protocol #14 to the 2002 Economic Cooperation Agreement (ECA) between Argentina and Brazil. Article 13 of the ECA established a bilateral quota system until December 31, 2005. Argentina has extended it sine die.

 

Import Restrictions:
Imports of used automobiles into Brazil are not allowed under any circumstances, and special authorization is required for the import of used parts.

Brazil also has a ban on diesel passenger car imports, but still exports diesel cars to Argentina. Argentina is also currently considering a similar ban on imports and production of diesel passenger cars. There is a possibility this ban will be extended to the entire MERCOSUR region; however, this has yet to be determined under the CAP negotiations.


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