What is import customs?  

Knowing more about import customs is essential to ensure that imported goods meet Brazilian regulations and standards. Any errors may cause delays and additional costs for the importer.

On the other hand, better understanding allows operations managers to minimize costs and optimize the process. Therefore, here we present the most relevant information about import customs, including its concept, operation, location, among other important information. Keep reading!

What is import customs?

The import customs is a government agency that has the responsibility to inspect and control the entry of goods into the country. It verifies that they comply with applicable laws and regulations. Another function is to collect import taxes and duties.

Basically, an imported good must pass through the import customs of the destination country. This body verifies the documentation and the nature of the cargo, in addition to determining the value of the product for taxation purposes. In addition, depending on the type, customs may require physical inspections and other checks to ensure security and compliance with applicable standards.

It is important to see customs clearance (a process required by the IRS for import) as an essential part of international trade. It helps ensure that imported goods are safe, legal, and in compliance with the country’s laws and regulations.

From the perspective of importers, this agency helps make the market fairer by preventing organizations from trading illegal products or those that do not comply with the country’s regulations.

How do customs work in Brazil?

Customs oversees and controls both the entry and exit of goods from the country. The agency responsible for customs is the Federal Revenue of Brazil, which is part of the Ministry of Economy.

This means that, as soon as a good arrives in Brazil, it must go through a series of procedures (parameterization channels) to be released and be able to be marketed. See what they are next.

Documentation check

Through the verification of documents, the Federal Revenue Service of Brazil (RFB) checks if the goods being imported follow the rules and regulations of the country.

The importer must present several documents, such as the commercial invoice, the bill of lading, the certificate of origin, among others. They must be completed in accordance with the rules established by the country of origin and translated into Portuguese if they are in another language.

During this step, customs assesses whether the papers are complete and correct. For example, it checks whether the description and values are in line with reality. The agency also verifies that the importer is complying with all tax and fiscal obligations necessary to release the goods.

If there is any inconsistency or irregularity in the documentation presented, customs makes a more detailed analysis of the cargo. For example, it can perform physical inspections to check that everything is in accordance with the descriptions of the documents. If discrepancies are identified, the cargo may be held until the issue is resolved or returned to the country of origin.

Customs valuation

Customs valuation determines the value of the goods for taxation purposes. That is, the value found is used as a basis for the collection of taxes and import fees.

In Brazil, customs valuation is regulated by the 1980 United Nations Vienna Convention. In practice, this agreement establishes the rules and criteria to be used for the determination of the customs value.

There are six methods of customs valuation provided for by the convention. Understand what they are and what they are based on:

• transaction value method: in the amount paid or to be paid by the importer to the exporter for the imported goods;
• Method of transaction value of identical merchandise: in the transaction price of identical merchandise that has been imported into the same country of destination, at the same time as the imported merchandise.
• Method of transaction value of similar merchandise: in the transaction value of similar merchandise that has been imported into the same country of destination, at the same time as the imported merchandise.
• Deductive value method: in the selling price of the imported merchandise in the country of destination, minus selling and transportation costs plus a reasonable profit margin.
• construction value method: in the cost of production of the imported merchandise, plus a reasonable profit margin;
• Last resort method: This is used only in cases where none of the previous methods can be accurately applied — in practice, it relies on other reasonable criteria, such as selling prices of similar merchandise in other international markets.

The transaction value method is the most used in Brazil. But the choice will depend on the specific circumstances of each import.

If there are discrepancies between the declared value and the actual value of the merchandise, customs can impose fines and other penalties, in addition to collecting the due import taxes and fees.

To determine the customs value, the Brazilian Federal Revenue Service may request documents, such as the commercial invoice, the insurance policy, the bill of lading, among others. Based on this information, customs checks whether the value declared by the importer is correct and whether there is a need to make adjustments.

Importing companies must be familiar with the customs valuation requirements of the destination country and ensure that the necessary documentation is submitted accurately and within the deadlines set by customs.

Tax classification;

The tax classification is responsible for determining the NCM (Mercosur Common Nomenclature) code of each imported commodity.

In practice, the NCM is an eight-digit code that identifies the nature of the merchandise and its respective import tax rate. Each product has a specific code, which is determined based on its description and characteristics.

This classification is made by the RFB and through the analysis of the information contained in the documentation presented by the importer. Some of the documents used are the commercial invoice and the description of the goods. If there are doubts about the tax classification, the Federal Revenue Service may request more information or documents.

This is a crucial step to define costs because the import tax (II) is calculated based on the NCM code. In addition, tax classification is also important for Government statistical purposes, as it allows the collection of data on imports of each type of merchandise.

