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Country Commercial Guides for FY 2000: Brazil Report prepared by U.S. Embassy Brasilia, released July 1999 Note*

CHAPTER VI.   Trade Regulations and Standards

Trade Barriers, including tariffs, non-tariff barriers.

Since 1990, Brazil has made substantial progress in reducing traditional border trade barriers (tariffs, import licensing, etc.), even though tariff rates in many areas are still high. Significant non-border trade barriers remain.

In 1998, in order to fight increasing under-invoicing, Brazil issued a series of measures that required additional approvals for products subject to non-automatic licensing, and broadened the list of such products. While the Government is now in the process of phasing these out and moving most products to the automatic license category, these requirements still present a barrier. Under Brazil's new Customs Valuation regulations, Customs will focus its efforts on under-invoicing, and are authorized to hold up imports until the goods are valued.

Tariffs, in general, are the primary instrument in Brazil for regulating imports. For 1997, the average tariff under Mercosul's Common External Tariff (CET) was 17 percent. The average tariff in 1990, by contrast, was 32 percent. Brazil currently maintains no applied tariff rate higher than 35 percent. Brazil continues to promote significant tariff reductions for many capital goods, which constitute approximately 40 percent of U.S. exports to Brazil. The United States continues to encourage tariff reductions on products of interest to U.S. firms.

Brazil and its Southern Common Market (MERCOSUL) partners, Argentina, Paraguay and Uruguay, implemented the MERCOSUL CET on January 1, 1995. In November 1997, after consulting with its MERCOSUL partners, Brazil implemented an across-the-board three-percent increase on all tariffs (inside and outside the CET), raising the ceiling from 20 to 23 percent. Only energy inputs such as coal and petroleum and agricultural inputs such as seeds were exempted.

The CET currently covers approximately 85 percent of 9,500 tariff items; most of the remaining 15 percent will be covered by 2001, and all will be covered by 2006. The CET levels range between zero and 23 percent, with the exception of tariffs on telecommunications equipment, computers, some capital goods, and products included on Brazil's national list of exceptions to the CET, such as shoes, automobiles and consumer electronics. These tariffs are generally higher. For products covered by the CET, the maximum Brazilian tariff is now 23 percent. With the exception of sugar and automobiles and parts, trade between Brazil and Argentina is duty free.

The United States signed a trade and investment framework agreement with this emerging common market in 1991. The United States will continue to encourage the reduction of barriers to trade and investment, including tariffs and the creation of a customs union that is open and consistent with the WTO, specifically GATT Article XXIV.

Customs Regulations

In 1997 the Brazilian Government established a computerized information system to monitor imports and to facilitate customs clearance known as the Foreign Trade Integrated System (SISCOMEX). The SISCOMEX has facilitated and reduced the amount of paperwork previously required for importing into Brazil. Brazilian importers must be registered in the Foreign Trade Secretariat - SECEX's Export and Import Registry and receive a password given by Customs to operate the SISCOMEX. The SISCOMEX has a graphic interface for the composition of electronic import documents and transmits information to a central computer.

Customs Clearance in Brazil can be a time consuming and frustrating process, similar to other countries in the region. In a report issued by the ICEX (Instituto de Estudos das Operações de Comércio Exterior) last year the average customs clearance time in Brazil was the slowest in the Hemisphere (150 hours). Products can get "caught up" in customs because of minor errors or emissions in paperwork. In FTAA negotiations, Brazil and the U.S. are working on measures to allow more rapid customs clearance. The Brazilians recognize that many of its ports, loading and unloading as well as customs clearance need increased efficiency. To this end, they are also working on a "blue line" expedited method of clearance. However, you should be prepared for the fact that unloading and clearance may take substantially longer than expected.

Tariff Rates

Import tariffs currently range from 5 to 32%, however there are numerous exceptions. An example is the 70% tax on imported automobiles. A number of capital goods that are not locally produced enjoy a 5% import tariff, whereas the import tariff on machines is 19%. Exemptions or reductions of import taxes are established by law or by international treaties. The United States continues to encourage tariff reductions on products of interest to U.S. firms. (See section VI, on Tariff in Trade Barriers)

Import Taxes Including Value Added Taxes

The import tax base includes the following elements:

• transportation cost of the imported product to the port of arrival;
• fees associated with loading, unloading and handling the imported cargo to the port of arrival;
• insurance costs associated with freight.

Brazil also assesses the following taxes and fees on imports:

Warehouse Tax:   0.65% of CIF in private terminals for a 15 day period

Terminal Handling Charges Avg.:   US$ 100 per container (in Santos Port, Sao Paulo)

The Merchant Marine Renewal Tax (MMR):   assessed at 25 percent of ocean freight charges on imports by sea, payable by the importer.

