April 2011Corporate Presentation1

The Brazil Customs Challenge: How to Get Your Goods in and Get PaidPrepared by : Denise Carrion & Rubio Guimaraes

2Corporate Presentation April 11, 20232

2

GLOBAL

• Revenue – €6.8 billion

• Over 49,000 employees

• 1,200 locations in over 170 countries

• 10 million square meter combined storage space

BRAZIL • Employees : +6,500• Warehouses : +585,000 sqm +• Branches : 60

4th largest global supply chain company

CEVA Logistics Overview

John PattulloCEVA LogisticsCEO

Vision : “ CEVA will be the most admired company in the supply chain industry exemplifying Unity, Growth and Excellence”.

Mission : Making Business Flow

Manufacturing support

Inbound Transportation

Warehousing & Distribution

Centers

Outbound Transportation

Aftermarket Services

Final Mile Solution

• Receipt and management of raw materials and products at source• Control• Re-packaging• Value-added

services

• A range of multi-modal capabilities• Time definite

services• Customs

brokerage•Web enabled

tracking solutions

• Dedicated and shared warehousing• Distribution

network centers• Value-added

services

• Dedicated and/or shared transportation• CEVA Ground

distribution services• Transportation

network management

• Spare parts warehousing• Spare parts

distribution• Returns• Repairs• Reverse logistics• Call center

services

• Home delivery for finished goods• One and two man

home delivery• After sales set up• Installation• Reverse logistics

GlobalEnd-to-end Capabilities

4Apresentação Institucional011

Brazil

AM

CEVA Logistics Customers in Brazil

MA

MG

RJ

ES

SP

PR

RS

GO

PA

PEPE

The Brazil Customs Challenge: How to Get Your Goods in and Get PaidPrepared by : Denise Carrion & Rubio Guimaraes

Import LicenseProcess

InternationalTransportation

Customs Clearance Transactional Process

International Payments

AGENDAThe Brazil Customs Challenge

In order to avoid penalties and delays at customs clearance for our customers, it is mandatory :

• DECLARE CORRECTLY CONSIGNEE/SHIPPER'S NAME on all shipping documents.

• MAKE sure that the consignee's CNPJ (Company's ID number in Brazil) is mentioned on all shipment documents (commercial invoice + packing list).

• ENSURE that there is a perfect match among the weight shown on the invoice/packing list, and the actual weight of the cargo.

• NOTE that a HAWB/HBL can be amended only before arrival of the cargo in Brazil, and those documents are only issued at origin based on all details of Shipper Commercial Invoice + Packing List.

• PREPARATION of Commercial Invoice and Packing List as per Brazilian Legislation Requirements.

Key Import Elements for a successful Clearance in Brazil Customs Clearance Transactional Process

According to Brazilian laws and in order to avoid fines and delays during the Customs Clearance process, commercial

documents, such as commercial invoice and packing list must be prepared as per requirements below :

Key Import Elements for a successful Clearance in Brazil Customs Clearance Transactional Process

- Issued under Exporter’s letterhead, hand-signed in BLUE ink, by an authorized person; identifying title and name – Commercial Invoice must be expressly written in the title, invoice number, date;– Must contain : Exporter’s and Importer's complete name and address and Part number;– Complete description of goods in English language. The description must be done with complete words -Quantity of goods with respective unit and total price in accordance with the conditions negotiated, mentioning expressly, if agreed, the amount of reduction or discount offered to the Importer;– Marking, numbering, and, if available, package reference number;– Quantity and kind of package;– Package gross weight, thus considered the weight of the goods with all its recipients;– Net weight, thus considered the material free of any wrapper;– Country of origin, thus considered that where the goods was manufactured or where the biggest transformation was occurred; -Country of acquisition, thus considered that where the goods were acquired to be exported to Brazil, independently of the country of origin of the goods or its parts;– Country of shipment, thus considered that from where the goods was delivered at the moment of its acquisition;– Payment terms and negotiated currency;– Sales condition terms (Incoterms);

CommercialInvoice

No abbreviations !

