Why are import taxes so high in Brazil?

Some of duties/taxes on many items are quite punitive, also much has been said of brazil being a industria de multa venue,or a fined crazed country, best to research as much as possible.

Yep, I had a feeling it would be very high import fees, but I needed this so had no choice. It’s an electronic item. Turns out the product value is actually 150 usd, the shipping was 34 usd. So 200 usd import tax, on a 150 usd value item.. crazy!!

Because Brazil has high taxes to pay for their public health system (which isn't the best but better than what we have in the U.S., which is nothing), to pay for their federal university system (students who are admitted to this system study in the best universities in Brazil for free) and to pay for things that we don't get in the U.S., like more benefits for retirees. Speaking of retirees, the public civil servants who retire in Brazil take up more than half of the Brazilian tax dollars, similar to how the U.S. defense budget takes up over half of the U.S. budget. The highest paying jobs in Brazil are the public civil servants and this eats up a lot of their tax dollars, made worse by the fact that it is almost impossible to fire a public servant. They also retire younger than other Brazilians. Then there is corruption at all levels of government who have their hands out, including the former president Lula da Silva (2002-2006) who is currently running against Jair Bolsonaro (current president) and has a very good chance of winning in October.
In summary, Brazil is absolutely not a tax-friendly nation. Income taxes are typically 27.5% and sales taxes are 17%. Important taxes are essentially, as you noted, 100% or more of the price of the import. My Toyota Prius would cost $60,000 in Brazil (I paid $32,000 in the U.S.).
What is really sad is the average Brazilian who is not a public civil servant doesn't make enough to pay for the good life that expats often enjoy, which doesn't help relations much when we move there. Sorry to be so blunt, but it is what it is.

Bureaucracy, taxes,fines,poverty,not nirvana,nice place if u got some dough,greatest food on earth.

03/04/22

JosephJJ

Good answers so far.  I would summarize that there are at least three main reasons, none of which are going to change anytime soon, because they continue to enjoy broad support from politicians across the entire Brazilian political spectrum.

1. Protectionism.  This is one of the most closed economies in the modern world.  Brazil and India are world leaders in protecting their domestic industries, and are mutually reinforcing in the WTO.  Portuguese-speaking countries get some breaks, as do members of Mercosul -- but only when it works to Brazil's benefit.  A few years ago, the very successful free trade agreement in auto parts between Brazil and Mexico was almost canceled because, for the first time since its inception, the balance of trade shifted in Mexico's favor.  Only fast footwork and concessions on the part of the Mexicans saved it.

2. Massive dependence on indirect taxation.  A basic principle of taxation in the United States is that taxes should be highly visible, so that the citizen knows where the pain is coming from.  Brazil follows the opposite philosophy.  Direct taxation on individuals is relatively light (although not on businesses, which is another problem) -- the income tax only affects a small minority of the population, and property taxes are generally low.  All levels of Brazilian government fund themselves mostly through indirect taxes; states and municipalities also depend on federal grants, which in turn depend on indirect taxes.  The ICMS, the value-added tax that is the main source of funding for the states, ranges from 17% in Acre to 20% in Rio de Janeiro -- a big bite at every step of the supply chain, and only the biggest of several.  Most Brazilians complain that taxes are too high, but have no idea how much they're paying, or to whom.

3. Tax-on-tax.  For the most part, the indirect taxes are applied in a very particular order, so that each tax becomes part of the tax base for the next tax in the chain.  So on the product you just bought, the "II", the actual customs duty (which may have been reasonable because it's the one that the WTO really looks at) was applied first.  After that, almost undoubtedly the "IPI", the tax on industrialized products, was applied to the total of the purchase price and the II; that one can easily reach 100% on its own.  Then, a variable series of smaller federal taxes and special charges was probably applied to that total, and added to the base.  Finally, the ICMS was applied to THAT total.

