Brazil Drawback Beyond the Direct Exporter: Suppliers and ZFM

Drawback in Brazil reaches beyond the company that ships the goods. Secex Ordinance No. 44/2020, issued by the Secretariat of Foreign Trade (Secex) to govern the granting and management of the regime, extends the tax suspension to three situations in which the input and the shipment pass through different legal entities: the intermediate manufacturer, which imports or purchases inputs to produce a component sold to an exporting manufacturer; the company that sends its inputs to a third party under a tolling arrangement (industrialização por encomenda) and receives back the product that it exports itself; and the sale to a trading company (empresa comercial exportadora) or to an authorized trading firm, or the export on behalf of a third party, in which the shipment is made by another company and the holder of the act continues to be regarded as the exporter, under Article 31, § 3. Outside these cases, a sale in the domestic market, including a sale to the Manaus Free Trade Zone (ZFM), leaves the export commitment unfulfilled, however much the legislation of other taxes treats it as equivalent to an export.

These situations account for the bulk of the drawback used by industrial and mining groups in Brazil, in which the mine, the processing plant and the company that sells abroad are separate legal entities and the inputs are purchased by one and consumed by another. This is where concessory acts tend to be born in the name of the wrong holder, because the company that acquires the input differs from the one that exports, and the tax authorities, years later, demand the suspended taxes from the company that held the act without having the export.

This text describes each case with its requirements, the form of proof and what changes when the production scenario shifts during the term of validity of the act. The general deadlines of the regime, the term of validity of the concessory act, the regularization measures known as “incidentes” and the consequences of default are covered in the firm’s previous article on drawback suspension, which this text takes as its starting point. The legal basis is Article 12 of Law No. 11,945/2009, Joint Ordinance Secint/RFB No. 76/2022, as amended by Joint Ordinance Secex/RFB No. 3/2025, and Secex Ordinance No. 44/2020 as amended through Secex Ordinance No. 486/2026.

Can the exporter’s supplier hold its own drawback?

It can, as an intermediate manufacturer, the figure that Brazil’s drawback regime reserves for the intermediate supplier, provided that the product it sells is supplied directly to an industrial exporting company and used or consumed by that company in the manufacture of the final exported product. The provision is in Article 2, sole paragraph, item I, of Secex Ordinance No. 44/2020, and the figure exists both under suspension and under exemption, the latter by virtue of Article 48, § 1, item II. The intermediate manufacturer imports or purchases in the domestic market under suspension, manufactures the intermediate product and sells it in the domestic market to the exporter; the export commitment is fulfilled by the exporter, with the final product.

The application for the intermediate manufacturer’s concessory act requires, in addition to the usual elements, the CNPJ corporate taxpayer number of the industrial exporting companies to which the product is destined, under Article 11, item VI. This designation conditions the proof: a sale to an exporter absent from the act is left without coverage, and the inclusion of a new recipient depends on a request to amend the act during its term of validity, as provided in Article 6, § 3, of Joint Ordinance No. 76/2022, with the review under Article 23 of Secex Ordinance No. 44/2020. The product to be exported, for this purpose, is the one resulting from the exporter’s industrial process, as provided in Article 31, § 1, so that the compatibility and value-added analysis of Article 13 is carried out over the entire chain, from the intermediate manufacturer’s input to the final product that leaves the country.

Proof is twofold and depends on an act of another party. The intermediate manufacturer registers in its act the invoice (nota fiscal) for the sale of the intermediate product to the exporter, with the number of the act stated on the invoice; the exporter, in turn, states the number of the intermediate manufacturer’s concessory act in the item of the Single Export Declaration (DUE) covering the final product, under Article 32, item II, § 1, item II. Without the entry made by the exporter, the intermediate manufacturer’s act closes irregularly even though the goods have actually left the country; if the exporter failed to state the act in the DUE, Article 35 allows the information to be included in a DUE already registered, upon a request filed within 60 days of the expiration of the act and before closure. For this reason, the supply contract must oblige the exporter to provide that information in the DUE and to give the supplier access to proof of the registration of the export (averbação); Article 32, § 4, allows one and the same DUE item to prove the exporter’s act and one or more acts of intermediate manufacturers, and § 3 allows the exporter to prove the export of the final product through a sale to a trading company or to a commercial company authorized to operate in foreign trade, in the forms of items III and IV of Article 32.

Three limits deserve attention. The suspension for services linked to export, provided for in Article 12-A of Law No. 11,945/2009 and regulated by Secex in 2025 through Article 2-A of Ordinance No. 44/2020, is unavailable to the acts of intermediate manufacturers, by force of Article 5, sole paragraph, item I. The extended term of up to five years for long-cycle capital goods requires, in the intermediate manufacturer’s act, that the exporter’s final product be the long-cycle good, and this characteristic is waived for the intermediate product, under Article 20, §§ 3 and 4. And the same sales invoice can prove more than one concessory act only if no products of the same subitem of the NCM, the Mercosur Common Nomenclature, are linked to acts of different exporters and if the additional acts belong to intermediate manufacturers, as laid down in Article 32, § 2.

