The name sounds daunting, but the logic is simple: the State gives up taxing an input on the way in because it knows the input will generate an export, and exports bring foreign currency into the country. In return, the company takes on a commitment to export. Used well, drawback makes the Brazilian product more competitive abroad and frees up working capital that would otherwise sit locked in taxes. This guide explains what it is, the types, which taxes it covers and when it is worth using.
What the drawback regime is
Drawback is a special customs regime that relieves the taxes charged on imported inputs (or inputs bought on the domestic market) when those inputs are used to manufacture a product destined for export.
In other words: you import a raw material, a component or packaging, turn it into a finished product and export that product. Because the goods ultimately leave Brazil, the government waives the taxes on the import stage. The logic is to support the national export industry, putting the cost of the Brazilian input on a par with competitors in other countries.
The regime is administered by the Secretariat of Foreign Trade (SECEX) and operated through the Portal Único de Comércio Exterior (Siscomex), by means of a document called the ato concessório, the concession act, which records the export commitment and the inputs tied to it.
In one sentence: drawback trades the tax charge on the imported input for a commitment to turn that input into an exported product.
The three types of drawback
The regime has three forms of application. In practice, the first two account for almost all use.
| Type | How it works |
|---|---|
| Suspension | The taxes on the imported input are suspended at the moment of import. Once the export commitment is met, they cease to be charged for good. It is the most used type. |
| Exemption | The company has already exported and now imports an input equivalent to the one it used, to replenish stock, without paying the taxes. It restores cash for the next production cycle. |
| Restitution | Refunds, as a credit, taxes already paid on the import of an input that was exported. It is little used today, replaced in practice by the other two. |
The suspension and exemption types now operate in an integrated way (known as Drawback Integrado), allowing imported inputs and inputs bought on the domestic market to be combined within a single concession act.
Which taxes drawback covers
This is the part that hits the wallet hardest. Under the suspension type, the regime covers:
- Import Tax (II)
- IPI: the tax on manufactured products
- PIS/Pasep and Cofins, including the versions charged on imports
- AFRMM: the merchant marine renewal freight surcharge, which falls on sea freight
ICMS deserves separate attention: being a state tax, its suspension or waiver depends on a CONFAZ agreement and on each state's legislation. In many cases relief is available, but that has to be confirmed according to the state where the company operates.
Why it matters so much: added together, II, IPI, PIS, Cofins and ICMS can account for more than half the cost of an input. Removing that burden completely changes whether exporting the finished product is viable.
How it works in practice
The flow of drawback suspension, from planning to proof, follows these stages:
01 Plan the export operation
Drawback starts from a certainty: the finished product will be exported. Before applying for the regime, you need clarity on what will be manufactured, which inputs go into that product and in what quantity. That link between input and exported product is the heart of the regime.
02 Register the concession act
On the Portal Único Siscomex, the company registers the drawback concession act, declaring the inputs to be imported, the product to be exported and the export commitment. It is that document which authorises the suspension of taxes.
03 Import the inputs with the suspension
With the concession act attached, the import of the inputs clears customs with the taxes suspended. The customs operation stays normal (Import Declaration, inspection and paperwork), but the tax treatment changes.
04 Manufacture and export within the deadline
The company turns the inputs into the finished product and exports it. Under drawback suspension there is a deadline of up to one year to export, renewable for one more (up to two years in total). Capital goods with long manufacturing cycles may have longer deadlines.
05 Prove that you met the commitment
Once the export has taken place, the company proves the commitment was met and closes the concession act. With that, the suspended taxes cease to be demanded. If the export does not happen, they become due with interest and a penalty.
When drawback is worth it
The regime makes sense for companies that fit this profile:
- Manufacturers that import inputs from China (electronic components, parts, raw materials, textiles, packaging) and export the finished product
- Assemblers and manufacturers that add value to imported parts before re-exporting
- Agribusiness and capital goods companies with an established export chain
- Regular exporters, who benefit from the exemption type to replenish stock continuously
Since China is the world's largest source of industrial inputs and components, drawback is especially relevant for anyone importing from there and exporting the finished product: it removes the tax burden that would otherwise make the Brazilian product less competitive abroad.
