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Foreign Trade
4.6 Custom Valuation
Brazilian custom valuation rules follow the methods laid down under the 1994 General Agreement on Trade and Tariff (AVA/GATT). Accordingly, the customs value should be based on the fair market value of the transaction (Method 1).
If the transaction value is not available, importers should rely
on the substitutive methods for custom valuation provided by AVA/ GATT, until reaching a suitable
one. These methods can be based
on comparables for identical or similar goods (Methods 2 and 3, respectively), on resale transactions (Method 4), on cost methodologies (Method 5) or on fall back/arbitration rules (Method 6).
4.7 Tax Benefits and/or Special Custom Regimes
Brazilian tax law provides for several tax benefits and/or special custom regimes, which allow the definitive or temporary imports and exports, as the case may be, with a reduced tax burden, specially destined to start-up activities or certain industry sectors in Brazil.
Thus, the election of the best regime should be made based on the specific facts-patterns of the project vis-à-vis the statutory conditions and requirements applicable to the relevant special custom regime.
Below we briefly describe few of the tax benefits and/or special custom
regimes provided in Brazilian law, but note that there may be other alternatives for tax optimization available.
4.8 REPETRO-SPED
REPETRO-SPED is a special customs regime which allows the temporary and/or definitive importation of listed equipment and assets that will be used in oil and gas exploration and production activities in Brazil up
to December 31st, 2040. Under the relevant regime, the Federal Taxes due on imports are suspended, and the State VAT (ICMS) exempted or reduced.
4.9 Temporary Admission Regime for Economic Use
Temporary Importation for Economic Use regime allows the Federal Taxes (II, IPI, PIS and COFINS) to be paid proportionally, at 1% per month of
the taxes due upon importation, according to the length in which the asset will remain in the country. Also, there are good grounds to sustain that State VAT (ICMS) is not levied on temporary importation based on the Brazilian Supreme Court (Supremo Tribunal Federal - STF) case law.
4.10 Infrastructure Projects Special Tax Regime (REIDI)
REIDI is a special tax regime that can be applied by companies developing the infrastructure of projects in the areas of transportation, ports, energy, sanitation, and irrigation. The regime grants PIS and COFINS suspension
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