Population:  184.2 million

Area: 8,515,000 sq km

2006 GDP* (US$bn): 966.8

Real GDP Growth* : 3.6 per cent

GDP per capta (US$)*: 5,177

Inflation:* 4.5 per cent

Principal trading partners:USA, Argentina, Netherlands

(*IMF forecast)

Brazil has undergone a significant move towards modernisation and a reduced role for the government in the economy. This change was driven principally by a more liberal trade regime, deregulation and privatisation of state companies.
São Paulo is the most developed state financially and industrially, and accounts for 45 per cent of Brazil’s GDP. Following São Paulo, the next most developed states in Brazil are also in the south and southeast regions, and include: Rio Grande do Sul, Santa Catarina, Paraná, Rio de Janeiro, Minas Gerais.

Political climate

Bazil is a federal republic comprising 26 states and a federal district (Brasilia). The political climate is stable, with a government that welcomes foreign investments. The three tiers of government include Federal, State, and there are over 5500 municipal councils.

Trade relations and statistics

Brazil, Argentina, Paraguay and Uruguay have formed the Southern Cone Common Market (known as 'Mercosul' in Portuguese). Chile and Bolivia have also special trade agreements with the member countries. Under the treaty agreement, tariffs are being lowered gradually to reach zero on practically all products.

Mercosul represents a market of almost 200 million people with a combined GDP of more than US$1 trillion. Brazil accounts for 67 per cent of all goods and services produced within Mercosul.

Brazil also belongs to the World Trade Organisation and is holding conversations to integrate the Americas Free Trade Zone.

Major Australian exports to Brazil (2005-06):

• Coal – A$508 million
• Nickel – A$17 million 
• Medicaments (including veterinary) – A$17 million
• Passenger motor vehicles – A$11 million

Major Australian imports from Brazil (2005-06):

• Animal feed – A$71 million
• Telecommunications equipment – A$58 million 
• Pulp and waste paper – A$51 million
• Pig iron – A$48 million

(Source: Department of Foreign Affairs and Trade - Country economic fact sheet)

Tariffs and regulations

Import restrictions

Free unless otherwise informed by SISCOMEX in the 'Tratamento Administrativo' section. SISCOMEX (online system to register exporters and importers, supported by the SECEX - Foreign Trade Department, Federal Tax Department, and Central Bank of Brazil).

Pre-import licence products have up to 60 days to proceed with the shipment. Merchandise must be on board the carrier prior to expiry date of import licence. Some imports are subject to quota or to special requirements.

Tariff

All products exported to Brazil are taxed by an import tax (unless otherwise specifically exempting the product from such payment). The key points to note about the import tax include:

• It is levied on the customs value.
• The customs value is generally assessed based on the transaction value and that coincides with the cost, insurance and freight (CIF) value.
• The import tax rate is selective and depends on the product's tariff classification.

Special preferences granted on a wide range of items imported from member countries of the Latin American Integration/Development Association and, in particular, from Mercosul member countries (Argentina, Uruguay and Paraguay).

Products manufactured or exported to Brazil are classified under the Mercosul Common Nomenclature (NCM) classifications. It is important to check the sub-classifications as there is a wide variation of import tax rates. Companies called ‘despachantes’ provide a valuable service by doing this check.

Most duties are ad valorem, based on the GATT Valuation Code (approximately CIF value) (Incoterms 2000).

The drawback regime is an incentive for exports introduced by the Brazilian Government. The requirement for requesting the regime is that the finished product that has been manufactured in Brazil and then exported has used some parts and pieces that have been imported into Brazil. This presents opportunities for Australian exporters in all industries.

If you would like to find out about classifications for both product tariffs and the NCM, Austrade São Paulo has an offline subscription service to get updates as well as any new information on the drawback regime.

It is important to note that Brazil requires special labels for toxic and food products that need to be addressed when exporting.

Packing, marking and labelling

In accordance to the product shipment specification.

Weights and measures

The metric system. 

Insurance

Insurance must be obtained through a Brazilian firm registered in Brazil. Agents will advise exporters in this regard.

Methods of quoting and payment

Quotations should be FOB and C&F (Incoterms 2000), ex-works, Brazilian port, in US dollars. Payment terms can be in advance, collection (payment terms are freely negotiable, averaging 360 days), with or without a letter of credit coverage

Public health requirements

In accordance to the product shipment specification.

Documentation

Documentation required include:

• Commercial invoice
• Bill of lading
• Certificate of origin - if a product is eligible to special multilateral agreements

Taxation

Foreign-controlled companies and foreign residents generally receive the same treatment with taxation in Brazil as local companies and residents.
 

The Industrialised Products Tax (IPI) is levied on most goods and is applied on the duty-paid value. The most common rate is between 10 per cent and 20 per cent, assessed on the duty-paid value. However, certain goods, such as alcoholic beverages are subject to rates of up to 150 per cent (tariff 20 per cent + IPI 130 per cent).
 

Merchandise and Services Circulation Tax is also levied and varies from state to state. In Sao Paulo, for example, it is 18 per cent levied on the aggregate of the duty-paid value plus the IPI.

Merchant Marine Commission of 25 per cent of freight cost.
 

Warehousing charges begin at one per cent for five days and increase progressively up to 1.5 per cent for each period of 10 days after 20 useful days of storage.
 

Port and dock charges vary based on the types of goods and their FOB value (Incoterms 2000), rates range from 3 per cent to 12 per cent.
 

SISCOMEX Fee: fixed fees in Reals for each import declaration, averaging US$20.

A bank charge must be paid at the Bank of Brazil. The rate averages US$50.
 

Clearance agent's charge of two per cent, levied on the CIF value (Incoterms 2000).

Bank fees covering letter of credit emissions and document handling may reach three per cent of the FOB price.
 

Imports into the Free Trade Zone of Manaus (State of Amazonas) are exempt from import duty.

Time

Brazil is 13 hours behind Australian Eastern Standard Time (AEST). There are two main time zones in Brazil. The exceptions are the states Rondonia, Amazonia and Acre, which are 14 hours behind AEST.

To find out the current time in Brasilia, view the World Clock.

Public holidays

January 1 – New Year's Day
April 21 – Tiradentes Day
May 1 – Labour Day 
July 9 – Civil Holiday (São Paulo State only)
September 7 – Independence Day 
October 12 – Our Lady Aparecida 
November 2 – All Souls Day 
November 15 – Proclamation of the Republic 
December 8 – Immaculate Conception (Some rural areas) 
December 24 – Christmas Eve (Half day)

More information visit Austrade:Brazil Profile