You can understand why expats avoid importing anything, and keep lists of things that they want to buy on their next visits abroad.  Amazon US is good, because they at least understand the taxes, and make sure that they're covered upfront.  They even refund any extra that they estimated and didn't have to pay.  You want to avoid buying from companies unaccustomed to shipping to Brazil, or you can end up with a package stuck in Campinas Customs, where most international air shipments go, and no way to get it out -- that has happened to me.  To buy electronics closer to home, a visit to Foz do Iguaçu with a day trip to Ciudad del Este, Paraguay, can be rewarding.  You have to be sure to go only to the reputable stores (there are travel agents who make their living taking care of that point), and need to be aware that warranties for items bought in Paraguay (or anywhere abroad) are not generally honored in Brazil.  Also, Brazilian Customs does a 100% luggage inspection in the Foz airport.  This is mainly to catch professional smugglers, but occasionally they may pick up the odd tourist, too.

I deduce that some Brazilians travel 2 the usa,bring back as much merchandise as possible,and get a discounted vacation because  of the aforementioned circumstances,if they dont go overboard, might work out

Crazy, ain't it? That's why I save any purchases over $50 for when I leave the country. Obviously in your case, you say you needed it, you couldn't do much about it, but it's seriously a joke paying over the original cost of the thing you bought.

Kind of lucky that I live next to Paraguay where I can normally find most things for a reasonable price and just cross over with it.

Hi, yes, I do know why import taxes are so high in Brazil. I'm an International Development graduate. It is a very interesting and complex question. Though I do not have my notes with me, I can illuminate the question somewhat.

Brazil is the world's largest domestic 'inwards facing' economy. This basically means almost all of Brazilian commodity production is consumed within Brazil and imports of day-to-day goods are weak compared to other nations. Many companies (especially car companies such as Jeep) for this reason manufacture within the country, as the economy is protectionist.
When the Great Depression hit in the late 20s, Brazil was a relatively stagnant economy, with poor structures and institutional sophistication. This continued into the war period, where export markets were much weaker. Following the war, Brazil started to move towards a policy of Import Substitution Industrialisation - basically an economic policy of importing all the equipment needed to kick-start the economy mainly based upon extraction, e.g., the equipment to drill for oil. Between 1965-1973 under the dictatorship, annual growth in manufacturing was high at 12%. The average GDP growth in Latin America at this time was burgeoning, at an average of 3.6%. The large population surplus was a big help. However, this growth was during an autocratic regime, where the populace was forced to produce even if demand lagged behind. While the ISI policy helped the nation in many respects, it modernized traditions of heavy corruption, widened uneven development gaps, and created an economy in which it was far too reliant on exports. Products were too hard to sell domestically as poor inclusion continued, with low incomes and low diversity of needs in the market. This all came to a head in the oil crises of 1973 and 1979(?) Which anyone who remembers the crisis during the carter presidency will closely recall. When the oil crash came, this resulted in less money to spend on technology imports for production output, and this destroyed an already fragile system. Now delinked from international economic productivity, protectionist measures for businesses (such as many being state owned or exclusive monopolies) drew out market heterogeny, which is still a huge issue today. Brazilian goods became too artificially protected, and therefore not competitive enough, combined with being too expensive to produce and to buy, worsened by state corruption. This is when you could get into many interesting theories that sprouted up in reaction under dependency theory, that is a very important theory to understand the general South American psyche over international state and market power.

From that point on, especially with the fall of the military dictatorship in 1986 (I think it was that year), the market had to become more and more domestic to protect its industry. This has created strong buying to a certain degree, again because of the huge labour and populace surplus in Brazil, but has also meant that the price of cheap products is dependent on the continued low wages of those who manufacture them. Combined with currency volatility, and a low ease of business as stated by the Global Development Index, Brazilian products are often simply not competitive overseas, and it is difficult to attract foreign businesses. This is why import taxes are high, because the fragile economic system still depends on being in a bubble away from the international system. The economy, other than in primary extraction of oil and minerals, has effectively been in limbo since the 80s. This can't change unless if the market heterogeny, monopolies, corruption, oligopolies, and labour rights are sorted out - and that's a whole other much more confusing issue.

03/04/22

boombop4477 wrote:

I deduce that some Brazilians travel 2 the usa,bring back as much merchandise as possible,and get a discounted vacation because  of the aforementioned circumstances,if they dont go overboard, might work out

Yeah, when I used to travel on business, I saw a LOT of seemingly empty suitcases on their way to Miami and Orlando with Brazilian families in Guarulhos and Confins.  I doubt that they came back empty, though. 

