The Brazilian Government decided to withdraw another obstacle to the entry of foreign capital in Brazil. The Board of the Central Bank of Brazil (Banco Central do Brasil - Bacen) eliminated the maximum term of five years for export financing transactions that imply in the anticipation of funds to the Brazilian exporter by way of advance the export receipt, known as Advance Payment (Pagamento Antecipado – PA).
This decision was implemented by means of Bacen Circular No. 3661, of July 3, 2013 (Circular 3661/2013), which approved the amendment to subsection 2-A of section 2 of chapter 3 of title 3 of the Exchange and Foreign Capital Regulation (Regulamento do Mercado de Câmbio e Capitais Internacionais –RMCCI) approved by Bacen Circular No. 3280, of March 9, 2005. Subsection 2-A deals with the registration with Bacen of the PA transactions involving the export of goods or services prior to 360 days in relation to the shipment of goods or the provision of services. This registration is made in the Financial Operation Registration – ROF module of the Electronic Declaratory Registration– RDE of the Central Bank of Brazil Information System (Sisbacen).
From now on, there is no maximum term for PA transactions. Transactions exceeding 360 days are deemed to be long term transactions for the purpose of Circular 3661/2013 and can be linked to exports of the borrower of the financing, its parent company, its subsidiaries or companies that are controlled by its parent company.
For the registration of the PA transaction it is necessary to have the effective entry of funds into Brazil. This entry can be made through: (i) international transfer of Brazilian Currency (Reais), including payment orders from abroad in Brazilian currency; or (ii) exchange contracts settled prior to the shipment of the goods or the rendering of the service.
The repayment of principal of the PA transaction must be carried out by the shipment of goods or the provision of services, and interest can be paid through financial transfers or exports.
In the event that the shipment of goods or the provision of services does not happen, the funds sent to Brazil may be returned abroad to the country of origin, or the corresponding registration will be made in the modality of foreign direct investment or external loan.
After the ROF is obtained, even though prior to the registration of the payment scheme, remittances abroad may be carried out by way of payment of fees.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.