Oliveira Souza

The new regulation on Drawback: expectations of simplification, competitiveness for domestic companies, and economic recovery.

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The new SECEX Ordinance No. 44, dated July 24, 2020, will come into effect on August 17 of the current year. Consequently, the regulation that consolidated the rules of the Drawback Customs Regime – SECEX Ordinance No. 23, dated July 14, 2011 – undergoes changes.

According to Lucas Ferraz, the Secretary of Foreign Trade at the Ministry of Economy:

“Drawback is a regime that not only contributes to the increase in the country’s export volume but also to the diversification of our export portfolio, known as the extensive margin of international trade. With the implemented changes, we aim to eliminate unnecessary transaction costs, creating incentives for more companies, especially newcomers to international trade, to use the regime.”

Meeting the needs of Brazilian operations to a large extent, the noteworthy advancements are:

A new approach to control and granting the special customs regime, focusing on the quantities involved in the operations, aiming to reduce costs and facilitate the entry of new companies into the Drawback regime;
A clearer delimitation of the different types of Drawback customs regimes (Suspension, Exemption, and atypical), harmonizing with the provisions of other regulations;
The removal of the possibility of considering the mere fluctuation in input acquisition values or export values of resulting products as non-compliance with the customs regime rules, compared to those initially projected;

Updating SECEX’s export regulations, consolidating the export process review promoted by the Single Foreign Trade Portal.

This simplification has the potential to be an important step in making Brazilian companies more competitive in the international market by allowing greater access to Drawback practices and benefits.

To illustrate, here are the numbers from 2019:

Exports with Drawback: US$ 47.9 billion – 21.6% of the total exported by Brazil;
Imports with Drawback: US$ 6.2 billion – 3.5% of the total imported by Brazil;
Domestic Market with Drawback: US$ 935.3 million – 13.1% of the total inputs.

According to the Ministry of Economy, Drawback supports the export of approximately US$ 50 billion annually. Therefore, the expectation is that the recent regulatory updates can promote greater competitiveness for national products and consequent economic growth.

Sources:

  1. https://www.gov.br/economia/pt-br/assuntos/noticias/2020/julho/ministerio-da-economia-publica-nova-regulamentacao-sobre-regime-de-drawback
  2. Special customs regimes are exceptions to the rule of paying taxes on imported goods and products, as determined by the Federal Revenue Service, attached link: http://www.receita.fazenda.gov.br/historico/srf/boaspraticas/aduana/Regimes.htm#:~:text=Os%20regimes%20aduaneiros%20especiais%2C%20em,al%C3%A9m%20da%20possibilidade%20de%20tratamento
  3. http://www.siscomex.gov.br/wp-content/uploads/2020/07/202001.pdf
  4. http://www.siscomex.gov.br/governo-abre-consulta-publica-sobre-nova-regulamentacao-para-drawback/