Drawback | KPMG | BR
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The Drawback regime encourages our exports by suspending taxes imposed on imported inputs or by exempting companies from paying those taxes...

The Drawback regime encourages our exports by suspending taxes imposed on imported ...

The Drawback Customs Regime was created in November 1966 by Decree 37 to encourage our exports by suspending taxes on imported raw materials, parts and components and those acquired in the local market that will be used to manufacture goods that will be exported or that have been exported by exempting companies from paying those taxes. Therefore, the Drawback Special Regime provides a reduction in the costs of exportable goods, making them more competitive in international markets. 

Among the opportunities offered by the regime, we have the following special types and operations: 

  Suspension  Exemption  Refund
Special Transactions 
  • Intermediate
  • Shipment
  • Generic
  • Without foreign currency hedging
  • Joint
  • Supply to local markets 
  • Intermediate
  • Naval Construction 

The Exemption modality consists of granting an exemption of taxes imposed on the import or acquisition in the local market, jointly or not, of merchandise equivalent to that used or consumed to manufacture a product that was previously exported, therefore replenishing inventories. The Suspension type consists of suspending the taxes imposed on the acquisition of imported and/or domestic input to produce finished goods. Once the export of the finished goods is made evident the tax exemption is granted. The Refund type consists of refunding the taxes paid on the import of imported input and used to produce exported merchandise. 

For the Exemption and Suspension modalities, we have the following Special Operations:

1. Intermediate Drawback: consists of importing or acquiring in local markets inputs by intermediate manufacturing companies to manufacture the intermediate product to be supplied to the manufacturing exporter. Under the Suspension regime for the manufacturing exporter to use the input to manufacture the final product to be exported; under the exemption regime to replenish inventories of inputs used for manufacturing intermediate products supplied to and exported by the manufacturing exporter. 

1.1. Drawback for naval construction: applicable to the importation of merchandise to be applied on processes of naval construction of ships and their sale in the domestic market.

1) Among all these types of Drawback modalities, the Suspension modality is the most used and it is segmented in four minor operations: 

1.1.  Generic Suspension Drawback: allows the generic differentiation of merchandise by assigning a single Common Mercosur Nomenclature NCM classification number (“Other – 99999999”) and the input of the quantity and total amounts to be acquired under the regime. 

1.2.  Suspension Drawback without Foreign Currency Hedging: when there is not partial or total foreign currency hedging on imports.

1.3.  Joint Suspension Drawback: when two or more companies jointly import the product.

1.4.  Suspension Drawback for Local Markets Supply: consists of the import of input for manufacturing machinery and equipment in Brazil to be sold in the local market after an international bidding (sale equivalent to an export). 

> Understand the differences in and opportunities offered by the  Exemption Drawback and by the Suspension Drawback 

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