Key Import Elements for a successful Clearance in Brazil Customs Clearance Transactional Process

- The phrase “Packing List” has to be expressly written in the document title;-The packing list must be hand-signed in BLUE ink, by the authorized person; identifying his title and name,

MUST CONTAIN : - Packing list number; issuing date;- Complete name and address of the Exporter (as it is in the commercial invoice);- Complete name and address of the Importer (as it is in the commercial invoice);- Type/ package model;- Package content (part numbers and quantities);- Package quantities;- Package Dimensions or cubic meters;- Total gross weight;- Total gross weight per package;- Total net weight;- Total net weight per package. - All cargoes will be weighted by Brazilian Customs and if they state any discrepancy, it will delay the clearance process and Customs will charge a penalty, therefore the correct gross weight must be mentioned in the document.- It is necessary to have a Packing List for each Invoice issued.

Packing List

• Some products requires an Import License prior to be shipped to Brazil. Those licenses are based on import control defined by the government and it can change from time to time accordingly to market situation, internal production and other factors.

• Prior to start exporting to Brazil, it is crucial to check if the product to be exported requires previous Import License. Based on the HC (Harmonized Code) is possible to check at Brazilian Customs Systems (SISCOMEX) the IL requirements.

• There are many government entitites that regulate the import flow to Brazil, such as Ministry of Agriculture, Ministry of Health, Ministry of Army, Suframa (that controls Free Trade Zones) and many others. Those entities define Import License Procedures and requirements.

• The Importer Company must attend all those requirements directly or using a broker company, procedures are executed through SISCOMEX or for some specifics Ministries, physical documentation must be presented.

• The time to obtain an Import License varies from 5 working days to 30 days. Per law, the international transportation documents (air or ocean waybill) cannot be issued prior to the date of Import License issuance.

Key Import Elements for a successful Clearance in Brazil Customs Clearance Transactional Process

• All goods that enters the country, imported permanently or not, is subject to customs clearance process, which is processed based on the Import Declaration (DI), prepared in SISCOMEX (Brazilian Customs Integrated System of Foreign Trade).

• Import Declaration is controlled by SISCOMEX based on the import requests for each product. An automatic sequencial reference is provided for each declaration. This reference identify the entire import customs clearance process and will be used to check :

• The status of Import Company with Customs for any irregularity;

• The compliance with exchange rules as per Central Bank;

• The arrival of the cargo (volumes, weight, documentation, etc);

• The Duties & Taxes Payments;

• And all kind of imported goods information

Key Import Elements for a successful Clearance in Brazil Customs Clearance Transactional Process

Key Import Elements for a successful Clearance in Brazil Customs Clearance Transactional Process

IMPORT DECLARATION

Importer Information

Cargo Information

GoodsValue

Duties & Taxes

ExporterInformation

Harmonized Code

GoodsDescription

Duties & TaxesDetails

Key Import Elements for a successful Clearance in Brazil Customs Clearance Transactional Process

IMPORT DECLARATION

Import Duty

VAT

PIS

Cofins

IMPORT DUTY: it will be charged from 0% till 35% over CIF value depending on kind of goods; VAT: will be charged from 0% till 33% over CIF value + IMPORT DUTY; PIS: (Social Integration Program Tax/Worker’s Tax): will be charged from 0% till 2,30% over CIFvalue + IMPORT DUTY + VAT + % ICMS; COFINS: (Social Security Financing Tax/Social Tax): It will be charged from 0% till 10,80% overCIF value + IMPORT DUTY + VAT + PIS + % ICMS;

LOCAL FEE: It will be charged between 7.5% till 25% over CIF value + IMPORT DUTY + VAT + PIS+ COFINS; depending on the state in Brazil that cargo will be released;

Key Import Elements for a successful Clearance in Brazil Summary of Import Taxes

Basic Import Regulations Requirements & FlowCustoms Channels & Conference Process

Green Channel

Yellow Channel

Red Channel

• Drives through an automatic Clearance Process• No Documents and Physical inspection required