On the other hand, the regime is no use to anyone importing purely to resell on the domestic market: with no export, there is no drawback. And it demands rigorous control: the link between imported input and exported product has to be provable.
Common mistakes in using drawback
1. Underestimating the export commitment Drawback is not an automatic benefit: it is a trade-off. Anyone who suspends the taxes and fails to export within the deadline ends up paying it all back, plus interest and a penalty. Only enter the regime with the export genuinely planned.
2. Getting the link between input and finished product wrong The concession act relates the imported input to the exported product in consistent quantities. Imprecise declarations make proof harder and can make it impossible to close the regime.
3. Ignoring the ICMS question Many companies assume ICMS is automatically relieved. Being a state tax, it depends on an agreement and on local legislation. Check before you calculate the saving.
4. Not keeping the paperwork in order Drawback is audited. Invoices, import declarations, export receipts and stock control have to line up and be available for inspection.
Where BCVN fits into this operation
Drawback is a tax regime: setting it up involves the company's customs and accounting functions, usually with support from a customs broker or a foreign trade consultancy. But the success of the regime begins much earlier: at the source of the inputs.
That is where BCVN comes in. For drawback to work, the inputs imported from China have to arrive with the right quality, on time and with the correct paperwork. Otherwise a delay in production jeopardises the export commitment. After 18 years connecting Brazilian companies to Asian suppliers, BCVN helps find and qualify suppliers, inspect production before shipment and organise the logistics of the inputs that will feed your export chain.
Want to know whether your import from China can go into a drawback regime, and how to structure the operation? Talk to our team.
Frequently asked questions about drawback
What is the difference between the types of drawback?
There are three. Under drawback suspension, the taxes on the imported input are suspended and cease to be charged once the finished product is exported within the deadline. Under drawback exemption, the company imports an input equivalent to the one it already used in a previous export, replenishing stock without paying the taxes. Drawback restitution, little used today, refunds taxes already paid. The first two account for almost all current use.
Which taxes does drawback suspend or waive?
Under the suspension type, the regime covers the Import Tax (II), the IPI, PIS/Pasep and Cofins (including on imports) and the AFRMM, the merchant marine renewal freight surcharge. ICMS may be suspended or waived depending on a CONFAZ agreement and on each state's legislation, so it has to be checked case by case.
Can any company use the drawback regime?
No. Drawback is intended for companies that import inputs to manufacture a product that will be exported, or that carry out a stage of that process. You have to take on a formal export commitment and register for the regime through the Portal Único Siscomex. Companies that import purely to resell on the domestic market do not qualify.
How long is the export commitment under drawback?
Under drawback suspension, the concession act allows up to one year for the export to take place, renewable for an equal period, giving up to two years in total. For capital goods with long manufacturing cycles the deadline can be longer. If the export does not happen, the suspended taxes become due with interest and a penalty.
Is drawback worth it for imports from China?
Yes, when the input imported from China goes into manufacturing a product that is exported. Since China is the largest source of industrial components and raw materials, drawback usually cuts the cost of the operation significantly, removing taxes that would make the finished product less competitive abroad. The gain has to be calculated case by case.
Does drawback remove the need for a customs broker and the normal clearance process?
No. Drawback is a tax regime applied to the import, but the operation remains subject to normal customs clearance, with the Import Declaration, inspection and all the paperwork. What changes is the tax treatment, tied to the concession act and to the export commitment.
BCVN — Brasil China Viagens e Negócios has been connecting Brazilian companies to the best suppliers in China and Asia since 2008. Discover our services in trade intermediation, quality inspection, factory audits and guided business trips to China's main trade fairs.