Compulsory Contribution to Custom Broker's union:   2.2% of the CIF value or minimum of US$ 71 and maximum of US$ 160

SISCOMEX tax:   US$ 30.00 (fee for using the SISCOMEX system)

Cargo transportation company fee:   US$ 35.00

Hypothetical Cost Buildup for an Imported Machine, shipped in a 20 feet container, shipped from Miami to the port of Santos Cost Buildup in US$

FOB Price of Product		100,000

*Freight	  	  	  2,400
	
Insurance (0.5 to 2%)		  1,000

CIF Price of Product		103,400

Landing Charges:

Import Duty (19% of c.i.f.)	 19,646

IPI (Manufactured Products Tax --
 5% on c.i.f. plus import duty)	  6,152

ICMS (Value-added 
 Tax 18%, 12% or 11% on
  c.i.f. plus duty plus IPI)	 23,256

Port Costs:

AFRMM (Merchant Marine Tax
 25% of Ocean Freight)		    600

** Warehouse
(0.65% of CIF or minimum of 	US$ 170
maximum of US$ 235)	    	    235

Terminal Handling Charges
(Average $ 100 per container)	    100

Compulsory contribution to the 
Custom Broker's Union
(2.2% CIF or minimum of 	US$  71
maximum of US$ 160)	    	    160 

Custom Brokerage Fee (avg.)		 
(0.65% CIF or minimum of 	US$ 170
maximum of US$ 450)	   	    450

SISCOMEX fee			     30

Cargo Transportation company fee     35

Bank Costs (1 to 3% of FOB)       2,000

FINAL COST		     US$156,064 

*   Freight provided by Hamburg Sud Brasil Ltda. on July 6, 1999 for transporting a 20 feet container from Miami to Sao Paulo.

**   Private terminals at the port of Santos for 15 days.
***   IPI and ICMS are not to be calculated as additional import costs because they are also added into the final costs for all locally manufactured products.

Internal Taxes

Internal Brazilian taxes relevant to U.S. exporters are the Industrial Products Tax, Imposto Sobre Produtos Industrializados (IPI) and the Merchandise Circulation Tax, Imposto Sobre Circulaç&ão de Mercadorias e Serviços (ICMS)

The Industrial Products Tax (IPI) is a federal tax levied on most domestic and imported manufactured products. It is assessed at the point of sale by the manufacturer or processor in the case of domestically produced goods, and at the point of customs clearance in the case of imports. The IPI tax is not considered a cost for the importer, since the value is credited to the importer. Specifically, when the product is sold to the end user, the importer debits the IPI cost.

The Government of Brazil levies the IPI rate by determining how essential the product may be for the Brazilian end-user. The tax rate ranges from 0 to 15 percent e.g. the IPI rate on cigarettes and alcoholic beverages is 365%. The tax is charged on the product's c.i.f. value plus import duty. In general, a relatively low tariff rate carries a lower IPI and a relatively high tariff rate carries a correspondingly higher IPI rate. As with value-added taxes in Europe, IPI taxes on products that pass through several stages of processing can be adjusted to compensate for IPI taxes paid at each stage. Exports from Brazil are exempt from the IPI tax. The regulations dealing with the IPI tax are detailed in Decree No. 87.981, of December 23, 1982.

The Merchandise Circulation Tax (ICMS) is a state government value-added tax applicable to both imports and domestic products. The ICMS tax on imports is assessed ad valorem on the c.i.f. value, plus import duty, plus IPI. Although importers have to pay the ICMS to clear the imported product through Customs, it is not necessarily a cost item for the importer, because the paid value represents a credit to the importer. When the product is sold to the end-user, the importer debits the ICMS, which is included in the final price of the product and is paid by the end-user.

Effectively, the tax is paid only on the value-added, since the cost of the tax is generally passed on to the buyer in the price charged for the merchandise. The ICMS tax due to the state government by companies is based on taxes collected on sales by the company, minus the taxes paid in purchasing raw materials and intermediate goods. The ICMS tax is levied on both intrastate and interstate transactions and is assessed on every transfer or movement of merchandise. The rate varies among states, with the predominant rate currently 18% in Sao Paulo and 12% in most other states. On interstate movements, the tax will be assessed at the rate applicable in the state of destination.

Some sectors of the economy, such as construction services, mining, electrical energy, liquid and gaseous fuels are exempt from the ICMS tax. Most Brazilian exports are exempt.

The US/Brazil Council of the U.S. Chamber of Commerce has produced a report on tax issues in Brazil and made seven recommendations to the Brazilian Congress for reform. Businesses consistently report that the number and rate of taxes are high compared to other countries and that there is a high degree of repetitive taxing. See additional information below "Major Tax issues affecting U.S. business".

Import License Requirements

Automatic License

As a general rule, Brazilian imports are subject to the automatic import license, which is granted when the product enters Brazil. All commercial, financial and fiscal information regarding each individual importation as well as information required for the preparation of the Import Declaration (DI) is fed into the SISCOMEX. The Brazilian Foreign Trade Secretariat (SECEX) is the government agency responsible for granting import licenses. Some products and import operations are subject to special requirements, which should be completed prior to customs clearance. These requirements include:

• sanitary or animal health requirements established by the Agricultural Ministry for imports of meat and food products, fish, crustaceans, mollusks, and other sea products, milk, milk derivatives, eggs and honey, other animal origin products, fruits, beverages and several other animal or vegetal products;

• environmental requirements established by the Brazilian Environmental Protection Agency -- IBAMA -- for natural, synthetic or artificial rubber;

• company and/or product registration numbers for asbestos, agricultural chemicals, pharmaceutical products, perfumes and cosmetics and medical related products.