Physical inspection

The physical inspection verifies the conformity of the imported goods with the information contained in the documentation presented by the importer. It can be performed either randomly or selected. The latter case occurs when there is suspicion of irregularities in the documentation or in the imported goods.

At this stage, the RFB inspectors analyze the quality, quantity and conditions. In addition, they compare the information in the documentation with the characteristics of the merchandise.

Physical inspection can be carried out either at the port, airport, or border where the goods are offloaded, as well as in customs warehouses or depots where they are stored.

In addition to physical inspections, the Federal Revenue Service may also employ non-invasive inspection techniques — such as X-rays and scanners — to verify the contents of goods without opening them. These tools are especially applied to those that cannot be opened or that present a risk to public health or safety.

If irregularities are found in both physical inspection and non-invasive techniques, the Internal Revenue Service may impose fines and other penalties. It is also possible that she retains the merchandise or determines its destruction.

Therefore, it is crucial that the products comply with the information provided in the documentation, as well as meet the requirements of Brazilian authorities.

Taxation

Taxation is one of the most important steps of import customs. Here the taxes (taxes, fees and contributions) levied on imported goods are calculated and collected. In addition to the collection of taxes, the veracity of the information declared by the importer is also verified here.

The main taxes and charges that fall on the entry of goods into the country, according to the official Government portal, are:

• Additional Freight for the Renewing of the Merchant Navy – AFRMM
• Tax on the Transfer of Goods and Services – ICMS
• Tax on industrialized Products – IPI;
• Contribution to PIS/PASEP and COFINS;
• SISCOMEX Utilization Rate;
• Import Duty – II;
• CIDE – Fuels .

To minimize costs with taxes on imports, it’s important for importers to seek fiscal incentives that allow for reduction or exemption, if applicable to their company, product, or defined tax regime.

Where is the import customs?

Brazilian import customs are located in the main ports, airports and border points of the country. Some of the main locations with import customs are:

• São Paulo International Airport – Guarulhos (SP);
• Rio de Janeiro International Airport – Galeão (RJ);
• Port of Santos (SP);
• Port of Paranaguá (PR);
• Port of Rio Grande (RS);
• Port of Suape (PE);
• Port of Salvador (BA);
• Port of Fortaleza (CE);
• Ponte da Amizade (Foz do Iguaçu – PR);
• International Friendship Bridge (Uruguaiana – RS);

In addition to the listed locations, there are also other import customs scattered throughout the country, in dry ports, cargo terminals and land border points. Therefore, we can say that they are strategically located at strategic points of entry and exit of goods from the country.

How long does a product stay in import customs?

The length of time the merchandise remains in customs can vary depending on a number of factors. Some examples include the type of product, the origin of the importation, the complexity of the customs clearance process, and the volume of products imported at the time.

Generally speaking, the customs clearance process can take a few days or even a few weeks to complete. During this time, the product remains detained at customs until all import formalities are fulfilled, including document verification, customs valuation, tax payment, among others that have been explained previously.

In some cases, the release can be faster if the documentation is complete and correct, as well as if there is no problem with the product. On the other hand, if there is any suspicion of irregularity or the need for a more detailed analysis, the product may be detained for a longer period, which can take weeks or even months.

Therefore, it is difficult to predict exactly how long a product will stay in import customs, but in general, it is reasonable to wait a few days to a few weeks.

Why was my product taxed at customs?

In general, products are taxed to generate revenue for the Government and to protect the local industry from unfair competition from foreign products. The taxes levied on imports may vary according to the type of product, its value, its origin and other factors.

All managers of importing companies must be aware of the customs regulations of the destination country and be prepared to pay the necessary fees to import their products legally. They also need to present accurate and complete documentation to avoid delays or possible sanctions.

In addition, it is important to remember that import companies may also have to pay other fees, such as freight, insurance,  storage costs and other amounts associated with the import. Therefore, it is essential to consider all of these fees when calculating the final price of your products to ensure that they can operate profitably in the target market.

What to do when goods are incorrectly priced

It is possible to take some steps to dispute the customs assessment if you do not believe that the imported goods were taxed correctly. That is, if by its calculations the RFB is demanding values above those required by law:

• Check the documentation: The first step is to review all documentation to ensure there are no errors or inconsistencies that may have led to an incorrect assessment — in this case, it’s relevant to analyze all documents, including the commercial invoice, the description of the merchandise, the tariff classification, and the declared value;
• Consult an expert: Seek guidance from a foreign trade specialist or a customs broker — this professional can analyze the import process and identify possible errors or inconsistencies.
• Resort to customs review: Another measure is to request a customs valuation review from the authority — this process may include the submission of supplementary documentation and the conduct of technical analyses to substantiate the tariff classification or the value of the merchandise;
• Resort to legal action: File a lawsuit to contest the customs valuation — you’ll need the assistance of a lawyer specialized in foreign trade to assess the chances of success and guide the defense strategy (this should only be done as a last resort, as it can be quite costly).

