How does customs inspection work and what are the fees involved?

  • 20/06/2023
  • 19 minutes

Export and import activities involve a fundamental operation: customs inspection. Goods entering Brazil from other nations are subject to inspection by government authorities.

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It is a necessary measure to promote greater security and transparency in economic transactions. Of course, such a procedure involves expenses.

Be sure to check, in our post, what customs inspection is, how long it takes, how to contact us and other relevant points!

What is customs inspection?

To begin with, let’s review what customs inspection is. Imported items are subject to customs clearance, a supervisory action that confirms whether the cargo information and documents comply with the applicable laws.

Dispatch allows clearance, which corresponds to the final part of the inspection. Once clearance is complete, the importer receives the cargo.

The importance of the Internal Revenue Service

According to Act 10593/2002, the Brazilian Internal Revenue Service (RFB) develops activities integrating three important areas:

  • Guidance for taxpayers;
  • Control and inspection of internal taxes;
  • Import/export control and inspection (foreign trade or customs).

The system used to perform dispatch and clearance is the Integrated Foreign Trade System, Siscomex, which is linked to the Internal Revenue Service.

What is the purpose of the customs inspection?

Now that we’ve talked about customs inspection, let’s talk about its purpose. It has the purpose and power to control borders in relation to foreign trade operations and oversees the regulations of these operations.

By right granted by law, customs inspection can limit the freedom of people and their goods in their management of customs trade, which is fundamental to protect the interests of the Treasury Department

In addition to inspecting products entering and leaving Brazil, it monitors the regulatory and compliance of administrative bodies (Mapa, Anvisa and others), manages values, classifies tariffs and verifies irregularities in import and export operations.

Another operation carried out by inspection is the customs review. This tax procedure corresponds to a new inspection, carried out after customs clearance. The purpose is to reassess the regulation of the import, the payment of taxes and other tax obligations.

It is a very common process to confirm that everything is actually in compliance with the law..

What are the targets of the customs inspection?

Customs inspection focuses on foreign trade activities, that is, on import and export operations. The importer/exporter can be an individual or a legal entity — in both cases, he/she is subject to verification by Internal Revenue Service agents.

The procedure focuses on any shipment, no matter who the sender or recipient is, whether it has a commercial purpose or not.

At what times and places is the inspection carried out?

Customs inspection acts on the so-called “customs enclosures”, also known as “customs warehouses”. The Brazilian Customs Regulation (Decree 6759/2009) defines these locations as areas defined by a qualified customs authority and located in primary zones of organised ports or in secondary zones connected to them.

Under the supervision of the Brazilian Internal Revenue Service, these areas perform the movement, storage and dispatch of products from another country or destined abroad. The RFB classifies customs enclosures as follows:

  • Airports (cargo terminals);
  • Airports (customs in passenger terminals);
  • Military bases;
  • Integrated Control Area (ACI);
  • Customs Logistics and Industrial Centers (CLIAs);
  • Duty Free Stores;
  • Sea, river and lake ports;
  • Dry ports;
  • Customs Border Points;
  • Express shipments;
  • International postal shipments;
  • Special Enclosure for Export Customs Clearance (Redex);
  • Silos and tanks.

Of all these locations, the most common are airports, ports and customs border points. According to the Internal Revenue Service, Brazil has:

  • 39 ports;
  • 38 customs cargo terminals in airports;
  • 30 customs border points (cities bordering other countries).

What are the fees that can be levied on imported and exported goods?

There are two taxes levied on imported and exported goods: the Import Tax (II) and the Export Tax (IE). These are taxes collected in the customs clearance phase.

Regarding Import Tax (II), the applicable tax rate is generally 60% for individuals and around 18% for legal entities, varying according to the type of goods. This percentage is based on the declared value of the product, plus shipping and insurance. It is important to know that, in addition to “II”, other taxes and fees apply:

  • Tax on Industrialised Products (IPI);
  • Contribution to Social Security Financing (COFINS);
  • Tax on Circulation of Goods and Services (ICMS);
  • Siscomex Fee;
  • Other expenses.

According to Ordinance 156/1999, imports of international goods using air transport may have a tax rate reduced by up to 60% if they do not exceed U$3,000.

