What is a “Trading” company?
Overseas visitors may be puzzled by the number of so-called “trading” firms prominently placed in the LABACE exhibition areas. Why at an event that lets potential purchasers meet directly with manufacturers do Brazilian middlemen occupy so much space?
Sertrading, for example, is at its fourth LABACE, and vice president Luciano Sapata said, “We began 2013 with great expectations and have already imported 25 aircraft at an average cost of R$8 million [U.S.$4 million].” The firm sees LABACE as an opportunity to explain to potential customers how the importation procedure functions in Brazil. “All of Sertrading’s importation processes are agile and done in a secure and transparent manner. We always seek improvements in the time required, and to reduce costs and possible bureaucracy,” he said.
AIN spoke with Emily Gruppo of Colombia Trading, who explained that importing aircraft or aircraft parts through a “trading” firm can yield impressive tax savings. Most taxes in Brazil are on consumption rather than on income, one of the major taxes being the ICSM, similar to a VAT tax, that varies by state and by product. Normally someone who imports an aircraft to São Paulo would pay ICMS tax at a rate of 18 percent, but if the same aircraft were purchased through a “trading” firm, the rate drops to 4 percent.
Air taxi firms are already entitled to a reduced rate of 4 percent under another law, but Gruppo claims that correctly structured transactions can still provide gains. For example, the IPI tax, normally 10 percent, can be fully refunded if importation is done through a state that enjoys tax incentives, and tax credits can be generated that the “trading” firm can redeem on other imports. Colombia trading, she said, offers not only knowledge of tax advantages, but also specialized knowledge of customs regulations, as well as the rules of the FAA and its Brazilian equivalent, ANAC.