NCM stands for “Nomenclatura Comum do Mercosul” (Mercosul Common Nomenclature). It is nothing more than a 8-digit code that defines any and all good that circulate in Mercosul countries.
When importing, exporting, or even moving goods within the internal market, the NCM is an essential code to regulate operations. Therefore, it is essential for International Companies to understand how this code works and influences transactions before thinking on exporting to Brazil. Thus, the operation will be in accordance with the legislation and regulations, and in this way we will avoid any fine or assessment falling on your business.
Through this codes, the products are determined and classified, having their characteristics and particularities presented to the Brazilian government. NCM controls and identify all goods imported or purchases nationally, for the taxation of these transactions. Through the NCM, the merchandise is classified according to the Mercosur norms and if it contains an error, your company runs the risk of being fined.
It is important to note that the NCM is based on the Harmonized Commodity and Coding System (HS) and its HS Code but is more specific. Indeed, the HS system only use 6 digits to classify its products while the NCM system takes – in most of the time but it should be taken as a rule – the same 6 digits and adds a layer of 2 other digits to get more specific classification.
The identification of your customs codes in Brazil is one of the most important steps while exporting because it will help you start faster and costless. Failures in completing the classification can result in fines and delays in customs clearance. Therefore, assertively framing the goods within the codes is an extremely important procedure and must be done with caution, as it may interfere with the final costs of the operation.
There are currently 5 different import duties and taxes (II, IPI, PIS, COFINS, ICMS) that need to be considered for each NCM.
Making the correct NCM classification is the first essential step before thinking to export to Brazil.
It will determine the taxes involved in import and export operations (II, IPI, PIS, COFINS, ICMS). It will also define whether the import and export process will be classified under a special customs regime, such ANVISA for health-related product or MAPA for food-related product, and whether there will be any tax reduction possible during the nationalization process, such Import Duty exemption Ex-Tarifário.
In addition to providing agility in customs clearance and avoiding dubious and generic classifications that generate fines, delays and excessive costs.