Layer 2: Logistics
Incoterms for Brazil Imports
Which term to use, how it affects your landed cost, and why CIF is always the customs valuation base — even when you buy FOB.
Incoterms define who pays for what and when risk transfers from seller to buyer. For Brazil imports, your choice of Incoterm directly impacts customs valuation, tax calculations, and your total landed cost.
Key rule for Brazil
Brazilian customs always uses CIF value (Cost + Insurance + Freight) as the base for duty calculation — regardless of which Incoterm you agreed with your supplier. If you buy FOB, customs will add freight and insurance estimates to reach CIF value. This is mandated by the WTO Customs Valuation Agreement (Article VII of GATT).
Most common Incoterms for Brazil
Growing fast. ICC recommends over FOB for containers. Seller delivers to carrier at named place.
Most common for Brazilian imports by sea. Used as the customs value base when buyer arranges freight. AFRMM (8%) applies on freight value.
Mandatory customs valuation base. Even if you buy FOB, customs calculates duties on CIF value. Very common for first-time importers.
Seller handles everything including Brazilian import taxes. Requires seller to have RADAR/broker in Brazil. Used by large multinationals.
CIF vs FOB: which is better for Brazil?
FOB — you control freight
- + Choose your own freight forwarder
- + Negotiate better rates with volume
- + Pick your insurance coverage
- + More control over routing and timing
- - Must arrange international logistics
- - AFRMM (8%) calculated on your freight cost
Best for: experienced importers with established logistics
CIF — seller handles freight
- + Simpler — one price includes delivery
- + Seller handles shipping and insurance
- + Easier to compare supplier quotes
- + Less paperwork for buyer
- - Less control over logistics
- - Seller may mark up freight costs
Best for: first-time importers, small shipments
How Incoterms affect Brazilian taxes
Your Incoterm choice changes the customs value (valor aduaneiro), which is the base for all import taxes:
| Tax | Base | Incoterm impact |
|---|---|---|
| Import Duty (II) | CIF value | Always calculated on CIF, regardless of Incoterm |
| IPI | CIF + II | Cascades from CIF-based duty |
| PIS/COFINS | CIF value | Fixed rates on CIF |
| AFRMM | Ocean freight value | 8% of freight. FOB = calculated on your freight. CIF = extracted from invoice. |
| ICMS | CIF + II + IPI + PIS/COFINS + others | Cascades from all above |
All Incoterms 2020 — reference table
| Code | Name | Risk transfer | Brazil note |
|---|---|---|---|
| EXW | Ex Works | Buyer from seller's premises | Rarely used. Buyer assumes all risk/cost from factory. Difficult for importers who lack logistics in the seller's country. |
| FCA | Free Carrier | Buyer from carrier pickup | Growing fast. ICC recommends over FOB for containers. Seller delivers to carrier at named place. |
| FOB | Free on Board | Buyer from vessel loading | Most common for Brazilian imports by sea. Used as the customs value base when buyer arranges freight. AFRMM (8%) applies on freight value. |
| CFR | Cost and Freight | Buyer from vessel loading | Seller pays ocean freight but risk transfers at loading port. Buyer still needs insurance. Less common than CIF. |
| CIF | Cost, Insurance & Freight | Buyer from vessel loading | Mandatory customs valuation base. Even if you buy FOB, customs calculates duties on CIF value. Very common for first-time importers. |
| DDP | Delivered Duty Paid | Seller until delivery | Seller handles everything including Brazilian import taxes. Requires seller to have RADAR/broker in Brazil. Used by large multinationals. |
| DAP | Delivered at Place | Seller until delivery point | Seller delivers to named place in Brazil, buyer clears customs. Good middle ground — seller handles international logistics. |
FCA — the modern alternative to FOB
The ICC (International Chamber of Commerce) increasingly recommends FCA (Free Carrier) over FOB for containerized cargo. Why:
- FOB risk gap: under FOB, risk transfers when goods pass the ship's rail — but with containers, the seller loses control at the terminal, often days before loading. FCA fixes this by transferring risk at the carrier.
- Bill of Lading issue: FOB sellers often can't get an on-board B/L before the vessel sails. FCA 2020 added an option for the carrier to issue a B/L with an on-board notation to the seller.
- Brazilian customs accepts FCA without issues. The CIF-based valuation rule still applies — customs adds freight and insurance to reach CIF equivalent.
Common questions
?What is AFRMM?
AFRMM (Adicional ao Frete para Renovação da Marinha Mercante) is an 8% tax on international ocean freight for goods arriving by sea. It funds Brazil's merchant marine fleet. Only applies to maritime shipments — air freight is exempt.
All 7 import taxes explained?What is ICMS?
ICMS (Imposto sobre Circulação de Mercadorias e Serviços) is a state-level VAT charged on imported goods. Rates vary by state (typically 17–20%, up to 25% for some products). ICMS cascades on top of other import taxes, significantly increasing landed cost.
ICMS rates by state?What is a Despachante Aduaneiro?
A despachante aduaneiro is a licensed customs broker — required for all import clearances in Brazil. They file declarations in Siscomex, classify NCM codes, pay taxes on your behalf, and handle inspections. Must hold a registration from Receita Federal.
How to choose a customs brokerPractical recommendations
First-time importer?
Start with CIF. Let your supplier handle freight and insurance. Focus on learning the customs clearance process with your customs broker. Once you're importing regularly, switch to FOB to control costs.
Regular importer (>10 shipments/year)?
Use FOB or FCA. Negotiate freight rates directly with forwarders. Consider a long-term contract with a freight company that serves Brazilian ports. Your RADAR license volume should justify the logistics investment.
Selling to Brazil as a foreign supplier?
Offer CIF pricing — it's what Brazilian buyers expect. If selling to large companies, they'll often request FOB because they have their own freight contracts. Never offer DDP unless you have a Brazilian subsidiary.
Selling to the Brazilian government?
R$700B+/year in public procurement — now with EU-Mercosur preferential access. Browse open tenders or read the procurement guide.