Who is the beneficiary when another company in the group carries out the processing?

The beneficiary is the company that acquires the inputs and exports the product, even when the plant belongs to another. Article 4 of Secex Ordinance No. 44/2020, reproduced in Article 10 of Joint Ordinance Secint/RFB No. 76/2022, admits tolling, under which the industrial or commercial company that benefits from the regime sends the goods imported or acquired under the concessory act for processing by third parties, and the processed product must be returned to the beneficiary for export by the beneficiary itself. The rule applies even when the third party is a company of the same group, whether parent or subsidiary, and it applies equally under exemption, by Article 50. The beneficiary may be a commercial company without a plant of its own; what the rule requires is that it own the inputs and export the product.

From this follows the condition that most often fails in practice. The inputs covered by the act must be acquired by the principal, in its own name, and sent to the toll processor with a dispatch invoice for processing; the toll processor returns the product with a return invoice and charges for the processing on a separate invoice. When it is the toll processor that buys the reagents, the wear parts or the explosives and passes them on in the price of the service, those inputs fall outside the principal’s act, because the principal never acquired them, and they also have no place in an act of the toll processor, because the toll processor exports nothing and sells no intermediate product; it merely provides a service. The result is that part of the tax cost the group believes to be suspended is in fact being paid or, worse, is being suspended under an act whose holder is unable to prove it.

The solution is contractual and documentary. The tolling agreement under Brazil’s drawback rules provides that the processing inputs are purchased by the principal and sent to the toll processor, including those the toll processor consumes at its plant on the principal’s behalf, with segregated inventory and with the number of the concessory act on the purchase invoices, as required by Article 28, § 3. When two companies of the group export from the same plant, each keeps its own act and buys its own inputs; Article 8 allows a single act for a head office and branches sharing the same CNPJ root, separate legal entities each need an act of their own, and Article 27, § 3, item IV, admits the transfer of an import declaration addition only between acts of the same company. The attempt to use one entity’s act for inputs consumed in another entity’s product is the source of assessments for default which the export, however real, fails to undo.

The return of the product to the principal is essential and is never presumed. If the processed product is sold directly by the toll processor, or leaves the toll processor’s plant for the final customer in the toll processor’s name, the transaction ceases to be tolling and becomes a sale, with a different act holder and a different form of proof. In mining, where the concentrate or bullion from one mine is processed at another company’s plant and leaves for the customer through the same gate, the return may be symbolic, with the return invoice issued to the principal and the sale invoiced by the principal, provided that the chain of invoices identifies the concessory act at each stage and that the state ICMS legislation admits the arrangement. The Paraná State ICMS Regulation admits the departure of the product directly from the toll processor’s plant to the principal’s customer: the toll processor issues the symbolic return invoice and the principal, established in the State, issues the sales invoice with whatever tax is due, in view of that return, to accompany the goods in transit to the recipient, under Article 7, § 1, of Annex VIII of Decree No. 7,871/2017. The Tax Consultation Division of the Paraná Finance Department conditions the arrangement on the principal and the toll processor both being domiciled in Paraná and on the return taking place within 180 days, and it accepts the arrangement also in a sale for the specific purpose of export, in Consultation Rulings No. 29/2019 and No. 54/2025. When the toll processor’s plant or the principal is located in another state, ICMS Agreement AE 15/74 applies, which requires the physical return to the establishment of origin and, absent a protocol between the states, leaves primary products of mineral origin outside the suspension; direct delivery to the customer then depends on the rule of each state, which generally reserves it for intrastate transactions. Secex may demand, at any time until closure, the technical report of Article 16, which since Ordinance No. 486/2026 may accompany the application itself, under Article 11-A, and which must describe the toll processor’s operation as a stage of the principal’s process, with the consumption ratios of each input.

Does a sale to the Manaus Free Trade Zone fulfill the export commitment?

No. Article 4 of Decree-Law No. 288/1967 treats the shipment of domestic goods to the Manaus Free Trade Zone as equivalent to an export for tax purposes, and it is on this equivalence that the IPI exemption, the non-levy of ICMS and the relief from PIS and Cofins on sales to the region rest. Drawback follows a rule of its own that runs in the opposite direction. Article 5, item I, of Secex Ordinance No. 44/2020 denies the regime to goods to be used in the manufacture of a product destined for consumption in the Free Trade Zone and in the free trade areas, on the basis of Article 7 of Decree-Law No. 1,435/1975, under which the equivalence excludes the incentives arising from the drawback regime, and Article 51, item I, repeats the prohibition for exemption. A product sold to Manaus for consumption there remains, for the purposes of the regime, an unexported product, and the inputs that compose it admit no suspension.