It is worth mentioning that products from countries which are not a member of the European Union (EU) must pay customs duties. Thus, the due formalities are fulfilled and prevention against the entry of illegal goods into the country is enforced. There are actually two types of fees:

  • Customs duty fees: tax levied by the EU on imported products (these are customs duties that constitute EU revenue);
  • Customs fees: expenses related to the customs clearance process of products (this category includes amounts charged by customs and customs clearance fees, expenses with storage and handling, expenses with certifications and others).

Products from countries that are not part of the EU are subject to at least two types of taxes: customs duties and Value Added Tax (VAT). Depending on the nature of the product, the company may find itself in need of assuming:

  • Tax on Vehicles (ISV), when the imported product is a vehicle;
  • Special Taxes on Consumption (IEC), when imported products are alcoholic beverages, tobacco, beverages with added sugar or other sweeteners, energy and oil products;
  • Payment of anti-dumping duties, whose purpose is to provide protection against dishonest operations, that is, the sale of products abroad at prices lower than those prevailing in the domestic market.

For Export Tax, the tax rate is applied only to some products: hides and leather (9%); cigarettes with tobacco (150%); milk, cream and sugar concentrates (100%); weapons, ammunition and their parts and accessories, whenever the destination is South America (except Chile, Ecuador and Argentina) and the Caribbean.

Exemption from Export Tax is a way to stimulate the Brazilian economy, allowing companies or individuals to do more profitable business with other countries.

How long does it take to finalise the customs inspection processes?

Now let’s show for how long goods undergo customs inspection and what a finalised customs inspection means. Time varies because it is related to different factors. For example, clearance tends to be faster when inspectors are more readily available.

Inspection channels

The number of procedures performed simultaneously also influences the period spent to carry out the analysis. In this sense, it is worth mentioning the different parameterization channels, or inspection channels:

  • Green channel: for products that do not need assessment of documents or goods;
  • Yellow channel: the product is submitted to the examination of documents, but its verification is waived if it is in compliance;
  • Red channel: the product is submitted to documental examination and physical verification (the clearance of the goods occurs only after inspection);
  • Grey channel: the most rigorous of all, it involves documental examination, physical verification of the product and even resorts to a specific measure whose objective is to resolve any suspicion of fraud, mainly regarding the price of the product.

Importers fear the grey channel more than anyone else. Naturally, inspection time is longer when in this channel. In any case, those who decide which foreign trade processes will be submitted to this assessment are the supervisory bodies.

A little more about the grey channel

Grey channel application involves serious suspicions such as fraud. This is the case of underbilling, which is the declaration, in the tax document, of an amount lower than what the product actually cost. It happens when a party wants to avoid paying taxes.

By Act 13804, this crime is called “embezzlement” and consists of the action of evading, partially or totally, the payment of tax or duty due for the entry, exit or consumption of the product.

Foreign trade fraud can incur heavy penalties. In addition to paying fines, the offender may respond to civil and administrative proceedings.

In other situations, it is not possible to confirm the origin of the goods. The inspection may understand that there is concealment of the real seller, the taxable person, the buyer or the person responsible for the transaction.

The suspicion of fraudulent action already gives reason to file an administrative proceeding that can culminate in fines and loss of the purchased product. Worse than that, the company may be considered ineligible, which will lead to its compulsory closure.

Finally, to close this section on finalising customs inspection, it is worth talking about the crime of smuggling, defined in the Penal Code as the act of importing or exporting a prohibited product. Smuggling and embezzlement are described in articles 334 and 334-A of the Penal Code.

The finalised customs inspection takes place when the goods are released to the recipient, even if they are retained until the payment of some tax is made — after payment of the tax, it is finally cleared. But, in the case of prohibited products (configuration of the crime of smuggling), there will be no clearance: the goods will be arrested and the due penalties will be applied to the offenders.

How to contact customs inspection?

If the delivery of any goods takes longer than expected, it is possible to contact the Treasury Department, which represents the Internal Revenue Service in each state. On the website, from the tracking code, it will be possible to obtain information about the order: if there is any prohibited or restricted product, if there is any document missing, if there is any fee or tax to be paid or if there was any delay due to the transport mode.

Correios (Brazilian Post and Telegraph Corporation) usually get in touch with the recipient, informing the reason for the retention of the product. Thus, if it is necessary to pay any tax, the importer will be able to pay it for the clearance of the goods.

Knowing more about customs enforcement helps to take proactive, early and fail-safe actions. It also helps deal with adverse situations, if they by chance happen.

What did you think of the theme? As this is a vast subject, it is worth reading more about it. Take your time to understand how the interruption in customs clearance occurs!