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  • Writer's pictureKeila Vitola Druzian

Formal Import and Courier Import: what are the main differences?

Many companies are born with the intention of importing products, but their administrators start this project without knowing that there are two modalities: Formal Import and Courier Import.

Therefore, in this article we will show a little of these two modalities, the main differences and when to use each one.

What is Formal Import?

Formal Import deals with the movement of goods between countries observing the rules established by the importer's country, bringing more complexity and bureaucracy to the importing process. In this modality companies/importers need to have qualification in the current SISCOMEX Radar.

In addition, the goods must go through the Customs Clearance process, which requires the hiring of customs broker to carry out the procedures before the Brazilian Internal Revenue Service (RFB).

What is Import via Courier?

Import mode by air that arrives in the country on an express basis and is limited to USD 3,000.00.

It is popularly known as Import via Courier, but the correct name is Express Shipping (Remessa Expressa in Protuguese).

This type of Import includes goods or documents arriving in Brazil transported by the Post Office or by private international express transport companies, also known as Courier Companies.

In Express Shipping the process is less bureaucratic, Customs Clearance is simplified, and, in addition, the importer does not need to be enabled on Radar.

Taxation in the Formal Import or via Courier.

We have reached the point that every importer needs to analyze in detail.

Formal Import Taxation.

The taxation of Formal Imports is based on the NCM used in the process.

The Mercosur Common Nomenclature (NCM) is fundamental to determine the taxes involved in foreign trade and outflow operations of industrialized products. In addition, NCM is the basis for the establishment of trade rights, and is also used under the ICMS, customs valuation, import and export statistical data, the identification of goods for the purposes of special customs procedures, administrative procedures, import licenses, etc.

Therefore, each NCM defines the percentage of taxes, which are:

  • Import Tax (II);

  • Tax on Industrialized Products (IPI);

  • Social Integration Program (PIS);

  • Contribution to social security funding (COFINS).

In addition to the taxation of 2 other items that are not defined by the NCM, but that will be charged:

  • Siscomex Utilization Fee;

  • Additional to Freight for the Renewal of the Merchant Navy (AFRMM); and

  • Tax on Circulation of Goods and Services (ICMS).

ICMS rates vary by State and type of imported product.

Import Taxation via Courier.

In Import via Courier, taxation is simplified: 60% Import Tax on Customs Value should be applied (= merchandise + freight + insurance), and there will also be incidence of ICMS (varying according to each State, equally).

It is important to remember that the calculation in this import modality is the same, regardless of the NCM and, moreover, there is no application of special customs procedures.

Logistics efficiency of Formal Import and via Courier

Surely logistics efficiency is not defined only by the option between Formal Import or Courier, but by planning. Based on the assumption that your planning is, we can understand how logistics works in both modalities.

The logistics of Formal Import.

Decided by Formal Import, we need to simplify how logistics will be. At this stage it will be necessary to check the legal requirements and administrative treatment that falls on the product you want to import and choose the type of shipping modal.

Assuming that the choice is by air modal, once the goods are shipped it is necessary to monitor the landing and the procedures of the Customs Clearance, which are made by the hired broker.

At this stage of the Customs Clearance happens the registration of the Import Declaration and the payment of taxes, parameterization and, being all "OK", the release.

Note: In case the product to be imported is subject to the approval of some regulatory body (the famous LI), it is necessary to observe the requirements as to the time of shipment. For automatic LI, boarding can take place before the LI approval, in the case of a non-automatic LI, the shipment cannot be made before the approval. The deadlines for analysis and approval also vary: 10 days in the case of automatic LI and 60 days in the case of non-automatic LI. For more details visit SICOMEX website.

After release, you must issue the invoice (Nota Fiscal in Portuguese) and then trigger the company (which should already be on notice) that will transport your goods from the airport to the final destination.

The Customs Clearance of Formal Import may occur on the same day of the registration of DI, however, in some cases more days may be necessary, depending on parameterization or if it depends on customs transit, before registering the DI.

