How to calculate Brazilian import costs

You must also read: Common doubts about creating a Brazilian Import Company

UPDATE FROM APRIL, 2013: There has been a slight decrease in Brazilian import costs. Please check: How much cheaper are Brazilian imports after the supreme court tax decision. Otherwise, the info below is still valid.

UPDATE FROM FEBRUARY, 2015: There has been a general increase in taxes. The info below does not reflect that. 

Every now and then people ask me how to calculate Brazilian import costs

Unfortunately, there is no easy answer for that.

Basically, the main costs are due to a series of additive taxes, namely:

Import Tax (II) - Which goes over the CIF price. To find the exact rate, one should check the HS code of the goods, according to the Mercosul tax classification, called NCM. The classification is basically the same, but there may be important differences. The full table may be downloaded at http://www.desenvolvimento.gov.br/portalmdic/arquivos/dwnl_1301080792.xls

Tax over industrialized products (IPI) - Which goes over CIF + II

The full Table of IPI rates may be found at http://www.receita.fazenda.gov.br/aliquotas/downloadarqtipi.htm

State Tax over the circulation of products (ICMS)

This is a kind of VAT, stablished by the estates. The  estate to which the goods are being imported will set the exact rate. The maximum rate, however, is 18%.  It is calculated over CIF + II + IPI + PIS/Cofins.

PIS and Cofins on import operations .

Those are federal contributions to the social security system. The usual rates are, respectively, 1,65% and 7,6%, although subject to many exceptions, both upward and downward. The calculation base is CIF + II + IPI + ICMS. The calculation of this tax is specially tricky and demands a mathematical formula.

IOF - This tax does not apply properly to import operations, but to all currency exchange agreements. Since most import operations will result in a currency exchange contract (e.g. Dollars to reais, or Euros to reais) , this tax will eventually be noticed by the importer. The usual rate is 0,38% of the contract value.

AFRMM.

Finally, apart from the taxes above, there is the contribution over the international freight, for the renovation of the merchant marine corps, or AFRMM.

As the name says, this contribution is calculated over the cost of the international freight, always at the rate of 25%. This contribution is unrelated to the other ones listed above.

To give readers a more solid idea of how to calculate these taxes I have made an automated spredsheet available at https://spreadsheets.google.com/ccc?key=0Ak-

xhn4MLJ9ldFR3TTNvRnVhNWNwQTZzOVoydjJ1YVE&hl=en#gid=1. 

 Please note that its purpose is to serve as a reference and not as a legal consultation. Also, keep in mind that I have not taken into consideration any of the tax exemptions or bureaucratic  pitfalls that may happen in a real life situation.

I hope you may contribute with your comments, so that I can go further in this theme.

UPDATE FROM APRIL, 2013: There has been a slight decrease in Brazilian import costs. Please check: How much cheaper are Brazilian imports after the supreme court tax decision. Otherwise, the info below is still valid. 

Please also check: Exemption of import tax for machinery - Import permits for electronics and drugs