Tax & Accounting Blog

Special Programs as a Tool to Support the Brazilian Exports Plan

Blog, Global Trade, ONESOURCE September 4, 2015

According to the Ministry of Development, Industry and Foreign Trade (MDIC), even though Brazil has the seventh largest economy in the world, it occupies the 25th position in the ranking of exporting countries.



By analyzing the last four years’ data on the evolution of Brazilian participation in Global Trade Exports (the exception of 2013), we can observe a decrease in participation by Brazil, exacerbated in 2015 by the current Brazilian economic scenario.

According to MDIC data, although 2013 showed an increased in participation, the Brazilian trade balance recorded a surplus (exports minus imports) of $2.56 billion USD in 2013, the worst result for a closed year since 2000.  During that year, Brazil recorded a $731 million USD deficit.

The Evolution of Brazilian participation in Global Trade – Exports


Source: (Brazilian Foreign Trade Association)

In June 2015, the Brazilian government, at a ceremony at the Presidential Palace, announced the National Export Plan (PNE). The plan aims to stimulate foreign sales of Brazilian products and has five pillars aiming to encourage, facilitate and increase Brazilian exports, as discussed in the article “National Export Plan – Brazil”[1].

Out of the five pillars mentioned in the plan[2], we will explore the topic “Improvement of mechanism and tax regimes for export support (fiscal system related to foreign trade)”, where we highlight the actions aimed at improving the tax environment for exporting companies.

Simplifying Drawback

Drawback is a special program created by the Brazilian government to reduce production costs of manufactured products that will be exported.  Brazil has simplified compliance with drawback in order to increase the use of the Drawback Regime as one of the most important value additions to Brazilian exporters seeking to:

  • Equalize tax treatment on imported and purchased raw materials in the domestic market, supported by drawback regime;
  • Increase the participation of small and medium enterprises as users of the special programs; and
  • Implement a new method for granting the special program based on the adoption of a single Concession Act, for companies with customary character and positive list in foreign trade.

Drawback is granted by an official document through the ‘Concession Act’[3], which has a validity period and amounts specified in value and quantity to be purchased (local or imported) with the intent to export. Under the ‘Concession Act’ the participant previously assumed oversight from DECEX (Government Department of Foreign Trade Operations). The new concept of a single Concession Act consists of a specific authorization for companies that have production and exports in continuous operation.

Adding to these proposals, another important initiative already enacted by the government is related to the non-segregation of raw materials between regime and non-regime as long as it has the same quality and characteristics.

Exploring the current participation of Drawback in Brazilian exports, it is noted there is a large margin of opportunities for the use of Drawback, especially with the program changes and enhancements that are being proposed by the Brazilian government1.

Drawback participation in Brazilian Exports



Special Customs System of Industrial Warehouse under Software Control – RECOF:

RECOF is a Brazilian special program that allows importing and purchasing on the local market of goods with tax suspension, which after undergoing industrialization operations, may be destined either for export or the domestic market.

In the last few years, many companies have left RECOF, because the program maintenance requirements became very difficult over time.  Therefore, the Brazilian Government decided to improve this Special Program by increasing its access, allowing RECOF to be used by a major number of exporting companies through changes in its regulation.

Analyzing the latest data released by the Brazilian customs authorities on the participation of RECOF in Brazilian exports, reached a rate close to 4.2%, therefore the margin of opportunity for the use of this Special Program is extremely interesting, as according to Brazilian Federal Revenue, the potential for eligible companies to RECOF could represent an increase in exports of about $13.8 billion USD (see chart below).



The emphasis on foreign trade expansion adds up to the Brazilian government expanding investment in infrastructure initiatives, implementing actions for improvement of the tax and regulatory environment, and mainly reducing bureaucracy and simplifying operations for the special program user companies. In this approach, the government is aiming at increasing the use of RECOF, by focusing on two elements:

  1. Easier access to the Special Program. This action has already been defined in the current version of RECOF, emphasizing:
    • Reduction of the requirement of the minimum Net Worth[4] value of the companies interested in entering the Special Program
    • Unlinking the requirement of qualification prior to the Linha Azul’s[5] Clearance Program (which is being discontinued due to the implementation of the Brazilian program of authorized economic operator – AEO);
    • Reduction of export commitment.
  2. Creation of a new modality of the Special Program called RECOF-SPED. This initiative finds itself in a phase of development by the Brazilian Government. Some concepts of this initiative were released:
    • Neither revoke or alters the current version of RECOF;
    • Elimination of the Net Worth requirement;
    • Digital fiscal accounting;
    • Easier access to the Special Program qualification process.

Free Trade Zone (FTZ)

Another interesting initiative in process of consolidation is the Free Trade Zone (FTZ) Special Program, which offers a tool of productive investment attraction to States, allowing the industrial deconcentration and the reduction of regional unbalance.

Authorized Economic Operator (AEO)

Putting another highlight in perspective, the Brazilian AEO (Authorized Economic Operator) program consists in the certification of the logistic supply chain players who represent low degree of risk in their operations, both in terms of physical security charge of compliance with their customs obligations.

According to the Brazilian government Schedule, from December / 2015 begins the phase that is being called – AEO compliance – where import process is the focus. The certification based on compliance with the standards and customs procedures, through the expansion and review of the Linha Azul Program, will occur at this stage.

In all of these initiatives, ranging to a greater or lesser extent, and depending on the control, these initiatives should provide greater efficiencies and a reduction of the so called Brazilian costs[6]. The incentive to export, with the purchase of raw material with duty suspension, as well as other tools offered by the Special Programs, culminate in a competitive advantage, which, in a globalized world with the disputed international trade, translates into efficiency and gains to the country, as:

  • Incentive to Industrialization: Important industrial policy tool combined with tax suspension.
  • Technological Heritage: Contribution to improving the technological heritage of strategic sectors.
  • Competitiveness: value-added, technology, increased production, opening new markets, cost reduction, etc.
  • Financial: reduction of financial costs, improved cash flow, reaching all imports of inputs.
  • Less paperwork: simplified customs operations and facilitating access to special programs.

In order to improve Brazilian exports, there are elements required through linking innovation and competitiveness.  It is not a choice, but a matter of survival and the Brazilian government is opening paths to achieve this goal.  Special programs stand as a strong ally in helping Brazil achieve this goal.

To learn more about import or export, visit our ONESOURCE Global Trade page



[2] 1) Market Access, 2) Commercial Promotion, 3) Trade Facilitation, 4) Financing and Guarantees for Exports, 5) Improvement of mechanisms and tax regimes for export


[3] Drawback is granted through an approval by the Brazilian Foreign Trade Operations Department (DECEX) of the Concession Act formulated by the interested party in the Web Drawback system. The regime may be granted for operations characterized as: Transformation; Processing; Assembly; Renewal or reprocessing; Processing or re-processing.

[4] Net worth is a concept applicable to individuals and businesses as a key measure of how much an entity is worth. A consistent increase in net worth indicates good financial health; conversely, net worth may be depleted by annual operating losses or a substantial decrease in asset values relative to liabilities. In the business context, net worth is also known as book value or shareholders’ equity.

[5] Linha Azul is a program created by Brazilian Government, consisting in the treatment of customs clearance expressed in the import, export and customs transit, which will be replaced by AEO (Authorized Economic Operator). Receita Federal do Brasil – Apresentação Recof-Sped Abineev5.pdf

[6] A generic term referring to the increased operational costs associated with doing business in Brazil; making Brazilian goods and services more expensive compared to other countries. The term is widely used as part of the local economic and political jargon.