The logistics of the Import via Courier.

Now, deciding by Import via Courier, logistics begins by choosing a company that offers this service and, among them, there are some that offer door-to-door service facilitating, simplifying the life of the importer.

In Import via Courier, the contracted company carries out international transport, takes care of the procedures of the Customs Clearance of Express Shipping and carries out local transport, after the arrival of the goods at the airport.

If there is no questioning on the part of the RFB (Brazilian revenue authority), especially about the value of the goods and its description, it is virtually impossible that importing via Courrier takes longer than the Formal Import.

Product Limitations of Formal Import and Courier

This should be the biggest question when choosing between Formal Import or Courier and you will need to understand the limits before importing.

Limitations on Formal Importat

In Formal Import there are some limitations according to the Radar modality in which the importer is enabled, in addition to some types of products.

Value limit according to Radar:

  • Limited License: Operations up to $50,000 per semester or operations between $50,000 and $150,000 per semester.

  • Unlimited Qualification: Granted to companies that intend to operate import amounts above US$ 150,000.00 / semester.

  • Express Enablement: There is no limitation of values but is intended only for certain types of company.

On the other hand, on the limitation of products, the legislation says:

The imported goods prohibited in the form of the specific legislation shall be seized, in the name and order of the Minister of State for Finance, for the purpose of applying the penalty of foregoing

However, there is no list defining what these products are, they are described in different articles of the Customs Regulation and others in some specific standards. But to name a few, we can mention:

Counterfeit products; hazardous solid waste and tailings whose characteristics cause damage to the environment, public and animal health, or plant health; cigarettes of brands other than those marketed in the country of origin.

Import Limitations via Courier

The list of limitations in Import via Courier is extensive, so a good query is required before importing. Let's detail below some of these limitations:

  • Value: USD 3,000.00.

  • Purpose: It is not allowed to import for commercial distribution purposes!

  • Weight and volume: limitations determined by each Express Shipment company.

  • Products: prohibition of importing IMO cargo (dangerous cargo – explosives, gases, liquids and flammable solids...), firearms, ammunition and all and/or any product that requires import license.

Customs Bureaucracy of Formal Import and via Courier

Bureaucracy tends to be one of the most heard words in Foreign Trade, and in these import modalities would be no different.

Bureaucracy in Formal Importation.

We have already cited that Formal Import is more complex, and here we need to say the obvious: it is also more bureaucratic, because it allows you to import various types of products, in addition to the amount and weight you need, so the details are many.

To begin with, in addition to enabling the Siscomex Radar, the importer will need to rely on a professional company to help him (such as a Customs Broker or Trading Company).

Bureaucracy in Import via Courier.

Importing via Courier can be simpler and faster than Formal Import, but that does not mean it's not bureaucratic.

The importer must not forget to analyze the bureaucracies involving the limits of values and products, in addition to size and weight.

However, to import via Courier does not require qualification on Radar, and it is the Courier company that will take care of customs clearance procedures.

What do we do?

Both the Formal and Courier options will be more or less appropriate, depending on each case, will depend on the type of product, physical characteristics and purpose of the Import.

For example, we import via Courier to reset parts under warranty and receive samples, however, if you wish to import to resell, this is only permitted by formal route.

Our suggestion is that as an importer, since day 1, your company trades with one or more Courier companies. This shows seriousness in relation to exporters, besides being extremely useful and giving flexibility to your day-to-day operations.

Different Courier companies have different procedures depending on the country of origin of the goods, and the exporter may have preferences, or even refuse to use a particular company.

A concrete example that we experienced during the beginning of the pandemic in 2020 was the establishment of additional procedures for the shipment of PPE from China and that were more restrictive when shipped via DHL, so many companies refused to board using their services, giving preference to competitors.

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Were you in doubt about the subject? Need help performing these types of Imports? Contact us, we can help you!

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