Tax Aspects and Special Regimes on Steel: What is the best structure for your company?

In the globalized and highly competitive scenario of foreign trade, the choice of the appropriate tax structure is one of the pillars for the success of companies that operate with steel import and export. As an expert, I understand that this decision should be based on a careful analysis of factors such as revenue, profit margin, volume of operations, and tax optimization strategies. In this article, we will explore the main options for tax regimes, the taxes involved, and how to ensure legal compliance and competitiveness in the sector.

Actual Profit vs. Presumed Profit: Which one to choose?

The choice between Actual Profit and Presumed Profit is one of the most important decisions for companies in the steel sector. Each regime has its advantages and disadvantages, and the best option depends on the specific characteristics of the business.

Real Profit

• Advantages: Ideal for companies with lower profit margins or that have many deductible costs. It allows the use of PIS and COFINS credits on imports, which is especially relevant for companies that import large volumes of steel.
• Disadvantages: It requires more complex and detailed accounting, which can increase administrative costs.

Presumed Profit

• Advantages: Simplifies the calculation of Income Tax and CSLL (Social Contribution on Net Income), as the calculation basis is presumed based on revenue. It can be advantageous for businesses with higher profit margins.
• Disadvantages: It does not allow the use of tax credits, such as PIS and COFINS, which can be a negative point for companies that import steel.

For steel import and export companies, Lucro Real is usually the most advantageous option, especially when there is a significant volume of imports, due to the possibility of taking advantage of tax credits.

Main Taxes in Steel Trade

Steel Import

• Import Tax (II): Variable rate according to the NCM (Mercosur Common Nomenclature).
• IPI (Tax on Industrialized Products): Variable rate, depending on the classification of the steel.
• PIS and COFINS-Import: PIS (1.65%) and COFINS (7.6%). These taxes are non-cumulative, allowing the use of future credits.
• ICMS: Variable rate according to the state of destination. The calculation is complex, as it focuses on the value of the goods, including II, IPI, PIS, COFINS and other expenses.
• Customs Fees: AFRMM (Additional Freight for Renewal of the Merchant Navy) and Siscomex rate.

Steel Export

• Tax Immunity: Exports are exempt from II, IPI, PIS and COFINS, which stimulates international competitiveness.
• Tax Credits: Companies can take advantage of PIS and COFINS credits generated in import operations or in the domestic market for future compensation.

Tax Benefits and Special Regimes

To optimize the tax burden, it is essential to consider tax benefits and special regimes, such as:

• Drawback: Suspension or exemption of taxes on imported inputs intended for export.
• Reintegra: PIS/COFINS credit on exports.
• Special Customs Regimes: Ex-Tariff, Customs Warehouse and Special Warehouse, which allow the suspension or exemption of taxes on the import of inputs intended for export.

Required Licenses and Registrations

To operate in the steel trade, it is essential to comply with a series of legal requirements, such as:

• RADAR: Mandatory registration for import and export operations.
• Federal Technical Registry (CTF/IBAMA): For activities with environmental impact.
• Environmental Licensing: Ensures compliance with environmental standards.
• Certification of Origin: Proves the origin of the product for tariff benefits in international agreements.

Choice of Corporate Type

The choice between Limited Liability Company (LTDA) and Corporations (S.A.) depends on the business model and growth plans.

• LTDA: Ideal for small and medium-sized companies, with asset protection and lower costs.
• S.A.: Recommended for large companies or those planning to raise investments.

Strategies to Ensure Compliance and Competitiveness

1. Tax and Regulatory Due Diligence: Identify risks and structure operations in line with the legislation.
2. Periodic Audits: Correct flaws before they become tax or legal liabilities.
3. Transfer Pricing Agreements (TP): Ensure compliance in transactions between companies of the same economic group.
4. Ongoing Legal and Tax Advice: Keep up to date with changes in legislation.

The tax structure and legal compliance are decisive for the competitiveness and sustainability of steel import and export companies. All the steps listed are essential to ensure operational efficiency and cost reduction. As an expert, I recommend investing in strategic planning and expert advice to navigate safely and successfully in this complex and dynamic market.

If your company operates in the steel sector and needs personalized guidance, I am available to help build a solid and competitive tax structure.

Claudia Regina Gabriele

Tax Solutions