Site selection, in tax matters, consists in the prior choice of the best place to carry out business operations, considering the positive and negative consequences of a local tax legislation, such as rates and benefits. In this way, it is possible to verify in advance which tax burden will be charged on the operations you want to perform, as well as compare the advantages of each of the places of interest, whether they are different states or countries. This gives the taxpayer/importer more autonomy when choosing where to allocate your company, since it allows you to evaluate each possibility according to the economic, financial, and operational goals of the business.
In Brazil, imports activities are subject to various taxes, such as the II – Imposto de Importação (Import Tax), the IPI – Imposto sobre Produtos Industrializados (Tax on Industrialized Products), the PIS – Importação (Social Contribution on Imports) and, mostly, the ICMS – Importação (Tax on the Movement of Goods and Services). With regard to the latter, there are several tax benefits linked to it, all of them differently granted across the country, once the twenty-six Brazilian states are able to legislate and raise it. And about the benefits, each one of them are focused at a particular sector, product, or operation, but all share the aim of encouraging taxpayers to perform customs clearance in their territories/jurisdictions. The intention is to maintain or increase the collection of the ICMS – Importação.
In this context, observing the company’s activities branch, and considering that the ICMS focuses on several stages of trade/sale of goods, the Site Selection allows to analyze in each of the States of interest, prior to importation, the rates levied on: import, internal and interstate commerce. This verification consists of a tax and operational planning of the company’s activities that will make visible to the Company’s Management, at its choice, the best model of operationalization and taxation of each business – pointing out the existence of tax benefit applicable to the operations and/or products it trades.
This practice may represent a considerable differential in the company’s competitiveness, both in relation to other importers in the sector, as well as to national producers that sell in the interstate market. Finally, it should be noted that this same planning applies to all other taxes and operations subject, especially to state and municipal taxes.
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