What does exist is a different figure. If the buyer in Manaus is a manufacturer that uses the product in the making of a good it exports, the supplier may be an intermediate manufacturer and the buyer the industrial exporter, with all the conditions of the first section: the buyer’s CNPJ in the act, the sales invoice registered, the number of the supplier’s act stated by the buyer in the DUE for the final product. This is the typical case of refined metal or concentrate sold to a refinery or a factory located in the Free Trade Zone that exports the finished product. What defines the regime is the destination of the product the buyer manufactures, wherever the buyer is located; if the same refinery sells part of its output in the domestic market, the proportion sold domestically leaves the supplier’s act unproven, and the commitment must be sized by the exported share.

Deemed export (exportação ficta) is a distinct and narrower figure in Brazil’s drawback rules. Article 32, item V, admits as fulfillment of the commitment an export carried out with no requirement that the product leave the national territory, proven by the DUE, and Article 53, § 2, does the same for exemption. These are the cases of Article 6 of Law No. 9,826/1999, in which payment is made in domestic currency or in freely convertible foreign currency and the sale is made to a company headquartered abroad, with delivery in Brazil for use in oil and gas exploration and production or for full incorporation into a final product exported to Brazil, to a foreign government body or to an international organization of which Brazil is a member, or, since Law No. 14,368/2022, for an aircraft manufactured in Brazil and delivered to a scheduled airline. A sale to a Brazilian buyer, with delivery in Manaus, falls outside these cases because the buyer headquartered abroad is missing, and a DUE documenting it would be improper.

The difference has a practical consequence for the design of the long-term contract. The supplier that sells its entire output to a single manufacturer in the Free Trade Zone must know, before applying for the act, the proportion the buyer exports, obtain from the buyer the undertaking to state the act in the DUE and provide for the revision of the act’s quantities if the proportion changes. Without this, the act closes partially irregular, with taxes due on the inputs proportional to the product that stayed in the domestic market, even though the supplier never sold anything outside the Free Trade Zone.

What should be done when the yield drops and inputs are left over during the term of validity?

The answer is to amend the act while it is in force, before reaching closure. Article 21 of Secex Ordinance No. 44/2020 requires a request to amend the quantities, within the term of validity, whenever there is a change in the production process, in the goods or in the quantities to be imported, acquired or exported. A drop in ore grade, the replacement of a reagent with another of a different specification or a contractual reduction in the exportable volume alter the consumption ratio on which the act was based, and § 1 of the same article requires that the new export forecast correspond to the total that could be produced and exported with all the goods already admitted and those still to be admitted. The technical report of Article 16, which Secex may demand at any time until closure, is the document that supports the amendment, with the new ratios signed electronically by the responsible technical professional, with an advanced or qualified signature, as required by Article 16, item VII, as worded by Ordinance No. 486/2026.

When the amendment is insufficient and inputs are left over, the path is that of the incidentes of Article 37, which the previous article describes and which matter here from a specific angle: Article 38 applies the same procedure to imported or acquired goods that were left unused in the production process, even when all the products provided for in the act have been exported. Exporting everything that was promised does not release the input that went unconsumed. The most commonly used alternative is allocation to domestic consumption with payment of the suspended taxes and additions, known as nationalization (clearance for domestic consumption), which must be reported in the act, with the corresponding import declaration or invoice, the quantity, the value and the reason for non-use, under §§ 1 and 2 of Article 37. Article 43, § 1, item II, admits regular closure with partial performance of the imports and exports, provided that the proportion between input and product is maintained; what breaks the proportion is precisely the input admitted and left unconsumed.

Nationalization carried out on the beneficiary’s own initiative, within the thirty days of Article 39, has a different cost from a later demand by the Brazilian Federal Revenue Service. In the first case, the taxes are paid with interest from the registration of the importation and the late-payment penalty from the thirty-first day, under the guidance of the First Section of the Superior Court of Justice in the divergence appeals in Special Appeal No. 1,580,304, already mentioned in the previous article; in the second, the ex officio penalty of seventy-five percent applies. In groups with several acts, the decision on what to nationalize and what to transfer requires a map of balances per act and per entity before expiration, because the transfer of an import declaration addition between acts is possible only between acts in force of the same company, with the addition cleared during the term of validity of the receiving act and within the balance of the corresponding NCM, as laid down in Article 27, § 3.

There is also a safeguard worth knowing. Article 18 denies a new act to a company that, having had more than one act closed in the two preceding years, linked no export at all to any of them, unless the closures were regular with incidentes of return, destruction, delivery to the National Treasury or transfer of regime. A company that, faced with a drop in yield, lets the act undergo ex officio closure with no export and no incidente compromises the group’s future acts; a company that regularizes through return, destruction, delivery to the National Treasury or transfer of regime preserves its access. Nationalization, under Article 37, item I, subitem c, falls outside the exception, and an act closed solely through it, with no export, counts toward the limit of Article 18.

