The ex-tariff is an important tool in Brazil’s foreign trade, designed to boost the country’s industrial and technological progress by temporarily lowering or removing import duties on certain capital, computer, and telecommunications products that are not produced domestically.
Its significance is in its capacity to drive the modernization of Brazil’s industrial sector, lower production expenses, and enhance the competitiveness of domestic firms in the international market.
Companies, attorneys, and tax advisors need to be informed about the new regulations to maximize benefits and prevent unexpected outcomes as part of the upcoming changes.
We will examine the ex-tariff comprehensively in this article, covering its definition, historical development, the latest modifications introduced by Resolution GECEX 512/2023, and the forecasts for 2025.
What does Ex-Arif mean?
The ex-tariff is a special rule in Brazil and Mercosur nations that enables a decrease or waiver of import duties for certain capital, computer, and telecommunications products without local equivalents.
The previous Farmer, established by Law No. 10.637/2002 and governed by Decree No. 6.759/2009, primarily seeks to enhance the Brazilian industry through modernization, cost reduction, and improved competitiveness of local firms.
How can the ex-tariff be obtained?
The Foreign Chamber of Commerce (CAMEX) is responsible for deciding on ex-tariff awards through resolutions from its Executive Secretariat (GECEX).
For a product to receive benefits, it must satisfy certain requirements including demonstrating that there are no similar domestic products and showing that its import will enhance the country’s economy and technology.
Creation of the ex-tariff and its background
The ex-tariff was established in 2002 amid a continuously evolving global economy.
It has since experienced various modifications in both its regulation and implementation.
Decree No. 6.759, issued in 2009, consolidated the regulations of the ex-tariff, setting precise guidelines for its approval.
The ex-tariff in Brazil has been adjusted over time to suit the needs of the local industry, adding new items and removing those that are now being manufactured domestically.
Resolution GECEX 512 in 2023 introduced notable modifications, including shifting the focus from the previous applicant’s locker to the product and mandating the submission of organized projects.
Ex-employee and LETEC: gain further insights into the topic.
The LETEC is a tool designed to regulate the export of sensitive items and technologies, including weapons and military equipment.
The ex-tariff is connected to LETEC when goods that receive the ex-tariff benefit are utilized in manufacturing items that fall under LETEC.
The applicant of the ex-tariff must demonstrate that the imported item will be utilized in accordance with LETEC regulations in these instances.
The connection between the two systems is crucial to prevent misuse of ex-tariffs for illegal or against national interests.
Ex-Arifário updates in 2025.
Some important changes were made to the Ex-Tarifary regime for 2025.
Explore the primary modifications.
Procedure for ex-tariff in 2025
Procedures for approving the ex-tarifary are predicted to become even simpler and more digitalized by 2025.
The tendency is for the procedure to be completed entirely on digital platforms, incorporating systems from various government agencies like the Federal Revenue Service and CAMEX.
Likely, there will be increased transparency in the eligibility criteria, including clear guidelines published and communication channels established between the government and applicants.
This will decrease the time spent on analysis and improve process efficiency.
What items are permitted to enter duty-free in 2025?
The 2025 list of approved products for the previous Farmer should cater to the requirements of the Brazilian industry, with a focus on key sectors like renewable energy, information technology, and health.
New items are anticipated to be added, particularly those associated with the transition to clean energy and the advancement of the digital economy.
Which products are prohibited from receiving ex-tariff status in 2025?
Goods that have similar characteristics to domestic products or do not meet the requirements for economic and technological benefits should not be included in the ex-works.
There is a growing trend towards stricter analysis of these criteria in order to safeguard the domestic industry and prevent market distortions.
Resolution GECEX 512/2023 and the Former Employee: Shift in interpretation due to §1 of art.
Resolution GECEX 512/2023 made an important discovery in §1 of Art. 2, stating that the ex-tariff should now be granted based on the product rather than the applicant.
This amendment seeks to guarantee the efficient and transparent use of the benefit, preventing misallocations and preferential treatment.
Until the introduction of this Resolution, there were differing explanations in the Customs field that needed clarification for better reader comprehension.
A rule was established stating that the Ex was seen as a privilege given to the company making the request.
Another viewpoint recognized that the Ex was a privilege given to the worthy individual mentioned in the shared context.
The common interpretation is that the Ex benefit is given to the product itself, not the company using it for its intended purpose.
Any company advocating for the import of that product could benefit from a decrease in the Import Tax.
In some instances, it may be essential to argue in favor of this proposition to certain Customs offices where tax authorities are under the impression that only the requesting company of the Ex would be entitled to the benefit.
Clarifying the GECEX Resolution is what will be discussed next.
Former employee now supports the product rather than the candidate.