I have to say we are one of those 4 suitcase people. WIfe, clothes. myself food items.
We always have to go to the scales to weigh our bags and rearrange our bags.
As to electronics, they have flagged the majority of the time and a minimum of 60% duty is applied.
Now I always declare items, but many times with a CRNM I have no issues.

I really enjoyed the responses to taxes. I learned quickly to try to pay in USD and get the items discounted.
We have 2 duty-free stores here in Foz and are allowed a $500 per day exemption on purchases. This saves us from crossing into PY if the DF stores have what we want.

OMG! So I have always heard about Paraguay being a good place to buy "cheap stuff" but I guess that was 30+ years ago. I just found a site which looks like some kind of directory to products in Paraguay (Compras Paraguai). It links to the stores where the product is [supposedly] available and I'm finding products that are on my list-of-stuff-to-get-in-the-states at comparable prices.

Last time I visited there was no Ponte Tancredo Neves (opened in 1985) so we took a fishing boat to buy leather goods in Argentina and the Ponte da Amizade to Ciudad del Este led to a much less modern city.

So I jumped on to Google Maps to get a streetview of the store.  Dang! Things have changed.

So my question - possibly to Texanbrazil - you can buy stuff there and bring back to Brazil without any import fees? - (except over U$500)?

Could be time to visit Foz!!

Last couple of years, Vale SA and Petrobras have both been printing money like its going out of style, bringing in huge profits for the country.  I surely hope that some of that money is allowed to go to work expanding operations .....
There is a new nickel mine opening up in Itagiba, Bahia, trying to finance their infrastructure with a trickle of initial production ....the price of nickel has been skyrocketing because its the largest element by weight making up electronic vehicle car batteries, and now because Norilsk, worlds largest nickel miner, has been shuttered by the Russian sanctions.....  I keep writing them asking for information but they won't talk with me....Yamana's gold mines in Jacobina have also been able to greatly expand operations recently......then, Brumado's manganese and Caetite's uranium are still significant too.....

mberigan,
Legally you are allowed U$ 400 of merchandise w/o tax.
That said if you have just a couple of bags of merchandise many times you are not stopped on the BR side.
Personally, I bought a charbroil gas grill from the BR site U$ 1,5500. Charbroil said they can ship or take confirmation to Paraguay and pick it up. I was concerned but I did pick it up in Paraguay (the big box took up all the back of the SUV so not hidden from view) I was never stopped.
It is hit and miss. They like to stop taxis. If your items are smaller, walk across the bridge, and should be no issue.
I will say, pre-covid, the wife went every Sunday to the large stores that are open on Sundays and never stopped.

Never stop at small shops especially those with people standing outside to entice you to come in a shop! All sell fake stuff. Big shops like Shopping China, Paris shopping are legit and have many different items from food to electronics. Cell Duty-free ( now one in Foz) has duty-free items.
Foz duty-free shops same items and $500 U$ per day duty-free.
Some on this site have gone purchase items with no issues.
I go for spices. Pre covid these shops can import almost anything. Today I call ahead and they state many items cannot be imported. ( due to they do not have enough cash on hand to buy in bulk.)

Many from SP to shop in CDE. Some were sold, fake items by pirates! CDE does have a special policia dept for deceptive practices, and many have gotten their money back. (It takes a while in CDE and you have to stay and walk with the polica to the shop)

Let me know what you are looking for and maybe I can guide you,

03/06/22

When we went in 2020, just weeks before the pandemic, Customs was doing a 100% x-ray of all luggage departing Foz on domestic flights.  Our purchases were small and unobtrusive, and we stayed cool and weren't hassled.   As I said above, I think that they're mainly looking for smugglers for resale, but they'll see and question anything big and obvious.

Yep, the airport here in Foz always perform a baggage scan before you even show your boarding pass to check for electronic or other items that are intended for resale. I've been through many times and seen people pulled over to the side with 10 iPhones that were stopped and most likely confiscated as I am sure the person wasn't going to spend 60%+ more of the price of the phones to get them back.

Most recent flight was mid February, and a lady was off to the side with her suitcase being CUT open from the inside. Thought it was a little extreme but then found a news article from the city a few days after saying she as caught with 2.5kg of cocaine!

Off topic, but yeah, they will stop you with anything that doesn't appear to be personal use from what I know. We also have friends who have a small "business" of going to Paraguay to buy popular electronics and they bus it back to SP to sell at a mark up. They also have the constant threat of the bus being search at checkpoints leaving Foz in all directions for the same reason. They also had some items confiscated pretty recently but luckily not one of their bigger ones!