Non-Automatic License (LI)

Whenever imports are subject to the Non-Automatic License (LI), the importer must provide the commercial, financial and fiscal information either prior to shipment or prior to customs clearance as follows:

Prior to Customs Clearance

Products imported under the drawback regime, those which still enjoy the benefits of the BEFIEX program (a program that granted a number of benefits including import tariff reductions and attractive financing to Brazilian exporting companies. Although the program expired in the late eighties a few companies still benefit from the BEFIEX), imports from the National Council for Scientific and Technological Development and imports from free trade zones in Brazil are required to obtain the import license prior to customs clearance.

Prior to Shipment

Products or import operations that are subject to special controls from SECEX or from approvals of other government agencies need to obtain the import license prior to shipment. This includes the following operations and products:

• products subject to import quotas (tariff and non-tariff);
• subject to similarity audit;
• used products;
• products that enjoy import tariff reductions;
• imports that do not involve payment from importer to the exporter (samples, donations, replacement of goods, leasing, rental, foreign investments, temporary admission)
• imports from Iraq;
• products that affect human nervous functions;
• narcotics, psychotherapeutic drugs, etc.;
• products for human or veterinary research;
• weapons and related products;
• radioactive products and rare earth metal compounds;
• crude oil, oil derivatives or other petroleum derivatives;
• anti-hemophilic serum, medications with plasma and human blood;
• products that may be harmful to the environment, as CFC;
• skins and leathers as well as finished products;
• mailing machines, stamp selling machines, as well as parts and pieces;
• airplanes, spatial devices as well as parts and pieces;
• products subject to specific price controls or payment term controls.

When inserting the import documents in the SISCOMEX, the importer will be advised if the non-automatic import license is required. DECEX is the responsible for providing the import license which is normally granted in two days from the request date. The communication between the importer, DECEX and/or government agencies that need to grant an import approval is done through the SISCOMEX.

Temporary Goods Entry Requirements

On December 31, 1998, Brazilian Customs issued regulation 164 (Instrução Normativa 164) establishing new procedures for imports under the Temporary Admission Program. The program allows for imports of goods for a pre-determined time frame and a clear objective. Under the program, import tax and the Federal tax (IPI) are only charged on products that will be used in the production of other products and involves payment of rental or lease from the local importer to the international exporter. This includes products such as dies, matrixes, sheets and industrial tools. Due taxes are proportional to the time frame the imported product will remain in Brazil.

The import tax applicable on products imported under the temporary admission program is calculated according to the following formula:

Tax = (Federal Taxes in the normal import process TIMES Number of months in which the product will remain in Brazil) DIVIDED BY (12 TIMES the life span of the product -- according to Normative Instruction # 162, dated December 31, 1998).

An example is a leasing operation for 12 months of a US$ 200,000 machine into Brazil, with 10% import tariff and 5% tax over industrial product (IPI). The life span of this hypothetical machine is 5 years. In a regular import operation the due taxes would be as follows:

CIF Price:		200,000

Import Tax:	 	 20,000

IPI:		 	 11,000 (5% over CIF Price + Import Tax)

Payable taxes:       US$ 31,000

Under the temporary admission program payable taxes would be as follows:

(31,000 * 12) / (12*5) = US$ 6,200 (this includes the import tax and the tax over industrial product).

Special Import/Export Requirements and Certifications
(Health, Pharmaceuticals, Pre-shipment Inspection).

Regulatory and approval processes to enter the Brazilian Market

Imported products controlled by the Ministry of Health, including pharmaceuticals, vitamins, cosmetics and medical products, can only be sold if:

1. The foreign company establishes a local Brazilian manufacturing unit or local office, fully responsible for its products; or

2. The foreign company appoints a Brazilian distributor, who has the registration with the SVS as an importer and distributor of the types of products being offered. Basically, any product that comes in contact with the human body and could present any health risk falls under these requirements.

Note:   Any and all products related to health, applied to the skin, injected into the body or even inserted into the eye (contact lens and cleaning liquids, for example), and any other having a medical application have to be registered with the MOH.

Documents Required of Local Distributors for Product Registration, Importation and Sales in Brazil

1. "Alvará de Funcionamento" - A trading permit granted by the state sanitary authorities. This allows the company to import, distribute, store and sell the product registered with the SVS.

2. "Autorização de Funcionamento" - A permit like the "Alvará de Funcionamento", but granted by the Federal Government.

3. Contract with a qualified technician (such as a chemist, pharmacist, engineer, etc, according to different types of industry). This is called "Terms of Technical Responsibility", signed by the professional. This document can be obtained from the Regional Pharmaceutical Council.

4. Contract with a local Brazilian laboratory to do the quality control certificate for each one of the products to be registered. This laboratory must be an "OCC-Organismo de Controle e Certificação", (Control and Certification Laboratory) an official registered certification organization, registered with the Brazilian Ministry of Health. The company has 12 months to provide this information. The company can use any laboratory authorized by the Ministry of Health.

