Identify the Best Implementation Strategy in Brazil

An implementation study allows you to evaluate the economic feasibility of your project in Brazil. We carry out cost studies for our clients to determine the return on their investment and establish the best implementation strategy to connect with the Brazilian market.

Our studies are part of the business plan and financial projections (Profit & Loss) developed for project implementation.

Costs and Fiscal Studies

Novatrade develops studies to meet several needs

  • Centralize the costs (taxes, logistics, structure costs, fixed costs, HR …) and sales projections to validate the gross product figures with an expert.
  • Know exactly how Brazilian taxation works and the calculation mechanisms for importation and resale duties.
  • Identify the state offering the best tax deductions and import fees to advise you on setting up an accounting regime.
  • Calculate your resale prices in Brazil, the profit margins as well as the breakeven point.
  • Assist in communicating a price (duty-paid) to your customers and compare your market position with the competition.
  • Figure out the recoverable taxes for the importer and verify the figures presented by your Brazilian distributors and resellers.
  • Set up a Brazil tariff grid corresponding to the sales typology with the appropriate ICMS percentage.

Types of studies carried out by Novatrade

In Brazil, you will have to deal with a complex tax and administrative reality with an array of taxes depending on the mode of commercialization. Our studies allow one to calculate the import and resale costs to determine your margin per product and net margins.

By comparing different import and resale scenarios, our studies help identify the best state(s) to set up a business in Brazil via a tax and logistics analysis. Note: in Brazil as each state has its own tax system it may be more lucrative to import via another state than the destination state.

Costs Studies

  • Import & Resale Cost Study in Brazil
  • Resale cost study to end users (including E-commerce)
  • Calculation of ICMS ST for resale to Wholesalers and Retailers
  • Study resale chain Finished Products (Importer => Wholesaler => Retailer => Final Customer)
  • Industrialization Cost Study (imported vs local material)
  • Cost Study of storage and distribution in Brazil
  • Preparation of Resale Price Grid in Brazil (state by state)
  • Study of import costs of software and hardware

Comparative Studies

  • Comparative study on importation vs local production
  • Compare direct import & import via trading (Conta e Ordem and Encomenda)

Fiscal Optimization Studies

  • Comparison and identification of the best accounting regime (Lucro Real & Lucro Presumido & Simples Nacional)
  • Analysis of the tax benefits proposed by certain states (Santa Catarina, Espirito Santo, Pernambuco …)
  • Studies of possible tax benefits for client’s project and analysis of the concession requirements

Financial Studies

  • Development and review of profit and loss statement (P&L), integrating all the costs of the Brazilian subsidiary (fixed costs and variable costs, operating margins and direct and indirect taxes),
  • Transfer pricing analysis, dividend upgrading and non-double taxation.

A Word About the Cost of Importing to Brazil

The cost of importing of a product is composed of logistical, operational and fiscal costs:

  • Commodity value
  • International transport
  • Import taxes (II, IPI, PIS, COFINS, ICMS) calculated in cascades
  • Operational import taxes (Siscomex, AFRMM)
  • Freight forwarding charges
  • Customs brokerage fees
  • Import licenses (if applicable)
  • Port of entry handling costs 
  • Port of entry storage costs
  • Bonded Warehouse (if used)
  • Technical Reporting Fee by Customs Certified Engineer (if applicable)
  • Local transportation 

A Word on Resale Price Formation in Brazil

In Brazil, for an exclusive tax value at the same margin, it is impossible to apply a single resale price at the national level, since the resale inclusive tax price will differ depending on the type of resale.

The formation of the resale price of a local or imported product is specific, a certain number of parameters modify the taxation rate and the resale price.

These parameters are considered in our costs studies:

  • Tax credits for tax purposes
  • Inter- or intra-state sales (percentage change in ICMS).
  • Impact of the typology of resale distribution, industrialization, use (variation of percentage of ICMS).
  • Impact of the tax system (Simple, Lucro real, Lucro presumido).
  • Buyer with or without ICMS tax.
  • Margin expressed in Brazil on a sale price inclusive tax.
  • Incorporation of local content in the finished product (change in ICMS rate)
  • End-user sales in person or e-commerce (impact on ICMS DIFAL percentage)

Our Studies Provide a Detailed look at Logistics Costs

  • Import state (port / airport of destination)
  • Import type (temporary or definitive)
  • Transportation type (FCL, LCL, Air)
  • Pick-up and FOB Specific charges
  • Incoterm
  • Type of container
  • Specific insurance
  • Clearance area (Bonded warehouse option)
  • Customs clearance days
  • Negotiation free time & demurrage
  • Number of BL, DI and LI
  • Extra-logistics costs

Novatrade Cost Studies Also Inform You if It’s Necessary to

  • Obtain import licenses according to the product(s)
  • Register the importer with Brazilian regulators (ex: ANVISA, MAPA, ANP …) allowing the sale of the product(s) in Brazilian territory
  • Register the product(s) with Brazilian regulatory bodies (eg ANVISA, MAPA, ANP …) to allow importation and marketing in Brazil

Some Examples

Comparison Between Sao Paulo, Paraná and Manaus (Zone Franche)

Operation: Import, processing and future retail to wholesaler and retailer
Company: METALOR

Comparison Between Direct Import and Import via Trading

Operation: Import and resale to large retailers
Company: DANONE

Comparison Import Finished Product vs Local Manufacturing

Operation: Local import / manufacturing and resale to large retailers
Company: IPO

Study of Resale Costs After Local Industrialization

Operation: Import and local purchase of raw material, industrialization, and local resale to car manufacturers
Company: GROUPE COURBIS

Comparison of Implantation and Importation Between Sao Paulo, Santa Catarina and Espirito Santo

Operation: Import and resale to wholesaler and specialized networks
Company: MACOPHARMA

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