Brazil approves facilitated access for small exporting businesses to duty drawback

A recent decree from Brazil’s Ministry of Development, Industry, Trade, and Services (Secex-MDIC), issued on Wednesday (7/2), aims to streamline the drawback regime for small manufacturers exporting through specialized foreign trade firms, including trading companies.

The drawback exemption allows Brazilian companies to request an exemption from federal taxes on imported goods or those purchased domestically to restock inputs used in the production of exported items. In 2023, this tax benefit helped companies replenish approximately US$ 4 billion in raw materials and intermediate products.

Previously, proving such indirect operations in the drawback exemption required submitting customs documents issued by commercial export companies. This process posed challenges for small manufacturers who relied on these intermediaries for external sales.

With the recent decree, small producers can now access the regime by simply presenting sales invoices to Secex from the commercial companies handling the exports. This change eliminates the need to provide information from customs declarations processed by the Federal Revenue. The new measure takes effect on March 1st.

Secex estimates that this initiative could benefit around 30,000 local producers, indirectly impacting 22% of Brazilian exports, with the agribusiness sector expected to benefit significantly.

According to Tatiana Prazeres, Secretary of Foreign Trade, the new rule aims to facilitate trade and reduce compliance costs for private operators, aligning with the government’s objectives.

In her words, “This change will streamline the use of drawback exemption for small domestic producers involved in the export chain, cutting bureaucracy and expediting processes. It ultimately encourages greater participation of small businesses in foreign trade, albeit indirectly.”

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