Product Registration

Product registration in Brazil is a laborious exercise, and has to be requested by the local office of the foreign company, or its agent. The registration is valid for five years and can be renewed continuously for the same period. Exceptions are: diet products that are valid only for two years and can also be renewed for an additional 2-year period. The registration process must be completed within 90 days after the registration is requested. The foreign company should take a series of measures in order to guarantee its rights to the registration, including:

*   Apply for registration of the trademark and patent with the INPI - National Industrial Property Institute, through a local law firm.

*   A solid contract with the distributor to protect the manufacturer's rights, including the ownership of its registration with the Ministry of Health. This should be done through a local agent.

*   It is also recommended that the foreign company establish specific clauses on the contract, transferring the ownership of the registration from the agent to the manufacturer, thus minimizing risks. This transference can only occur if the foreign company opens an office or plant in Brazil, since no registration can be transferred overseas. Transfer to another agent is extremely difficult to obtain.

*   Manufacturers have to disclose to the local authorities, through their agents, the quantitative and qualitative formula of their products, which should be patented in Brazil, before the product is introduced into the market, and at the time of registration. This has to be described on the registration document.

Types of Product Registration

For registration purposes, SVS classifies the products in the following categories:

1. Drugs: substances for medical or sanitary use (like sanitizing agents).
2. Medicine: curative, preventive or diagnostic pharmaceutical products.
3. Pharmaceutical Raw Materials: drugs or raw materials to be used in medicines
4. Food: Prepared food products
5. Related Products (Correlates):   other than the above definitions. The following products and substances used to protect health, for personal hygiene and cleanliness: medical products, cosmetics, perfumes, dietary, dental and veterinary products, insecticides and poisons.

According to Brazilian Law 6360 of 1976 and its addition number 74.094 of 1977 and Administrative Act number 71/96, and other regulations from the Ministry of Health, products that have to be registered, in addition to medical and pharmaceutical items, are:

• Cosmetics
• Child products (lotions, etc)
• Perfumes
• Hygiene products

Cosmetic products are classified according to the health risk they may present

.

Grade 1 products are products with minimal risk, such as: soaps; shampoos; tooth pastes and deodorants; shaving creams; after shaving lotions; tooth brushes; dental floss; powders; beauty creams; facial masks; beauty lotions; oils; make-up; lipstick; lip pencils and liners; eye products; and perfumes.

Grade 2 products are products that present potential risk, such as: hair colors; hair lighteners; hair perming and straighteners; products for hair and scalp treatment (anti-dandruff shampoos); chemical depilatories; insect repellents; and products for children.

Although the same documentation is required for grade 1 and 2 products, the registration of grade 1 products is much faster and simpler than the registration of grade 2 products.

Documentation Needed for Registration

The essential basic documents required from the local agent of the foreign company for the registration of products in Brazil are:

1. Application form obtained from the Brazilian Ministry of Health;
2. Original copy of the machine stamped bank slip, which serves as proof of registration fee payment;
3. Trade Permit ("Alvará de Funcionamento") issued by the State authority to the manufacturer's distributor;
4. Same type of document ("Autorização de Funcionamento"), issued by the Federal authority to the manufacturer's distributor;
5. Document showing the technical responsibility of the distributor/ manufacturer, issued by the certification entity;
6. Technical Report on the product, informing the components of the formula, instructions, directions, cautions, etc;
7. Label sample, brochures, pertinent information about the products, all translated into Portuguese;
8. For products not clearly mentioned on the Brazilian law, it is mandatory to provide information about their utilization, in order to demonstrate its efficacy and safety;
9. Copy of the registration granted to the products at the country of origin (or copy of the Free Sale Certificate);
10. Copy of legal document, by which the manufacturer authorizes its distributor to trade and distribute the products.
11. If a medical equipment, all documents showing product safety, country of origin, detailed (exploded view) of the equipment inner parts and user manual, have to be presented for registration.

Note:   Among the above requirements, special attention should be paid to the TECHNICAL REPORT. This is mentioned on Administrative Act 71/96, and which requires from the cosmetics, vitamin, pharmaceutical manufacturer:

1. The complete description of the product's formula, with all the components specified by their chemical designation, and the quantities of each one of them expressed in the metric system;

2. Inform the function of each component, and its function as integral part of the formula;

3. Name the components according to the Pharmacopoeia Standards, Brazilian and International Compendia or attached bibliography, discussing the component and pertinent literature, including safety rules and efficacy. This information must be translated into Portuguese.

Product registration often takes more than one year. However should the process take longer than three months, importers and producers are allowed to use the protocol number provided by the Sanitary Inspection Secretariat to distribute their products in Brazil. However, by doing so they assume the risk of product liability claims if their products are found to be unsafe by the Secretariat.

According to Brazilian importers, the price for registering a cosmetic product or perfume in Brazil is about US$ 600, of which US$ 220 is the cost of the "despachante" (a local agent who is paid to handle the paperwork, submit documents etc.). Medical products vary, depending on specific types of equipment. It is advisable that the local U.S. exporter's representative do use established product registration agents, particularly if the representative is new to the market or does not have adequate knowledge of this process (which can be complicated). U.S. exporters can attain additional information and local contact agents through ABPVS -- Brazilian Sanitary Inspection Professionals Association.

