Integrated Drawback: What it is, modalities and how the exemption works
Those who work in the area of foreign trade are already used to the integrated drawback. The regime offers advantages to managers who aim to optimize resources and results, making the entire production chain, from the manufacture of items to the export of goods, increasingly competitive.
It is therefore a tax benefit that helps exporters to lower the cost of production and to have an attractive price in international trade. Through integrated drawback it is also possible to obtain exemption or suspension of taxes on inputs that are used in the manufacturing process of the products.
Read on and understand more about it!
What is integrated drawback?
Integrated drawback is a customs regime that grants tax exemption or suspension. It is offered for imported inputs that will be used in the manufacturing of products destined for export. Thus the main taxes that are exempted or suspended by the regime are:
- Tax on Industrialized Products (IPI);
- Import Tax (II);
- Additional Freight for the Renovation of the Merchant Marine (AFRMM);
- Tax on Transactions Relating to the Circulation of Merchandise and the Rendering of Interstate and Intercity Transport and Communication Services (ICMS).
Created in 1996, this regime aims to reduce the manufacturing costs of Brazilian products destined for export. Thus, exporters can practice competitive prices in international trade and have a good profitability.
Another point that deserves attention with regard to the integrated drawback is that, since its origin, its objective has been the stabilization of the Brazilian trade balance, since it would increase the exports made by the country. And to make the benefit accessible to exporters, the regime has undergone legal and technological changes over the years.
How does the integrated drawback work?
Objectively speaking, integrated drawback works as an agreement between the exporting company and the Federal Government, in which the former formally declares that it will use the imported inputs in the industrialization of its products. The latter is responsible for providing the tax exemption and supervising the company.
After this is done the inspection by SECEX in order to verify whether the exporter made the tax exemption within the legal criteria. If this does not occur, SECEX itself is in charge of applying penalties with fines and other legal sanctions to the company.
However, when approval is granted, the entire process is registered in the SISCOMEX (Integrated Foreign Trade System), and the company is free to import the inputs with tax benefits, as well as manufacture the products that will be exported.
Learn about the three modalities of integrated drawback
Check out the three modalities of the integrated drawback!
Suspension
When the company ensures that the inputs will be used in the manufacture of products for export, it can buy them abroad without having to pay taxes such as: Tax on Industrialized Products (IPI) and Import Tax (II). Otherwise, the company not only loses the tax benefit, but can also be fined.
It is SECEX itself that authorizes the suspension of these taxes when the goods are imported.
Exemption
This integrated drawback modality offers tax exemption on the importation of goods previously acquired for stock replacement purposes. To qualify for this benefit, the goods must be imported in a quantity and quality equivalent to the last purchase.
This means that the benefit is released for those inputs that had been imported before, but needed to be purchased again in order to replenish the company's stock.
Restitution
It partially or totally refunds the taxes paid at the time of importation. It is not the most used integrated drawback, but the benefit was granted when the company, after importing inputs for industrialization and paying the taxes, did not intend to replace the stock again.
Integrated Drawback: Competitive Differential
It should be noted that companies wishing to use this benefit need to be self-critical and ask themselves whether they meet all the necessary requirements, as well as verify which of the modalities their business best fits into. The great differential of integrated drawback is the exemption or suspension of all taxes at its entry. In other words, this means that it allows the exemption of federal taxes at the time of acquisition of the goods, both in the domestic market and imported goods.
Some years ago the government updated the rules that govern the regulation of integrated Drawback. In this way, the processes that until then depended on filling out various forms, used to be slow and costly, became less bureaucratic, complex and more efficient. Today, the system is integrated with the Government's other operations.
Why is it important to count on a company specialized in integrated drawback?
Because of the complexity of Brazilian legislation, as well as all the bureaucratic steps involved in integrated drawback, it is extremely important to count on the help of a company specialized in international trade.
This not only facilitates the processes, but also makes them more transparent, avoiding inconveniences, losses, and other problems that could compromise the operation. Another positive point is that with the support of this company, you increase the security and competitiveness of your business.
Want to know how we can help you with integrated drawback? Then contact ShipSmart and talk to one of our experts!