What documentary structure supports drawback within a group?

The structure is the one that makes it possible to answer, for every kilogram of input admitted into the regime, on which invoice it came in, at which plant it was consumed, into which product it was incorporated and on which DUE it left the country. The audit of drawback is a cross-check: the Brazilian Federal Revenue Service compares the import declarations and purchase invoices linked to the act with inventory, production and exports, and regular closure before Secex is no obstacle to a later assessment by the Revenue Service, to which Article 3 of Joint Ordinance Secint/RFB No. 76/2022 reserves the audit activities and the assessment of the taxes. In a group, the cross-check runs across legal entities, and each transfer from one to another needs a document of its own.

Four sets of documents form this structure. The first is the contract between the entities, whether a tolling agreement or an intermediate product supply agreement, with clauses on who acquires the inputs, how dispatch and return take place, how inventory is segregated at the shared plant, who states the concessory act in the DUE and how the taxes are shared in the event of default. The second is the chain of invoices, with the number of the act on the purchase invoice, as required by Article 28, § 3, and, for the intermediate manufacturer, on the sales invoice to the exporter, whose export is proven by the exporter’s DUE; in a sale to a trading company or an authorized trading firm, Article 32, § 5, deems the export unaccomplished if the specific export purpose shipment invoice is left without the averbação registration event within 180 days of issuance. The third is the physical and accounting inventory control per act and per entity, with each company’s inputs identified at the plant, since the shared plant is the point at which the tax authorities presume commingling. The fourth is the technical report, a single one for the whole process, containing the consumption ratios of each product and each stage, including the stage carried out by a third party, and the identification of the residues and by-products with commercial value, which Article 41 requires to be reported at closure.

Segregation is a matter of substance. When the same mine gate lets out the concentrate of two entities, and the same reagents serve the processing of both, only inventory records kept per company make it possible to attribute each consumption to each act; in their absence, the tax authorities attribute the consumption to the entity that imported and demand from it the taxes on the share that served the other. Separate invoicing, with each entity selling its product in its own name, and the intercompany current account recording the cost of the inputs dispatched and of the processing charged complete the picture of intercompany drawback in Brazil.

With the reform of consumption taxation, the structure gains a layer. Enjoyment of the suspension with regard to the Contribution on Goods and Services (CBS) and the Tax on Goods and Services (IBS) under drawback suspension now depends on authorization of the legal entity by a joint act of the Brazilian Federal Revenue Service and the Managing Committee of the Tax on Goods and Services, provided for in Article 161, § 4, of CGIBS Resolution No. 6/2026 and of Decree No. 12,955/2026, with fourteen entry requirements, among them exports for more than one year, a computerized inventory system accessible to the tax authorities and an industrial capacity report, and with maintenance conditions that include a ceiling on suspended taxes of one hundred percent of net equity. § 3 of the same article extends the suspension to the beneficiary that carries out only intermediate stages of the process, which reaches the intermediate manufacturer, and Article 162 excludes the exemption and restitution modalities from the new tax and the new contribution; how the intermediate manufacturer, which exports through the purchasing manufacturer, is to meet the requirement of exports for more than one year is a point the joint act will have to clarify. The procedures for authorization, its waiver and its cancellation were reserved to a joint act still pending in October 2026, and the Secex concessory act remains a separate step for the import tax. Since authorization applies to each legal entity, acts whose term of validity extends into 2027 must be designed with dual authorization for each entity in the group, including those that only supply or process.

In what order should the group’s drawback be structured?

The order starts from the question of who exports, because that is what defines the holder of each act, and ends with the linking of the exports, because that is what proves the regime.

The actual review time at Secex and the time the exporter takes to amend the DUE vary, and the schedule must allow a margin before the act expires, because the deadlines of the regime run from expiration and are never suspended.

Sources consulted on 18 and 19 October 2026: Secex Ordinance No. 44/2020, consolidated text published by Secex; Joint Ordinance Secint/RFB No. 76/2022, full text on the Siscomex portal; Siscomex manual on integrated drawback suspension, 6th edition, April 2026; Secex, presentation on drawback and the Free Trade Zone, June 2022; Econet, intermediate drawback; CGIBS Resolution No. 6/2026, IBS regulation; Decree No. 12,955/2026, CBS regulation; Paraná State ICMS Regulation, Decree No. 7,871/2017, Annex VIII, consolidated text; SEFA-PR Consultation Ruling No. 54/2025, symbolic return and shipment for the specific purpose of export; ICMS Agreement AE 15/74; the firm’s article on drawback suspension.