New Brazilian Health Administration Agency

On December 31, 1998 the Brazilian President signed a Provisional Measure # 1791, created the new "ANVS - Agência Nacional de Vigilância Sanitária" (National Health Administration Agency) and established a new user fees structure for companies and products registration. However, the government is not yet collecting any new user fees since Congress reduced the published list by as much as 50%, as can be seen on the revised matrix below. Through Instruction #383 of April 28, 1999, ANVS has set May 10, 1999 as the last date the old user fees will be charged. From this date on the local market will start paying the new user fees on new registration, as shown in the matrix. The user fees and new certification rules will affect medical devices and equipment, pharmaceuticals, vitamins and food products, cosmetics, tobacco and certain sanitation products, which have to be compulsorily registered with ANVS prior to sale in Brazil. The local representative of the US company must do this registration of the products.

President Cardoso signed the Presidential Decree #3029 of April 16, 1999, effectively creating the ANVS and regulating a series of other Provisional Measures and Regulations incorporating the recent negotiations with the Brazilian Congress and the local market. The same Decree, published on the Brazilian Official Gazette on April 27, 1999 provides the Internal Regulation of ANVS, with the congressional confirmation that President Cardoso is indicating Dr. Gonzalo Vecina Neto, former Secretary of the old National Secretary of Health Vigilance (SVS) as Director-President of ANVS.

The Congress approved his name, along with some of his assistants and other division managers of the former administration. ANVS is fashioned after the FDA - Food and Drug Administration to substitute SVS - National Secretary of Sanitary Vigilance, instituted by Law # 6360 of 1976. In this new capacity, the new agency has enforcement powers similar to FDA, including cancellation of operation permits for drugs, food and medical product manufacturers and distributors. The Brazilian agency, however, was created as a public company, under a contract to the Health Ministry, therefore still subject to some political interference from the Health Ministry.

According to an initial analysis conducted by ABPVS -- Brazilian Regulatory Affairs Professionals Association, the following are the most important changes resulting from the establishment of ANVS:

1. Establishes a formal separation between ANVS which will be responsible for all sanitary and health inspection and the Ministry of Health, which will now be responsible only for public policies related to health issues;

2. Grants ANVS the power to temporarily intervene in the administration of public companies supplying products or services in the health sector, and considered exclusive or strategic responsibility of the Brazilian government;

3. Cancels Article 58, of Decree-Law 986/69, which exempted imported foods (sold in its original packaging) from registration with the Ministry of Health. In other words, imported food will now be subject to Ministry of Health registration, as has always been the case with local manufacturers. At the government request, the Brazilian Food Industry Association will be suggesting a list of food additives for colors and preserving food additives which may be exempted from registration;

4. Modifies Article 21 of Law 6.360/76, to state that imported drugs, similar to those manufactured in Brazil, will be automatically registered with the ANVS after 180 days from the date of filing the registration requirement, if ANVS fails to accept or reject the product registration within this period of time;

5. Modifies article 20, of Law 6.360/76 to state that no product without clinically or therapeutically proven beneficial substance in its formula, can be registered with the ANVS;

6. Establishes ANVS approval for production and registration of tobacco products, hitherto not registered with the Ministry of Health. The cost of registration of a new brand of tobacco, for example will cost US$ 100,000.00 per year;

7. Establishes a new list of registration fees, as outlined below, reviewed by the government in consultation with the industry and effective as of May 10, 1999.

The new legislation defines the following products for which control and registration is mandatory in Brazil:

1. Medications for human use, its active ingredients, and other related materials, processes and technology;

2. Food, including beverages, bottled water, its components, packaging, food additives, organic contamination limits, pesticides and veterinary drugs residues;

3. Cosmetics, personal hygiene products and perfumes;

4. Cleaners, sanitation products for decontamination and hygiene of hospitals, clinics, public transportation and homes;

5. Diagnostic kits, reagents and items for the same purpose;

6. Equipment and materials, devices for hospital, medical, dental, blood banks, laboratory use and image diagnostics;

7. Immunobiological products and their active ingredients, blood and its derivatives;

8. Organs, human and veterinary tissues for transplants or reconstitution;

9. Radioisotopes for in vitro diagnostics, radio-pharmaceuticals and radioactive products used in diagnostics and therapy;

10. Cigarette, cigars and any tobacco product in any form;

11. Any and all products posing any health risks, obtained by genetic engineering, processed or submitted to radiation sources.

ANVS also enforces its regulations on installations, equipment, technologies, environment and procedures involved in all manufacturing phases of the above items production, their disposal and respective residues.

In addition to setting new user fees, ANVS has (in conjunction with the Brazilian Metrology and Norms Institute - INMETRO), decided that electromedical products will have to undergo re-certification in Brazil, prior to sale in certain cases. Please, read a separate IMI: "Medical Equipment Re-certification in Brazil".

The following is the new user fees matrix effective May 10, 1999.