As a result of shifting the focus from the applicant to the product, the ex-tariff process becomes more objective and less vulnerable to outside factors.
This implies that the benefit is determined by the product’s features rather than the applicant’s specifics, aiming to enhance fairness and effectiveness in the process.
Structured design presentation needs to be well-prepared.
Resolution GECEX 512/2023 introduced a new rule regarding the need to submit a well-organized project for approval.
The project needs to provide specific information.
- How effectively it will be utilized.
- What are the anticipated economic and technological advantages?
- It will help boost the growth of the country’s manufacturing sector.
This condition aims to guarantee that the ex-tariff is utilized strategically and in accordance with the country’s interests.
Companies that bring pre-prepared goods would not be allowed entry.
It must be a company with an industrialization project in Brazil.
Criticism of this requirement, introduced by the Resolution, is already being voiced.
The criticisms suggest that the lack of effective supervision could lead to the emergence of industrial companies that only act as intermediaries between the proposals and the projects without ensuring implementation.
I acknowledge the critique and recognize the potential for this to happen, considering the adaptability of the Brazilian market to legal regulations.
I believe that implementing such a restriction would exceed the authority of the Resolution, which is a lower-ranking regulation, in addition to the criticism mentioned.
One law can limit a law granted by another law.
Projections for the number of exemptions granted by the ex-tariff in 2025.
An uptick in the number of exemptions given through ex-tariffs is anticipated for 2025, particularly in key areas like renewable energy and information technology.
There is a growing emphasis on granting benefits to projects that truly enhance the development of the domestic industry.
How should lawyers and businesses get ready?
Lawyers and companies must develop strategies to secure access to Ex-Tarifary and prevent risks of inadequacy amid these changes. Some recommendations are:
- Companies need to plan ahead to meet the new deadlines and prevent delays in receiving the benefit.
- Conduct market research to demonstrate the absence of comparable domestic products, collecting thorough documentation and technical reports.
- Monitoring regulatory changes can prevent future issues by keeping track of regulatory updates and collaborating with experts in tax and customs law.
- Companies looking to receive tax benefits must comply with new sustainability standards in order to have their applications approved.
Opportunity or obstacle?
The ex-tariff is crucial for the growth of the Brazilian industry, but its success relies on well-defined rules and a transparent concession process.
Resolution GECEX 512/2023 represents a significant advancement, yet it is crucial for the government to persist in overseeing and fine-tuning the system to effectively cater to the requirements of modernizing industry and the nation.
Lawyers must provide guidance to clients on best practices and make sure they comply with new regulations.
Monitoring for changes and taking calculated actions can greatly benefit those looking to leverage the Ex-Tariff in their favor.
Sources:
Law number 10.637 from the year 2002.
Decree number 6,759 from 2009.
Resolution 512/2023 by GECEX.
Studies and reports from CAMEX and the Federal Revenue have been conducted.
Important teachings and legal decisions.
Frequently Asked Questions
What does the Ex-Tariff Regime refer to?
The Ex-Tariff regime permits a temporary decrease in Import Tax for capital goods (BK) and computer and telecommunication goods (BIT) without a corresponding national reduction.
What is the meaning of Letec?
Letec stands for the “Common External Tariff Exception List” and is a Mercosur tool that enables member nations to impose alternative tariffs on specific products compared to the Common External Tariff (TEC) rates.
What does Ex-Tarifary exemption refer to?
The government temporarily reduces or exempts import taxes on capital goods and computer and telecommunication goods that do not have equivalent products made in Brazil.
How does the Ex-Tarifary operate?
Companies can ask the government to lower taxes by demonstrating that the product they want to import does not have a Brazilian-made equivalent. If successful, the item will be imported at a reduced rate or duty-free.
How can I determine if the item includes Ex-Tarif?
The inquiry can be conducted on the Ministry of Development, Industry, Commerce, and Services (MDIC) website or the resolution database of Gecex (Camex Management Executive Committee).
What advantages does the Ex-Tariff regime offer?
- Cost reduction for importing machinery and equipment.
- Access to more sophisticated technologies.
- Brazilian companies are becoming more competitive.
- Promoting innovation and advancement in the industrial area.
What does BK (capital goods) stand for?
Capital goods are machinery and equipment utilized in manufacturing other goods, like industrial machinery and large equipment.
What does Gecex resolution refer to?
How can one depose a former ruler? How can one contest a former ruler?
How to make a request for an Ex-Tariff Item?
What are BIT and BK?
BIT refers to computer and telecommunication products like network servers and equipment, while BK encompasses capital goods such as industrial machinery and production equipment. Both types of goods can receive benefits from the Ex-Tarifary if there are no similar domestic products available.