• Requires a document review • No physical inspection is required unless some problems are found on the documents

• Requires a document review • Requires physical inspection• Red Channel is applied when customs systems identify a risk of fraud or issues on products description or quantities, any inconstancy on Import Declaration, etc

Gray Channel

• Requires a document review• Requires physical inspection• Gray Channel is applied when customs systems identify a risk of fraud or issues on goods amounts pricing (under or over)

Average1-2 days

Average3-4 days

Average7-10 days

Average10-15 days

• The Import Declaration will be accompanied by the following documents :

• Original bill of lading or equivalent document

• Original commercial invoice

• Other documents required by specific legislation or international agreements

• Once registered by SISCOMEX the system itself indicates the type of conference that can be :

CEVA receives copy of commercial invoice and/or instructions from the customer

Import LicenseRequired

CEVA prepares the Import License in the Customs system (Siscomex)

with detaild of goods, HS number and copy of proforma invoice

CEVA registers Import License in the system (Siscomex)

CEVA checks the Import License regularly waiting for Customs

approval

IL approved?

No

Yes

CEVA Authorizes

customer to proceed with

shipment

Check requirements and proceed

START

CEVA types the data into Customs system (Siscomex)

Yes

No CEVA requests information to customer

Registration OK

CEVA stands for the pre alert to finish data

typing

Pre alertreceipt

Registration, Part Number/

Instruction ok?

Basic Import Regulations Requirements & FlowImport Customs Flow

CheckingOK?

CEVA requests for missing documents and eventual

corrections

No

Yes

Import Declaration typing

CEVA sends advanced cash for expenses

Import Declaration Checking

CheckingOK?

No

Yes

Provides proper adjustments

Flight or Vessel arrival

CEVA awaits authorization from customer for debit of duties and taxes

DiagnosisOK?

No

Yes

Siscomex suppies errors and correction or follow-up

information (alerts: green, yellow, red)

CEVA proceeds with Import Declaration registration in Siscomex (register transfer): - Prints ID report- Pays ICMS – Enter ICMS information in Siscomex- Pays AFRMM (seafreight only)

CEVA access Siscomex and check diagnosis

Basic Import Regulations Requirements & FlowImport Customs Flow

Check Siscomex Sorting

Light ?

Red/GreyYellow

Physical checking by CustomsStatus informed in Siscomex

Status?

PendingCleared

Grey Light

Registers discrepancy in Siscomex and

performs warranty deposit

Issuing Nota Fiscal de Entrada

Documents checking by Customs agent. Status informed in

Siscomex

Status ?

Pending

Cleared

CEVA meets the requirements

CEVA meets the

requirements

Follows-up the process along with Customs

agent

Green

Basic Import Regulations Requirements & FlowImport Customs Flow

CEVA performs payment of storage charges to Infraero

Forward Nota Fiscal to Customs facility where the shipment is

Cleared by Customs - CEVA gets orignal shipping documents

Import Confirmation ticket issued by Siscomex

Import Declaration built up according to Customs Clearance facility

END

Documents tendered to the trucking company

File closingPaperworks build up for invoicing

P.S.: Government can change these amounts without previous notice !

Key Import Elements for a successful Clearance in Brazil Penalties (some of them …)

Advices to Companies Exporting to Brazil

• Nothing is forbidden to be imported to Brazil !

• It is complex and bureaucratic, however can be done properly using correct partners and correctprocess !

• Prior to start exporting to Brazil it is higlhy recommended to consult a Customs Expert that will guide your company through the rules and requirements of our Country.

Brazilian Customs Official Web-siteEnglish version available !

http://www.receita.fazenda.gov.br

CEVA Logistics Contacts

Denise Carrion Brazil Managing Director for Freight Management Tel (55) (11) 2199-6723Email : denise.carrion@cevalogistics.com

Rubio GuimarãesBrazil Customs Clearance DirectorTel (55) (11) 2199-6724Email : rubio.guimaraes@cevalogistics.com

June 2011LATAM Finance Seminar 201122

...Making business flow...Making business flow