CURRENT USER FEE MATRIX FOR REGISTRATION WITH ANVS

ITEM	FEE IN R$ (REAL)*	VALIDITY
1. Operational Authorization for each type of company
1.1. Drugs manufacturers	20,000.00	Yearly
1.2. Medical products and equipment	10,000.00	Yearly
1.3. Distributors of drugs	15,000.00	Yearly
1.4. Drugstores, pharmacies, and retail shops of medical/hospital products	5,000.00	Yearly
1.5. Any other	6,000.00	Yearly
2. Alteration or increment to the current Authorization (type of activity, company data, joint venture or incorporation)	4,000.00	N/A
3. Substitution of company's legal representative, technical responsible persons or cancellation of authorizations	Exempt	N/A
4. Good Manufacturing Practices and control for each company's office or manufacturing unit, type of activity and production/supply line
4.1. In Brazil and in the Mercosul
4.1.1. Drugs and pharmaceutical products	15,000.00	Yearly
4.1.2. Medical equipment and products	10,000.00	Yearly
4.1.3. Any other related products	3,000.00	Yearly
4.2. Other countries outside of Mercosul	37,000.00	Yearly
5. Registration of
5.1. Cosmetics	2,500.00	5 Years
5.2.1. Sanitation products - Grade 1 (Minimal) Health Risk	3,000.00	5 Years
5.2.2. Sanitation products - Grade 2 (Potential) Health Risk	8,000.00	5 Years
5.3. Medical Devices
5.3.1. Equipment (nuclear medicine, computer tomographers, magnetic resonance and cineangiocoronary devices)	20,000.00	5 Years
5.3.2. Other equipment, instruments and diagnostic kits	8,000.00	5 Years
5.4. Pharmaceuticals
5.4.1. New drugs (new formulations)	80,000.00	5 Years
5.4.2. Similar, or existing formulations	21,000.00	5 Years
5.4.3. Generics	6,000.00	5 Years
5.5. Food and Beverage	6,000.00	5 Years
5.6. Tobacco and similar products	100,000.00	Yearly
6. Increment or modification on the company's registration
6.1. Packaging details	1,800.00	N/A
6.2. Formula concentration and dosage	1,800.00	N/A
6.3. Prescription text, labeling and packaging	1,800.00	N/A
6.4. Validity or cancellation	Exempt	N/A
6.5. Any other	1,800.00	N/A
7. Exemption of registration	1,800.00	N/A
The above products will have the following discounts for local based companies in the following cases: 15% in case of large Brazilian companies (revenues above R$ 50 million); 30% in case of medium size Brazilian companies, (revenues up to R$ 15 million, as defined by Law 9531 of December 10, 1997); 60% in case of small size Brazilian companies (revenues up to R$ 720,000.00, as defined by Law 9317 of December 5, 1996); 90% in case of "micro-size" (usually very small, sole ownership) companies, (revenues up to R$ 120,000.00, as defined by Law 9317 of December 5, 1996) * Note:  US$/Real exchange rate on the revision date (May 14, 1999), is: US$ 1.00 = R$ 1.70.

As indicated by this matrix, user fees for medical, pharmaceutical and cosmetics products registration represent a significant increase over 1998 levels. For example, registration of a new drug will cost US$ 47,058.00 for each product, and must be renewed every 5 years, a huge increase compared to the old fee of US$ 1,000.00. Registration of products with similar items already in the Brazilian market will be US$ 12,352.94 and generic products, US$ 3,529.41, a clear indication that the government is stimulating the development of the generic drugs market in Brazil. The operational fee for a new pharmaceutical industry will jump from the current US$ 137.50 to US$ 11,764.70, with compulsory annual renewal. Brazilian industry has reacted harshly to the implementation the new user fees. However, most agree that the new agency is a considerable improvement in regulatory affairs and that ANVS should have its own revenue base.

Labeling Requirements

The Brazilian Customer Protection Code, in effect since September 12, 1990, requires that product labeling provide the consumer with correct, clear, precise, and easily readable information about the product's quality, quantity, composition, price, guarantee, shelf life, origin, and risks to the consumer's health and safety. Imported products should bear a Portuguese translation of this information. Since metric units are the official measuring system, products should be labeled in metric units or show a metric equivalent. The United States Senate Concurrent Resolution No. 40, adopted July 30, 1953, invited U.S. exporters to inscribe, on external shipping containers in indelible print of a suitable size: "United States of America". Although such marking is not compulsory under law, U.S. shippers are urged to follow this procedure in publicizing American-made goods.

Registration of U.S. Companies to Export to Brazil

Brazilian regulations also require that all U.S. companies exporting animal origin products (beef, pork, dairy, seafood, poultry, and eggs) must be registered with the Ministry of Agriculture and Food Supply (MAA) before entering the country. MAA also must previously approve all labels of processed products of animal origin, such as cheese, frozen dinners, etc.

Prohibited Imports

The Brazilian Government has eliminated most import prohibitions. However, it places special controls on certain imports and prohibits the importation of others, e.g. pleasure boats valued above US$ 3,500. The importation of used machinery, automobiles, clothing, and many consumer goods continue to be severely restricted. Imports of some used machinery, however, have been authorized under special exemptions. Recent court decisions have challenged the regulation that bans used car imports. Imports of used machinery and equipment to the Manaus Free Trade Zone are subject to more liberal treatment. Please refer to item "Imports Subject to Special Control" in this Chapter for more details.

