Let’s differentiate now two import models: the traditional, maritime, by containers, which we will call Formal Import, and the air model, practiced by the final consumer, called Direct Import (Cross-Border).
Taxation at Formal Import:
Depends on the NCM Product CODE
IMPORT – TAX: Range from 30% to 60%
VAT TAX – ICMS: Range from 12% to 25%
PIS TAX: 7.6%
COFINS TAX: 3% I
PI TAX: Range from 5% to 20%
When the Importer resell the goods to a Retail – RESALE TAX + 25%
Then the Retail resell the goods to the Consumer: RESALE TAX + 25%
Taxation at Direct Import (Cross-Border):
For any kind of product
IMPORT TAX 60%
VAT TAX – ICMS Range from 18% to 25%
That is all
Taxation Summary in Brazil
Obviously, the values in tables 1 and 2 are approximate and we are not taking into account the calculation methodology, not even the freight cost per kg ratio, which is obviously lower in the maritime model than in the air model.
But every government, every country, has what I call “tax intelligence”, which balances means so that the result is approximately the same. The small difference does not cause imbalance, but what changes is the opportunity that each means offers.
In Formal Imports, as well as in Direct Imports, most products practically double the FOB (Free On Board) value, some have tax incentives from the government, but the bill does not change.
The advantage of sea freight in the Formal model is balanced by the need of the importer to resell the product, as well as its cost of keeping stock. This means that the Formal Model incurs the Resale Tax, whereas in the Direct model, despite the higher air freight, there is no Resale Tax.
“Tax Intelligence” regulates freight differences, and some advantages of the Import Tax of the Formal model, such as the Resale Tax, paid when the Formal Importer sells its product to retail, or to the Final Consumer, is levied on all previous taxes, like a ripple effect.
If we did the math correctly, if the Direct Import Consumer obtained the same purchase price as the Formal Importer, without a doubt the sale price would be much lower, violating the manufacturer’s or brand’s international pricing policy.
But as in both models there is an intermediary, commissions to be paid, operating costs, and the final values are offset. Later on, we will see where the great advantage of Direct Import lies.