The Drawback regime is becoming more and more important in the Foreign Trade market. A practically obligatory regime for those who wish to export products with great competitiveness.
In a simple way, the main benefits of Drawback are fiscal and financial. Since there is no tax collection, there is a reduction in financial/fiscal charges and costs, which directly influence the company's cash flow. Therefore, it is a great way to gain competitiveness in the international market.
However, Drawback still generates many doubts, and in this post, we will explain the basic concept and its modalities.
The Drawback special customs regime, established in 1966 by Decree Law No. 37 of 21/11/66, consists of
Suspension or elimination of taxes on imported inputs for use in exported products.
The mechanism acts as an incentive to exports, as it reduces the production costs of exportable products, making them more competitive on the international market.
The importance of the benefit is such that in the average of the last 4 (four) years, it corresponded to 29% of all tax benefits granted by the Federal Government.
In the scope of the Foreign Trade Secretariat (Secex), the rules related to Drawback operations are reproduced in the Secex 23/2011 ordinance. Click here to read.
Check out the 3 Drawback Modalities currently available.
The first modality consists of:
Exemption of taxes on the import of goods, in equivalent quantity and quality, for the replacement of other goods previously imported, with payment of taxes, and used in the industrialization of exported product.
Basically, in the exemption mode you import products to replenish your inventory used in export.
In this second modality, the suspension of taxes is incident on the import of goods to be used in the industrialization of products that must be exported.
In Suspension Drawback, you import products that you will still use in your production process for future export.
The third modality deals with the refund of taxes paid on imports of imported inputs used in exported products.
The Drawback of Restitution is practically no longer used. The export incentive instrument under examination basically comprises the modalities of exemption and suspension.
Both the Exemption Drawback and the Suspension Drawback also include two special operations: Intermediate Drawback and Vessel Drawback.
Intermediate Drawback consists of:
Importation, by companies called Manufacturers-Intermediary, of goods for industrialization of intermediate product to be supplied to companies called Industrial-Exporters and used in the industrialization of final product for export.
The Drawback for Vessel refers to the import of goods for industrialization of the vessel and sale in the domestic market.
The special Drawback regime has a specific control system for such operations: Electronic Drawback System.
The main functions of the system are:
The Concessionary Act is issued in the name of the industrial or commercial company that, after importing, sends the goods to the establishment for industrialization, and the export of the product must be performed by the holder of the Drawback itself.
The company must, both in the modality of exemption and suspension of taxes, use the Unified Drawback Report to inform the documents registered in SISCOMEX , such as:
These documents, identified in the Unified Drawback Report, prove the import and export operations linked to the special taxation regime and must be linked to the Concessionary Act for the processing of their discharge in the system.
The Drawback regime grants exemption or suspension from:
Exports linked to the Drawback Regime are subject to the general rules in force for the product, including the applicable administrative treatment.
Where to watch out:
The same Export Register - RE cannot be used to prove Drawback Concessionary Acts other than the same beneficiary - it is mandatory to link the Export Register - RE to the Drawback Concessionary Act.
The concession of the Special Drawback Regime does not ensure the obtaining of import quota for goods or export for products subject to contingency, nor exempts the import and export from the prior consent of other bodies, when applicable.
If you want to go deeper into this theme, in the Pine Academy Advanced Import Course, we have 3 specific modules that teach all the details and secrets of the special Drawback modalities, such as