Warranty and non-warranty repairs:

Products that can be imported into Brazil under the temporary admission program without payment of import and federal taxes are those related to:

1. scientific or technical events (shows, exhibitions and congresses);
2. projects and researches approved by the National Council of Scientific and Technological Development (CNPq);
3. artistic and cultural shows and events;
4. sports competitions;
5. commercial or industrial trade shows and exhibitions;
6. commercial promotion, including samples from company representatives;
7. products used by foreign technicians to repair imported products under guarantees;
8. to replace other products imported under temporary admission status;
9. to temporarily replace imported products under guarantees;
10. to process, assemble, renew or refurbish a product imported under temporary admission (Customs requires the existence of a technical service contract);
11. for packaging or handling other imported products, whenever these products may be re-utilized;
12. to identify, package or handle other products that will be exported;
13. to reproduce phonograms and audiovisual pieces, imported as matrixes;
14. of temporary activities that are of interest to the agricultural sector including animals for trade fairs and exhibitions, reproduction, veterinary treatment, etc.
15. help or save people in cases of calamity or accidents which may affect people or the environment;
16. temporary professional activity of a non-resident in Brazil;
17. of use of immigrants. (while immigrants wait for the resident visa);
18. of use of non resident travelers (personal luggage).

Other products that may be imported duty-free under the temporary admission program include:

I -- vehicles of a non-resident traveler
II -- products for functioning or resistance tests, repairs or refurbishing (these are not defined as economic products because they will not be used in a commercial way and therefore will not result in profits by the end-user. Such products may stay in Brazil for three months).

Products that fall automatically under the duty-free temporary admission program:

I- vehicles used exclusively for international cargo transportation entering Brazil;
II- vehicles of non-resident foreign travelers, in areas where Brazil has borders with other countries;
III- vessels, airplanes and other products in scientific research or investigation at the continental platform or Brazilian waters, authorized by the Brazilian Navy;
IV- fishing vessels authorized to operate in Brazilian waters by the Agricultural Ministry.

Guarantees

Products imported into Brazil under the temporary admission program, subject to payment of proportional import duties must provide for a guarantee. Importers of the products listed as not subject to payment of import tariff are required to complete a "commitment document" form (Termo de Responsabilidade), issued by the Brazilian Customs (Annex I), of Customs Regulation 164 in which the importer is subject to penalties in case of non-adherence to the program. The guarantee may be a cash deposit, escrow of federal bond, an insurance policy or a guarantor. In order to protect itself against the non-adherence to the temporary admission program, Brazilian Customs requires a guarantee in the amount of the import taxes that would be applicable in a normal import transaction minus the amount collected with the proportional tax.

Imports from Federal, State or Municipality Government entities, foundations, diplomatic and consular missions or international representation entities of which Brazil is a member are waived of guarantees. Guarantee is also not required if the actual paid tax minus the tax applicable in a normal import transaction is less than R$ 20,000 (US$ 1.00 = R$ 1.75 on July 6, 1999).

Export Controls

At this time, the U.S. Government maintains no export controls specific to Brazil. Normal controls are maintained on military equipment and high-tech information systems and equipment of a highly sensitive nature. Companies more information on this subject can check with the Trade Information Center: 1-800-USA-TRADE, or the Department of Commerce website: www.doc.gov

Standards and Conformity Assessment

Brazil uses the metric system of weights and measurements. Scientific and legal metrology is the responsibility of INMETRO, the national metrology lab, who also accredits calibration laboratories in Brazil. Private sector voluntary standards in all sectors are issued by ABNT, Associação Brasileira de Normas Técnicas. In some areas, ABNT bases its standards on those of ISO and IEC and on occasion on U.S. standards. However, Brazil generally accepts U.S. product standards, as well as U.S. product certifications and laboratory testing.

In regulated sectors such as health and telecommunications, the appropriate agencies impose their own requirements, ranging from registration of products and laboratories to mandatory certification with the 3rd party testing done in country. When product certification is required by a government agency, generally the certification body and/or testing laboratory has to be accredited in Brazil by INMETRO. The U.S. Embassy in Brasília maintains an office of the National Institute of Standards and Technology, which can assist in obtaining information on standards. For more information contact INMETRO: Mr. Reinaldo B. Figueiredo, Head of International Affairs, Tel: (021) 502-6531, Fax: (021) 502-6542.

Free Trade Zones/Warehouses

As of May 1994, there are four free trade zones in Brazil -- Manaus, in the State of Amazonas; Macapá/Santana, in the State of Amapá; Tabatinga, in the state of Amazonas, which borders Peru; and Guajaramirim, in the State of Rondônia, bordering Bolivia. Four other free trade zones are authorized but not yet functioning -- Bonfim and Paracaíma in the state of Roraima, Brasiléia in the State of Acre and Epitaciolândia in the State of Rondônia.

