MEI Import: what are the particularities?

In the last years, import of products for resale became a common practice. It was possible with the development of business via Internet and is a business opportunity for Individual Micro Entrepreneurs (MEI’s).

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Brazil is responsible for only 1% of the international trade operations. For experts and entities engaged in foreign trade, local growth in the segment is likely to start with micro and small-sized companies.

To better explain how the MEI import process works, we interviewed Elson Isayama, president of the Trade Union of Customs Agents of São Paulo (Sindasp). Would you like to know more? Check out the interview below!

What is the MEI import process?

MEI’s can work in the import market. The process has the same rules of other import regimes: if less than USD 3,000, the simplified method can be used, if more than that, MEI must seek qualification with Radar/Siscomex and hire a customs agent/broker.

Radar allows the MEI’s National Register of Corporate Taxpayer (CNPJ) number to be recorded in the Foreign Trade System (Siscomex) of the Brazilian Internal Revenue Service (RFB). Even though it has a differentiated classification as a company, the MEI is subject to the same rules applicable to any other company.

What are the particularities?

According to Isayama, MEI’s can import goods, provided they are used for direct sale. That is to say, products are not sold in wholesale markets. He stresses Brazil has a hybrid system when engaging in foreign trade.

It means the company may directly import from a representative or manager or hire a customs agent/broker. “We suggest hiring a customs agent/broker because such professional has knowledge and experience in the activity and can provide the required support to the MEI during the whole process”, says the president of the Union.

The first step is to hire a customs agent/broker with knowledge in the segment where the MEI operates. “If the product does not require a specific consent from the government, the only required register is the qualification in the Radar system”, he explains. “With the digital certificate of corporate manager, it is possible to finish in just a few minutes”.

Companies unaware of import and export operations must be guided by a specialized professional. It is the customs agent/broker who will provide the directions required for the success of the company.

MEI must also assess restrictions related to the tax classification of the good. “It is worth mentioning MEI’s cannot benefit from compensations of taxes paid in import, such as Tax on Industrialized Products (IPI) and the Tax on operations related to circulation of goods and on provision of interstate, intercity and communication transportation services (ICMS)”, he adds.

Taxes involved in import

In imports, the MEI’s tax burden is the same of any other operation. And there is a downside: this corporate model cannot enjoy tax credits, which may affect the cost composition.

Tax rates to be paid by MEI are established according to tax classification of the good imported by the company. Foreign trade has specific codes and protocols. One of them is the MERCOSUR Common Nomenclature (NCM), used to standardize products coming in and out of the country.

Collection of taxes is made based on that code. It means that, if wrong, the MEI may lose tax benefits, suffer delays in delivery, have the good held or be fined (indexes range from 1% to 15% of the good’s value).

Taxes due include:

• Tax on Import of Foreign Products (IPI) (II);
• Income Tax of Corporations (IRPJ);
• Contribution for the Financing of Social Security (Cofins);
• Social Contribution on Net Income (CSLL);
• Employer Social Security Contribution (CPP);
• Contribution of the Social Integration Program/Public Servants’ Fund Financing Program (PIS/PASEP);
• Tax invoice issuance fee.

Main associated rules

For MEI’s, there is only one rule in imports. Expenses with acquisition of products may not exceed 80% of the company’s billing. Still, Radar grants a unique option for MEI’s, in the amount of USD 50,000, every 6 consecutive months.

This considerably extrapolates the total amount of the acquisition limit (80% of BRL 81,000). “That is why the entrepreneur must be extra careful not to lose the advantages of being MEI”, warns Isayama.

The Brazilian Service of Support to Micro and Small-sized Companies (Sebrae) reminds that, to work in foreign trade, MEI must have a CNPJ in line with the activity to be carried out and with the product to be traded. This is because authorization for import of products by MEI is related to the activity performed. And thus, the product that it wishes to import must be detailed in its articles of association.

Administrative processes

After registering at Radar, MEI must request an import license (LI). This document has information that allows following up the transit of the good in the foreign trade. LI is issued from a pro forma invoice, which gathers the approval of all those involved in the transaction and is fundamental for clearance of the delivery.

Moreover, it is important to have an exchange contract. It is obtained with the bank and allows the entrepreneur to make and receive payments related to the good. When the product reaches the customhouse, the legal person in charge of the company – already authorized at Siscomex — makes the withdrawal in personally. To do so, he/she must hold the LI, the exchange contract, the air waybill and the commercial invoice (a sort of international tax invoice).

MEI’s Annual Income

MEI has an annual billing limit of BRL 81,000 as of 2022. For companies wishing to dedicate themselves solely to import, this restriction may prevent the business from growing. Another barrier is the possibility of hiring only one employee. If the MEI chooses to hire a customs agent/broker, it will have to perform all other tasks on its own.

For those opting to work in this sector, it is important to pay attention to the dollar exchange rate and feasibility of import. Seek for products with added value, valued in Brazil, but with shortage in the country. As you can see, MEI import provides advantages to those attentive to the market.