Exporter was authorized to
receive export proceeds (payment from Importers) exclusively via credit of corresponding amount in a foreign account of a Brazilian Bank.
Receipt of foreign currency deriving from exports must occur:
1) via credit of correspondent amount into exporter`s account maintained abroad;
2) by agreement between the parties, via credit of corresponding amount into account of a bank authorized to operate in the Brazilian exchange market, as per current regulation.
Exporter is no longer obliged to keep his funds in a Brazilian bank's account, i.e., they are now free to maintain their own accounts in any Financial Institution abroad.
Exporter was obliged to inflow 100% of its export proceeds within 210 days from shipment date.
Exporter can now maintain up to 30% of its Export proceeds abroad, to be used for:
1) Payment of its own obligations
2) Investments (Liquidity Management, Investment funds, etc.).
Exporter is no longer obliged to inflow 100% of its export proceeds/receivables. 30% of each export proceeds can be used to honor its own obligations abroad.
Exporter was only able to receive amount in foreign currency by signing a Spot foreign exchange contract (type 1 - Export of Goods - Operation code 10007).
Inward of 70% of export proceeds is required up to the last business day of the 12th month subsequent to that of shipment of goods or services, regardless of the deadline established in the bills of exchange and the date of effective inflow of foreign currency abroad in 3 forms:
a) Spot Foreign Exchange Contract - Export of Goods
b) Non-Simultaneous Simplified Spot Foreign Exchage Contract
c) Simultaneous Simplified Spot Foreign Exchage Contract
If Exporter inflows the export proceeds through a Spot Export F/X contract or through Non-simultaneous simplified F/X Contract, it will receive correspondent BRL amount in its current account.
Impact The big new difference lays in the use of Simultaneous Simplified F/X Contract (See below for more details).
Non-simultaneous Spot F/X Contract
The Non-simultaneous Spot F/X contract was limited to USD 20.000,00 and was supported by a DSE (Simplified Export Declaration).
The link between the DSE and F/X contract was not obliged in the Integrated Foreign Trade System (Siscomex)
Besides, this type of contract was not subject to changes or cancellation and had to be settled on the same day of its input in the system.
The Non-Simultaneous Spot F/X Contract has the following characterists:
* Formalized through signing of the appropriate exchange Form by the Exporter;
* Settlement on the same day of contract registry (D+0);
* Any type of advance related to its value is prohibitted;
* Contract not subject to alteration, cancellation or elimination;
* Link between DSE and F/X contract continues to be non-compulsory.
There is no more limit for amounts for this type of contract, however the Bank must inform in the Central Bank System (Sisbacen) the name of the foreign payer in operations as from USD 20.000,00 or its equivalent in other currencies.
The process is now easier with less information required.
Simultaneous Spot F/X Contract
Exporter was authorized to receive amount in foreign currency only by signing a Spot foreign exchange contract (type 1 - Export of Goods - Operation code 10007).
Evidence of Export proceeds inward may be obtained through settlement of simplified export f/x contract with simultaneous settlement of financial transfer simplified contract due to consolidation of assets abroad. Following procedures should be observed:
(1) From the data informed in Sisbacen, there is automatic generation of type 1 F/X contract under operation Code "Export - simultaneous simplified F/X contract - Operation Code 10500 and, in a compensation book entry and simultaneously, automatic generation of a type 4 F/X contract, of same amount, date and Institution, under operation code "Short Term Brazilian Capital - Cash abroad derived from simultaneous simplified F/X - Operation Code - 55500.
(2) Exchange rate is the same for both exchange contracts;
(3) Exchage Contracts are currently generated in automatic mode;
(4) As per the amount, exporter's account must be credited and debited
(5) There is no receipt nor issuing of a foreign payment order.
The procedure allows the Exporter to meet the Brazilian tax obligations without having to inflow and outflow foreign funds.