The Manaus Free Trade Zone is the most extensively developed. Decree No. 288 of February 1967 established special incentives for a period of 30 years with the aim of creating an industrial, commercial and agricultural center in the heart of the Brazilian Amazon. The Manaus Free Trade Zone is a 10,000 square kilometer area which includes the city of Manaus, the capital of the State of Amazonas in the north of Brazil. Unlike Manaus, which has special incentives for the establishment of industries, the other zones are only free ports for imports and exports.

The Brazilian Constitution of 1988 endorsed the fiscal benefits of the Manaus Free Trade Zone and extended their applicability to the year 2013. Free Trade Zone status implies that goods of foreign origin may enter into the Manaus free port without payment of customs duties or other federal, state or local import taxes. In addition, the Industrial Products Tax (IPI) on certain commodities and the ICMS sales tax on most items are not applied. With very few exceptions imported products used for processing, re-export or transshipment which are subsequently shipped to other parts of Brazil also qualify for these tax exemptions. The ICMS sales tax is imposed on items produced in the free port when they are shipped out of the free zone into other areas of Brazil.

Law No. 8387 of December 30, 1991, modified the regulations for the Manaus Free Trade Zone by eliminating the previously existing import quota and requiring only that prior notification is made to the Superintendent of the Manaus Free Zone (SUFRAMA). However, in May 1995 the Brazilian Government returned to the import quota system and presently only imports of wheat and petroleum are not subject to quotas.

Manaus Free Trade Zone importers are allowed to supply foreign goods from their stock in Manaus to other parts of the country regardless of quantity. These goods, however, are subject to all duties assessed under normal importation. There is, however, the advantage that the ICMS (Merchandise Circulation Tax) is reduced to only 4 percent.

The Manaus Free Trade Zone was hard hit by the general lowering of tariff and non-tariff barriers. In July 1992 the government announced a series of measures to help the Manaus Free Trade Zone. Each industry must perform certain basic assembly steps in the zone in order to qualify for fiscal incentives. To protect Manaus industries, such as consumer electronics, which are heavily concentrated in the zone, the Tax on Industrialized Products (IPI) was raised by ten percentage points on competing products which are either imported from abroad or produced in Brazil outside the zone. The initial list included stereos, televisions, and VCRs, none of which are produced in Brazil outside the zone. Computers and peripherals were not on the list.

Fiscal incentives for Manaus include exemption from the IPI tax and from tariffs on imported components, reduced tariffs on products shipped from Manaus to the rest of Brazil; reduced state tax (ICMS) on products imported from or exported to the rest of Brazil, up to ten years exemption from federal income tax, and an exemption from import license fees.

The 1992 regulations allowed computer firms to benefit from both fiscal incentives and the change in local content requirements. With special government permission, computer firms, although required to perform much basic assembly in the zone, may be permitted to import circuit boards which use only surface mounted devices.

SECEX import licenses, issued through SISCOMEX, must be issued prior to shipment of goods destined for the Brazilian marketplace. These licenses are additionally subject to authorization by the Superintendent of the Manaus Free Trade Zone (SUFRAMA), the Manaus free zone authority. Commercial invoices and bills of lading must have "Free Zone of Manaus" typed on them, and one of the following statements: "Zona Franca de Manaus para Consumo" (Manaus Free Zone for Consumption) or "Zona Franca de Manaus para Reexportação" (Manaus Free Zone for Reexport).

Brazilian restrictions on the informatics sector no longer apply to the Manaus Trade Zone. A license and an authorization requirement for health/sanitary controls, national security interests, and environmental protection remain in effect.

Each passenger leaving Manaus is allowed a quota of US$ 2,000 (FOB value) of goods of foreign origin. Products manufactured in Manaus are not subject to the quota.

In addition to the free trade zones, 14 export processing zones have been authorized. The Ministry of Industry, Commerce and Tourism administers them. To date, only four have begun initial infrastructure construction; the remainder is still in the planning stages.

Legislation regarding ZPEs requires that firms operating in the zone export at least 90 percent of production. Up to 10 percent of production can be sold in the domestic market, and is subject to a duty of 75 percent ad valorem on the final price, minus the cost of imported inputs. Normal corporate income taxes apply to profits generated in the zones. Firms operating in the zones will be exempt from foreign exchange regulations and will maintain dollar and local currency accounts. The official Brazilian exchange rate must be used to convert dollar accounts for local purchases. Foreign firms established in the zones may use their own hard-currency resources for tax-free imports of machinery and raw materials from abroad. Firms in the ZPE may not produce goods subject to export quotas. License and authorization requirements remain in effect in ZPEs for health/sanitary controls, national security interests, and environmental protection.

Membership in Free Trade Agreements

Brazil is a founding member of Mercosul, the Southern Cone Common Market, a member of the World Trade Organization, and a participant in negotiations that would establish a Free Trade Area of the Americas by the year 2005.

Customs Contact Information 

Ministério da Fazenda
General Coordinator of Customs System
Clecy Maria Busato Lionço
Esplanada dos Ministérios, Bloco P, 40 andar
700.48-900 Brasília, DF
Tel: (061) 412-3403/04/05/07
Fax: (061) 412-1537
Home page: www.fazenda.gov.br