The increase in the number of companies internationalizing through exports has made the practice of tax exemption on exports adopted by most countries, in order to be an incentive for the exporter, helping to reduce costs for the manufacturer, reducing the price of the product and thus managing to stand out in the global market. Brazil follows this worldwide practice and seeks to exempt all taxes related to exports.
As provided on the MDIC page, the Federal Constitution of 1988 defined that the following taxes are not levied on Brazilian exports:
IPI – Exported products are not subject to the Tax on Industrialized Products;
ICMS – The Tax on the Circulation of Goods and Services is not levied on export operations;
COFINS – Revenues arising from exports, in determining the basis for calculating the Contribution for Financing Social Security, are excluded;
PIS – Revenues arising from exports are exempt from the contribution to the Social Integration Program;
IOF – Exchange operations linked to exports (also for other goods and services) have a zero rate on the Tax on Financial Operations.
IE – export tax, on which the vast majority of products are exempt, with the exception of specific goods such as cigarettes, weapons, ammunition.
That is, in your export, your company will not need to pay any of these taxes above.
In addition to the taxes not being levied on the billing of sales abroad, the exporter is entitled to the credit generated by the incidence of these taxes when purchasing inputs that will be used in the production of goods that will later be exported. There are also companies that classify themselves as predominantly exporters, according to Law No. 12,715, of September 17, 2012, whose gross revenue from exports abroad is greater than 50% of their total gross revenue from the sale of goods and services. These Predominantly Exporting Companies can purchase inputs, national or imported, with suspension of IPI, PIS/PASEP and COFINS. This avoids the phenomenon of accumulating federal tax credits as a result of exports.
The exporter is also credited with the ICMS paid on the acquisition of inputs intended for industrialization or goods purchased for resale, as well as electricity (in proportion to the export on total outputs or installments or in full when consumed in the industrialization process). However, using these benefits is a little more complicated, as it will also depend on your company's tax classification.
We currently live in a scenario in which currencies such as the dollar, euro, and pound are extremely valued compared to the Brazilian currency, this is a negative point for importers and companies that need import inputs, but for exporting companies, the greater the currency of the exchange rate, the higher the revenue for its products sold will also be. With this, a company that sells abroad can even reduce the value of its product, increasing its competitiveness.
In addition to the tax exemption issue discussed above, below we can mention the benefits that can be felt when a company focuses part of its sales on the foreign market:
– Increased productivity: since there is a greater demand, consequently there is a greater production to meet, and this brings benefits such as a margin for better negotiation in the purchase of raw materials, manufacturing costs can be reduced, thus increasing the competitiveness of the business.
– Product improvement: entering the foreign market, most of the time it is necessary to adapt the product to the target public and the requirements depending on the destination country, which can lead to the improvement of the product itself.
– General improvement of the company: with time and experience in exporting, companies adopt new technologies, forms of management, qualification of the workforce, adding value to the organization and also commercially speaking the company's image due to the quality of the product and professionalism.
– Lower risks and dependence on the domestic market: expanding business to the foreign market also means less dependence on the Brazilian market, running less risk as it will be diversifying its market portfolio. For example, in an unfavorable economic scenario in which Brazil has a low economy, it will still have revenues coming from abroad.
Although the export activity has so many advantages, there are a large number of companies that are unaware of these opportunities, either for lack of information or for fear of thinking that only large companies take the risk, which is a mistake, since most exporters today in Brazil they are small or medium-sized companies. Of the companies that already operate in the export activity, a common mistake is the lack of knowledge of the tax benefits regulated by our legislation, such as the possibility of exemption in the importation or purchase of goods that will be destined for the foreign market. Exemptions and tax benefits should be well used in exports, as they result in the formation of the final price of the product.
As we present in this article, exports bring several tax benefits to companies, in addition, there are a number of positive points related to the diversification of markets, productivity, and profits. For companies that are thinking about diversifying and internationalizing, moving towards export is a good choice, especially if they are accompanied by competent professionals in this area who can help to leverage their business.
Therefore, count on the expertise of HGL Comex to internationalize your company through exports and thus reach new markets. We have complete advice, which will help from identifying strategic markets, preparing plans, defining the most appropriate logistics, and monitoring the entire process, so that your success is achieved.