Like Texan mentioned, you can take an allowance over with you, but if you are like most people, you just get what you want and risk the crossing. We've done it many, many times and never once been stopped yet. That said, I did pick up a pretty nice 5.1 JBL surround sound system from a charity auction in Foz that was only selling items confiscated from Paraguay, so they are getting a reasonable amount of stuff haha.

Here is news from last week:
1000 lbs of guns sized crossing the border.

La Clave newspaper reports that the manager of a five-star hotel in Puerto Iguazú paid R$ 15,000 in electronic products at a store in Ciudad del Este, but the sellers did not send them to Puerto Iguazú, as had been agreed.
He made the purchase at the Cell Center store, which was located in The Bonita Kim Mall, but soon after had changed his name and address.

The Argentine asked for support from the Consul of Paraguay in Puerto Iguazú, Magno Álvarez, who accompanied him, along with the promoter Édgar Torales, to the address of the store in the mall. But there they were informed that the trade had changed to Avenida Camilo Recalde, already with another name: Technological World.

After much talk in the "new" store, there was an agreement with the owner, who handed the Argentine the goods for which he had paid R $ 15 thousand.

La Clave criticizes the lack of investigations to investigate these cases, in which the crooked traders apply scams and, to escape punishments, change the address and even the name of the establishment. And they get away with it, usually.

Texanbrazil wrote:

mberigan,
Let me know what you are looking for and maybe I can guide you,

Thanks! I make take you up on that. It is time to visit Foz and see how things look after so many years.

You need to understand, in the first place, why US /Netherlands/Hong Kong import duties are low, or sometimes, non existent.....

Low duties to no duties is not common place, as many Americans take for granted.


1.Quoting Peter Zeihan ( he is all over Youtube ), post war America opened up their market for anyone around the world to bring in their manufactured goods, commodities at low to no tariffs. 

This goes back to Bretton Woods.   Guns for butter.  Basically the US conceded / allowed free trade, while America's Navy  policed the Seven Seas, for as long as the participants of such largesse  sided with America in their fights against the "Communist Evil".     Americans bribed Europe and Japan, and by extension others in the fold. An offer they could not refuse....  Free Trade, Protection to Ship their surplus and the largest world market for them to sell to .

A latter unfolding of such directive came during the Nixon Administration, when America ditched the Dollar weighed parity against gold reserves ( Remember Fort Knox ?  ) . Then the dollar strength became sanctioned, and if you may recall, that is when a lot of the US based manufacturing gradually shifted overseas, mostly on low value added manufactured goods ( textiles, apparel, housewares ).

The dollar strength is actually bankrolled by in part the might  of the US economy, and  its supply side economics so highly touted during Reagan's Administration   ( which you see now under peril with issues in the supply chain, runaway inflation ). Runaway deficits do not help much in terms of inflation, but issuing debt outweighs tax collection as a source of revenue.,

A strong dollar, and a steady demand for US Debt ( T-Bills, Bonds ) go hand in hand. That is what pay for the US Military Expenditures ( there is not enough tax collected dollars to meet the US Defense Budget ( while committing to other entitlement programs concurrently  ), which runs up to about USD 700 billion a year.

2.Free trade is key to grease the gears of the US economy. Global supply  chains demand free trade, so that US manufacturers and retailers can source at the lowest cost possible within their constraints of sought quality. 

3.As for Netherlands, Hong Kong, their business is free trade, there is little threat they can see from dumping by other nations.  The few things the Dutch do, they are very efficient at it.   Rotterdam is by far, the highest volume trading port in the European Unit. 


4.Brazil does not have a reserve currency,  it needs to maintain employment at expense of  lower supply chain efficiencies  and higher consumer prices,  and its Federal Government   can't afford to lose such important tax revenue from import levies.   This is a country whose overwhelming portion of its exports is on commodities  ( Ores, Foodstuff ).  Whatever gained advantaged they had in exporting manufactured goods, became lost way back in the 90's. 

Meanwhile, you need to wait until you make your Stateside trips to get what you want in your  luggage carry on.  Just don't make too many Brazilian Friends at expense of being their mule