by David Roberto R. Soares da Silva
As of January 1, Brazil has a new Mercosur-harmonized/1/ rate table for the federal excise tax (IPI) levied on imports and local sales of manufactured products/2/. The new table changes more than 10 percent of the tariff codes existing under the former table (approved by Decree 6,006/2006), which will likely change the IPI and import tax rates on some products and taxpayers.
IPI rates vary depending on the nature of the product: The more essential the product, the lower the rate. The rates are listed by tariff code in the harmonized IPI rate table (tabela do IPI, or TIPI), based on Mercosur Common Tariff (Nomenclarura Comum do Mercosul, or NCM)/3/ classifications.
The TIPI is the result of NCM changes promoted by Brazil's Foreign Trade Chamber (CAMEX) through CAMEX Resolution 94/2011, published in the official gazette on December 12, 2011. That resolution also changes some rates for the NCM-based import tax.
Experts calculate that more than 10 percent of the tariff codes have gone through some sort of change in the TIPI, though not necessarily a rate change. The changes include new tariff codes with the same tax rates, different classifications, and the cancellation of certain tariff codes, among others.
NCM classifications are essential to taxpayers, not only for the determination of the correct import tax and IPI rates, but also for foreign trade transactions. The incorrect classification of a product under the NCM (or TIPI) may lead not only to underpayment or overpayment of import tax and/or IPI, but also the imposition of customs penalties for improper classification.
Therefore, it is important for local manufacturers, importers, and exporters to consult their advisers to review any adverse impact or necessary changes to their products' classification as a result of the new TIPI and the changes to the NCM.
David Roberto R. Soares da Silva, partner, Battella, Lasmar & Silva Advogados, São Paulo
/1/ Mercosur member countries Argentina, Brazil, Paraguay, and Uruguay have a harmonized trade system and a common external tariff.
/2/ Presidential Decree 7,660/2011, which approves the new harmonized IPI rate table was published in Brazil's official gazette on December 26.
/3/ The NCM consists of eight digits. The first six reproduce the harmonized tariff codes, while the seventh and eighth correspond to specifications endorsed by the Mercosur countries.
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Article originally published in the January 9, 2012 edition of World Tax Daily (Copyrights Tax Analysts)
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