What documentation is required by customs?

Importing companies must be aware of the documentation requirements and ensure that all necessary paperwork is submitted accurately and within the deadlines established by customs.

The documentation required by customs for importing companies can vary depending on the type of product, the country of origin, the purpose of the importation, and the regulations of the destination country. In general, the most common documents required for importing products are:

• Certificate of Origin (CO): aims to prove the origin of imported products. The CO may be required to allow the entry of the product into the country of destination and may be issued by the governmental authority or the Chamber of Commerce of the country of origin;
• Packing List: this document describes the products being transported, indicating the quantity, weight, dimensions and other relevant information. It is usually used by the carrier to check the cargo on arrival at the destination;
• Proforma Invoice: It provides an estimate of costs and transaction details prior to shipment of the merchandise. Its function is to assist in the preparation of budgets and for financing purposes before the actual commercial invoice is issued;
• Commercial Invoice: details the products being imported, including quantity, value and a description. This invoice is used to calculate tax rates and import duties;
• Bill of lading: proves the ownership of the goods transported and the contract of carriage between the exporter and the carrier. The bill of lading is used by the carrier to obtain payment and to allow pick-up of the goods on arrival at the port of destination;
• Import Licensing (LI): authorizes the import of products subject to special regulations. For example, chemicals, food and medicines may require certificates issued by health authorities. Products of animal and plant origin, on the other hand, may require certificates issued by agricultural authorities;
• Import Declaration (DI): consists of a document that must be presented to the customs of the destination country before the release of the goods. The DI details the relevant import information, such as the description of the products, the quantity, the value and the applicable tariffs and taxes.

What registrations are required for an importer?

In addition to documentation, import customs still requires different registrations. They vary by country and type of imported merchandise, but some of the main requirements are:

• Import license (LI): In some countries, LI is a mandatory registration to import certain products. The LI is issued by the Ministry of Development, Industry and Foreign Trade (MDIC) and aims to ensure that imported goods comply with applicable regulations and standards;
• Registration in the import system: importing companies need to register in electronic import systems, such as SISCOMEX in Brazil, the Automated Commercial Environment (ACE) in the United States, the Sistema de Administración Tributaria (SAT) in Mexico, among others. These environments are used to register the entry of goods into the country and comply with legal and customs requirements;
• Tax and fiscal records: importing companies must be up to date with the tax and fiscal records required by the country of destination. This includes registration with the Federal Revenue Service and payment of taxes, such as Import Tax, Tax on Industrialized Products (IPI), Tax on Circulation of Goods and Services (ICMS), among others;
• Registration and Identification of Foreign Operators (Radar): it is a mandatory registration that must be made with the Federal Revenue Service to enable the company to import and export products. Radar is a customs control system that allows the monitoring of foreign trade operations;
• Other records: Other specific records may be required depending on the country of origin and imported merchandise. For example, in Brazil, importers of textile products must register with the Ministry of Economy, while importers of electrical and electronic products must register with the National Institute of Metrology, Quality, and Technology (Inmetro).

What penalties can be imposed by import customs?

Customs may impose various penalties for importing companies in case of non-compliance with the rules and requirements. Here are some of them:

• fines: may occur for failure to present the required documents, declaration of false information or under-invoicing the goods;
• suspension or revocation of the Radar: a breach of customs rules may cause the company to have its Radar suspended or revoked;
• seizure of goods: Customs can seize imported goods when the company fails to provide the necessary documentation or when the importation is deemed illegal.
• import prohibition: the company may be prohibited from carrying out new imports, in cases of recurrence of infractions or in serious situations of non-compliance with customs rules;
• administrative or criminal proceedings: it is possible that the company has to respond to administrative or criminal proceedings in cases of non-compliance with customs rules. There is still a possibility of more serious punishments, such as the arrest of those responsible.

Every company should pay proper attention to import customs, as registration requirements can vary according to the country and the type of goods imported. Being aware of the requirements of this agency, as well as having the support of a specialized company, will enable compliance with all legal obligations to avoid delays and penalties at customs.Want to have the support of specialized professionals and ensure an efficient import? Meet the largest and most experienced maritime agency in Brazil.