How to Choose the Right Cross-Border Partner for Your Business

How to Choose the Right Cross-Border Partner

The most important thing in choosing your cross-border partner is the validation of compliance, questioning the methodology of the direct import process in relation to customs taxes.

There is no magic method, shortcut or move to avoid paying taxes in this process in Brazil. The import tax of 60%, as well as State Tax, called ICMS, is due. If there is no proof of payment of these amounts, a tax liability will be created that will reflect, sooner or later, in the process of selling and distributing your product, throwing all the investment made in the process down the drain.

Another fact is the sending of values from Brazil abroad, which must be carried out by an exchange agent authorized by the Central Bank of Brazil, whether this is a Bank or a Brokerage with a well-known name, or your company will not be able to prove money laundry.

If the sale value in any marketplace is paid in Brazil to a local company, this must be an eFX of the Brazilian Central Bank, that is, a “payment facilitator”, which is audited by the exchange agent, or directly by the Central Bank.

It must have policies like KYC – Know Your Customer and validation with organizations like OFAC Sanctions List, for example.

Only after the analysis above, should the commercial part of the process be analyzed: in which marketplaces the products will be exposed, and which pricing policy should be adopted for each of them, since the sales commissions they charge from sellers vary between them.

As Brazil has a tax rate, whether in the Formal Import or Direct Import model, both explained above, and it practically doubles the value of the product when nationalized, it is crucial to understand that the discount to be offered to the Brazilian market must be considerable, so that the products are competitive, and the process reaches qualitative sales maturity.

Carefully format the technical assistance process, with spare parts, and validate with your local partner, verifying their ability to offer a good service to consumers.

In short, you should look for the strategy of gaining market safely and not just selling. A single sale, from a single order, can increase in geometric progression when the compliance rules of the destination country are met, but a container sold to the wrong company can destroy your brand in this same country.