Which are the export taxes? Know each one of them!

Tuesday, August 29, 2023

Which are the export taxes? Know each one of them!

When a company starts to grow and export products to other countries, the manager needs to pay attention to the requirements of this kind of commerce.


One of the fundamental aspects is knowing and keeping up to date with export taxes. After all, closing great deals on the foreign market isn’t enough. Everything must be done in accordance with the law, complying with the bureaucratic processes predefined by regulatory bodies.


For entrepreneurs who manage several other demands, in addition to the export strategy, correctly calculating the incidence of taxes can be a complicated task.


With that in mind, let’s make things simple. In this blog post, we gathered the main export taxes and present all the information you need, such as the chargeable event, tax rates, calculation for export and products subject to taxation.


To find out more, read on!


Import taxes: concept and application


Export taxes are regulated by the federal government and are levied on foreign trade operations, that is, on national or nationalized products intended for export.


Standardized by Decree-Law #1578, of October 11th 1977, export taxes can be paid up to 15 days after the date of registration of the declaration of customs clearance.


Export taxes are collected upon presentation of the Federal Revenue Collection Document (DARF).


Only after the discharge of taxes the company receives authorization to proceed with loading the products or start moving across the border.


To make control easier, proof of payment of export taxes must be handed to the person responsible for transportation and attached to the dispatch instruction documents.


In practice, we can say that the chargeable event for export tax is the departure of merchandise from the country


Tax rates and products with incidence of export taxes


As defined by law, the rate on export taxes is equivalent to 30% of the product’s value, that is, on the calculation basis. However, there are exceptions.


That’s because, in addition to products exempt from export taxes, the federal government can alter the percentage taxed, considering objectives related to foreign trade and exchange rate policy.


In case of an increase, the percentage can’t exceed five times the 30% of the general rule.


That is, as a rule, the maximum rate is of 150% on the calculation basis. The minimum is tax exemption, usually applied after analysis of the destination of exported products.


Tax rates are applied to a small group of products: Check out what they are:


  • Weapons and ammunition: 150% when destined for South American countries (except for Argentina, Chile and Ecuador) and the Caribbean;
  • Cigarettes containing tobacco: 150% when destined for South and Central America, including the Caribbean;
  • Bovine or equine hides and skins: 9%
  • Milk and cream, concentrated or containing added sugar or other sweeteners: up to 100%.


Calculation of export taxes: how to do it?


To calculate export taxes, the best way is to use Article 2nd of Decree-Law #1578, of 1977, as a basis:


Art. 2nd - The tax calculation basis is the normal price that the product, or its similar, would reach, at the time of export, in a sale under conditions of free competition in the international market. (Wording provided by Provisional Measure #2.158-35, of 2001)


But what would the normal price be? It’s the product’s value at the place of shipping. Usually, this information is registered in the “Total price at the place of shipping” field, within the Siscomex export system.


In some cases, it’s necessary to indicate the price in Brazilian Reais (BRL) for the tax calculation basis. It’s a simple process: just use the exchange rate available on the Brazilian Central Bank System (Sisbacen) on the business day prior to the chargeable event.


Tax incentives for product export


With the aim of promoting sales of Brazilian products in the foreign market, the federal government offers some tax incentives. That’s for entrepreneurs to feel excited and start launching their products in new markets.


Among incentives offered by the government, it’s worth singling out the different treatment for taxes listed below. They are:

  1. IPI - Taxes on Industrialized Products: industrialized products destined abroad are exempt from the levy of IPI.
  2. ICMS - Tax on Circulation of Merchandise and Services: the export of industrialized products is exempt from ICMS.
  3. COFINS: the company can obtain COFINS exemption on revenues derived from merchandise export, as long as they’re destined exclusively for export.
  4. PIS - Social Integration Program: when exporting products, the company is exempt from PIS.
  5. ISS - Service Tax: ISS isn’t levied on service exports to another country.


As we’ve seen, most taxes are exempt, immune or not levied on exports. In the list of products offered to foreign trade with zero taxes we have refined sugar, honey and ethyl alcohol.


As the volume of production of these items is large, the country generates a surplus, since there isn’t enough domestic demand. Hence the importance of the government exempting producers from export taxes, encouraging trade in the foreign market.


After all, in practice, the more the country exports, the greater the sales and wealth generated.


In addition to knowing the export taxes, it’s important for the manager to keep in mind which are the trading processes in foreign currency that must be respected.


On the other hand, it’s also necessary to know the impacts that can affect your business due to the exchange variation and currency conversion, especially if your product is eligible for taxation.


Therefore, it’s worth preparing before exploring new markets. Try to find out about foreign trade practices and strengthen your export strategy. 


Do you want to know more about this subject? Keep reading ASIA SHIPPING’s blog!