Brazilian Export Processing Zones – EPZ

Definition of EPZDefinition of EPZ

• Demarcated areas where exporting companies benefit from fiscal and currency exchange incentives, as well as reduced bureaucratic procedures

EPZ RequirementsEPZ Requirements

• Industrial Activities

• Minimum of 80% of production for export

• If selling to the domestic market, all taxes are collected as usual

Tax IncentivesTax suspension on importations or domestic procurement of goods anddomestic procurement of goods and services:

– Capital Goods• New• Used (plant transfer)• Used (plant transfer)

– Inputs (raw materials, consumables, packing materials)materials)

Suspended Taxes:p• Import Duty• IPI (federal tax over added-value)• PIS/COFINS (federal tax over operational revenue)• PIS/COFINS (federal tax over operational revenue)• AFRMM (tax over import freight)

Tax Suspension on Imports/D ti P tDomestic Procurement

EPZEPZ

EPZ

Tax Incentives

Income taIncome tax

R l t b t t i ti• Regular system, but current incentivesapplicable.pp

• Northeast and North regions:

– 75% reduction

Currency Exchange IncentivesCurrency Exchange Incentives

• Flexibility to keep 100% of export proceeds in a financial institution pabroad.

• Freedom to make from it:i t t– overseas investment

– financial investments– general payments

Administrative IncentivesAdministrative Incentives

• Exemption of licenses and authorizations:– Exceptions: sanitary, national security

and environment.

In ho se c stoms clearance• In house customs clearance

• Streamlined import and exportStreamlined import and export procedures

Legal SupportLegal Support

• Incentives period of validity:• Incentives period of validity:Up to 20 years (stability)P ibl l f l i dPossible renewal for equal period.

• Decisions taken by a Council of Ministers:Decisions taken by a Council of Ministers:Development, Industry and Trade;

FiFinance;Planning, Budget and Management;E i tEnvironment;National Integration;C f f S ffChief of Staff;

Labour LawLabour Law

• The same applied in the rest of the tcountry.

Efficient dealing with work visa• Efficient dealing with work visa applications for companies at an EPZ area.

What Do EPZ Offer?

Lower cost ReducedCurrency exchange of investment red tapeexchange

flexibilization

Tax suspension

Streamlined customs

procedures

Legal security

procedures

Establishment of an EPZEstablishment of an EPZ

• Proposal from a state and/or municipality.p y

• Project submission to the National jCouncil of Export Processing Zones -CZPECZPE

• Presidential Decree to delimitate the es de a ec ee o de a e eEPZ area.

EPZ DevelopmentEPZ Development

• Public

• Private

• Mixed

Setting a company in an EPZ areaSetting a company in an EPZ area

• Project submission to the National Council of Export Processing Zones -CZPE

• CZPE approvalpp

• Transfer of a factory already in operation in Brazil is forbidden

Potential SectorsPotential Sectors

G l• General purpose

V l dditi t b i d t• Value addition to basic products exported by Brazil

• Traditional Brazilian export industries

• High-tech products which require i l diti f t l tfspecial conditions for export platforms

EPZBARCARENA

PARNAÍBAMARACANAÚ

MACAÍBA

SÃO LUÍS

N. Sª DO SOCORRO

SUAPE

JOÃO PESSOA

ARAGUAÍNA

TEÓFILO OTONI

ILHÉUSCÁCERES

ITAGUAÍ

VILA VELHACORUMBÁ

RIO GRANDE

IMBITUBA

Opportunities for InvestmentsOpportunities for Investments

• Industrial projects intensive in Brazilian raw materials

f• Regional export platforms

EPZ’ i f t t• EPZ’s infrastructure

• EPZ’s administration• EPZ s administration

Investment opportunities in th P d ti Ch ithe Productive Chain

What do EPZ offer?

• Proper infrastructureProper infrastructure

• High grade logisticsg g g

• Efficient use of regional and local resources

I t ti ith di ifi d B ili• Integration with a diversified Brazilian industrial base

• Advantageous business environment

• Municipal, State and Federal Incentives

Legal FrameworkLegal Framework

• Law 11.508/2007

• Decree 6.814/2009

• Normative Instruction 952/2009 (Federal• Normative Instruction 952/2009 (Federal Revenue Secretary – SRF)

• Resolution 2 and 3 (National Council of Export Processing Zones – CZPE)g )

Thank You!Thank You!

Eduardo CelinoCoordinator for Investments

Esplanada dos Ministerios – Bloco J, Sala 507 Zip Code: 70.053-900 – Brasilia/DF - BrazilTel: +55 61 2109 7747 Fax: +55 61 2109 7047Tel: +55 61 2109 7747 Fax: +55 61 2109 7047eduardo.celino@mdic.gov.br