The importation and commercialization of machinery and equipment in Brazil involve a series of tax and foreign exchange obligations that require rigorous attention from companies. Mistakes or omissions in these processes can lead to significant tax assessments, loss of tax benefits, disallowance of credits, and exposure to substantial financial liabilities.
Below, we highlight five critical points that must be carefully observed to ensure regulatory compliance and mitigate risks in such operations.
1. Customs Value Composition: Essential Elements and Their Impact on Taxation: Proper calculation of the customs value, particularly regarding the inclusion of freight, international insurance, port charges, royalties, and pre- and post-sale technical assistance, is essential to avoid tax assessments related to Import Duty (II), Excise Tax (IPI), PIS-Import, COFINS-Import, and State VAT (ICMS). Noncompliance at this stage may result in significant contingencies with material tax and operational impacts.
2. Tax Classification (NCM) and Its Impact on Taxation and Customs Regimes: Incorrect assignment of the Mercosur Common Nomenclature (NCM) to imported goods may result in improper application of reduced tax rates, tax suspension regimes, or inapplicable tax benefits. Such errors expose the company to assessments with aggravated penalties. It is advisable, as a preventive measure, to prepare technical tax classification reports and carry out specialized document reviews.
3. Utilization of PIS, COFINS, and ICMS Credits in Transactions Involving Capital Goods: Under the non-cumulative regime, it is essential to properly and timely calculate the PIS and COFINS credits on capital goods (pursuant to art. 3, §1, II of Laws No. 10,637/2002 and 10,833/2003), in addition to ICMS credits in accordance with state legislation. Improper use or failure to claim such credits directly affects the company’s tax burden and its market competitiveness.
4. Tax Treatment of Interstate Transactions: ICMS-ST and DIFAL: In interstate resale transactions of machinery, especially when the buyer is a non-taxpayer or a Simples Nacional (small business) taxpayer, it is essential to correctly assess the applicability of the Tax Rate Differential (DIFAL) and the Tax Substitution (ICMS-ST) system. Failure to collect these taxes, or collecting excess amounts, may generate tax liabilities or, alternatively, justify the recovery of amounts through judicial measures.
5. Tax and Foreign Exchange Compliance in Cross-Border Payment Transactions: Proper classification of foreign exchange operations before the Central Bank of Brazil and the Federal Revenue Service, including compliance with ancillary obligations such as Siscoserv (when applicable) and the Declaration of Brazilian Capital Abroad (DCBE), is crucial to avoid administrative penalties and fines. Failure to comply with these requirements compromises not only fiscal regularity but also the company’s reputation with financial institutions and regulatory authorities.
The complexity of Brazil’s tax and foreign exchange environment poses substantial challenges to companies engaged in the importation and commercialization of capital goods. In this context, the adoption of preventive practices — supported by specialized technical assistance, document review, and continuous auditing — is essential to ensure legal compliance, reduce contingencies, and promote operational and financial efficiency.