Applicability of the Regulation
This regulation does not apply to exports conducted through the CCR (Agreement on Reciprocal Payments and Credits), as well as those that have been financed by BNDES (National Economic and Social Development Bank) or by National Treasury (Proex - Government Export Program), which must follow specific regulation.
This regulation applies to the following events as of January, 09th 2006:
(1) Shipping Protocol legalized in the Register of Export recorded in the Integrated Foreign Trade System (SISCOMEX);
(2) Services rendered to persons/companies established abroad
In such cases, Exporter is still obliged to inflow 100% of Export proceeds
By allowing this, Brazilian Government extended this privilege to all past foreign transactions with shipment as of January, 09th 2006
Shipping Documents Linking
The Central Bank of Brazil required from Exporter the linking between the Export Records and Export F/X Contract, that is, the Legalized Shipping Protocol (Customs goods-related document) should be linked to the related F/X contract to support the commercial transaction (proof that the merchandise sent abroad had a related F/X contract).
Linking between Export Records and Export F/X Contract is no longer required.
Remarks: Although Exporter is no longer obliged to inform the Legalized Shipping Protocol number or Export Registry number to the Bank, existing unerlying transaction documents must be kept by Exporter for the purpose of providing evidence to the Central Bank if demanded.
The Central Bank of Brazil has handed over control responsibility to Brazilian IRS (Brazilian Federal Revenue Department).
Foreign Exchange Contracts Tenor
Foreign Exchange contracts had to be signed for spot or forward settlement, before or after the shipping of goods or services provided, within a maximum period of 570 days, being 360 in the pre-shipment phase and up to 210 days in the post-shipment phase, or 30 days from the date indicated in the respective RC (Credit Register) for financed transactions with tenor above 180 days for post-shipment phase.
Export on Consignment had a pre-shipment tenor of 180 days and 210 for post-shipment phase.
Foreign Exchange contracts may be signed for spot or forward settlement, before or after the shipping of goods or services provided, within a maximum period of 750 days, being 360 in the pre-shipment phase and up to 390 days in the post-shipment phase, or 30 days from the date indicated in the respective RC (Credit Register) for financed transactions with tenor above 180 days for post-shipment phase.
The Export on Consignment has now the same maximum period of 750 days applied for traditional Export of goods.
Exporter was granted with longer tenor to maintain its export proceeds abroad, which allows a better assessment as to the best time to inflow such proceeds and convert them to BRL (Brazilian Currency).
Same as above.
Cancellation of Foreign Exchange Contract
In the case of cancellation or elimination of a F/X contract above USD 50.000,00, exporter was obliged to present a filed law suit (in the local court) against Importer.
The Cancellation or elimination of a F/X contract in post-shipment phase does not require the presentation of filed Law Suit anymore. Now F/X contract cancellation and/or elimination can be done for any amount and it must be effected up to the last business day of the 12th month subsequent to that of goods shipment or service.
Easier method to cancel or eliminate F/X transactions in the post-shipment phase and pending operations in the Central Bank System (Sisbacen).
Cost Reduction since Law Suits are no longer required.
Import Regulation
Import Payments abroad
Importer could only effect payment to Exporter through Import F/X contract settled with a Bank duly authorized to operate in the exchange market in Brazil.
Importer is no longer obliged to effect payment regarding its imports through F/X contract. Importer has the right to use its international funds arising from export proceeds to effect such payments.
Less red-tape and freedom to adequately manage its proceeds to effect payment in foreign currency.
Former control will no longer be conducted by the Central Bank of Brazil.
Simplified Foreign Exchange Contract
Simplified F/X import transactions were limited to USD 10.000,00 and were supported/based on a DSI (Simplified Import Declaration).
The link between the DSI and F/X contract was not obliged in the Integrated Foreign Trade System (Siscomex)
Besides, this type of contract was not subject to changes, cancellation or elimination and had to be settled on the same day of its registration in the system.
Characterists:
* Formalized by Importer signing the appropriate exchange Form;
* Contract not subject to changes, cancellation or elimination;
* Link between DSI and F/X contract continues to be non-compulsory.
There is no longer amount constraint for this type of contract in the Central Bank system, however the Bank must inform the name of the Beneficiary for transactions equal or above USD 20.000,00 or its equivalent in other currencies.
The process is now easier with less information required.
Fines on Import Operations
A fine was applied for payment of the imports not effected in up to 180 days as of the first day of the month subsequent to that foreseen for payment of the import deal, as specified on the DI (Import Declaration).
No fine for deals with due date as of August, 04th 2006 (Inclusive).
Cost Reduction with Fines/Penalties.
Shipping Documents Linking
The Brazilian Central Bank required from Importer the linking between the Import Declaration and Import F/X Contract, that is, the Import Declaration (Customs goods-related document) had to be linked to the related F/X contract to support the commercial transaction (proof that the merchandise that was received had a related F/X contract).
Linking between the Import Declaration and Import F/X Contract is no longer required.
Remarks: Although Importer is no longer obliged to inform the Import Declaration number to the Bank, existing underlying transaction documents must be kept by Importer for the purpose of providing evidence to the Central Bank if demanded.
The Central Bank of Brazil has handed over control responsibility to Brazilian IRS (Brazilian Federal Revenue Department).
General Provisions
Payments abroad
Private Individuals or Corporate bodies with domicile or headquarter in Brazil were not allowed to pay their own obligations directly in foreign currency without an F/X contract.
Private Individuals or Corporate bodies with domicile or headquarter in Brazil are allowed to pay their own obligations directly with their funds availability outside Brazil, that is, without an F/X contract.
Better cash management to effect foreign payments.
Deliver of Documents to the Bank
Exporters and Importers were obliged to deliver copy of shipping documents or inform the Export Shipping Document Protocol number (for export transactions)/Import Declaration (for Import transactions) and consequently guarantee that Banks made the link between such documents with those related F/X contracts.
Exporters and Importers are no longer obliged to deliver copy of shipping documents nor inform the Export Shipping Document Protocol number or Import Declaration number to brazilian Banks.
On the same way, the Linking between such documents and F/X contracts are not necessary as of January, 09th 2006. (Shipments or services rendered as from this date).
Reduced red-tape and simplified controls.
Financial Operations (Non-trade)
Input of a financial Forward F/X Contract duly registered in the Central Bank System (Sibacen) in the ROF module (Financial Operation Registry required for financed transactions) was allowed with a maximum term of 60 days.
It is now allowed to register and settle Financial Forward F/X Contract registered or not in the Central Bank System (Sisbacen)with a maximum term of 360 days.
Alignment with Export transactions tenor.
Tainted Capital
There is an obligation to register foreign investments made in companies with headquarters located in Brazil and evidencing in their accounting records. When such investments were not duly registered with the Central Bank of Brazil, in accordance with the provisions of Law 4.131/1962 and the Brazilian foreign exchange regulation in the past, such unregistered investments resulted in the so-called "tainted capital". Therefore, any remittance under these "capital" relating to profit, interest on equity/dividends were not authorized.
The new regulation allowed the regularization of such tainted capital up to June, 30th 2007 subject to foreign investments amount to be verified on the company's accounting records on December, 31th 2005.
Exception: Foreign Capital accounted as of January 2006, which must be registered up to the last working day of the following year (2007).
By allowing the registration of the "tainted capital", the new regulation entitles foreign investors, based on such registration, to carry out remittances of interest on equity or dividends related to the formerly "tainted" quotas/shares, along with the untainted capital.
F/X transactions - amount up to USD 3.000,00
Any Financial (non-trade) F/X Contract up to USD 3.000,00 had to be formalized by signing an appropriate exchage Form.
Financial (non-trade) F/X Contract up to USD 3.000,00 or its equivalent in other currencies may be settled without signing an exchange Form.
These type of transactions are normally effected by private individuals and from now on, it can be settled electronicaly or by phone, eliminating the obligation of manual signature of the remitter/beneficiary of the payment order.
