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Expanding to Brazil: A Guide to Successfully Launching a D2C E-commerce Brand

Expanding to Brazil: A Guide to Successfully Launching a D2C E-commerce Brand

Produzido por  

Alex Kamath

21/3/2024

Guide to Successfully Launching a D2C E-commerce Brand in Brazil: How to Work with IOR and MOR to Mitigate Tax and Regulatory Challenges.

Increasingly, leading global and US e-commerce direct to consumer (D2C) brands are turning to the Brazilian market for growth.  Over the next four years, the compound annual growth rate (CAGR) for Brazil is over 14% with a total market of over $82 billion by 2027.

Launching a direct-to-consumer e-commerce brand in Brazil, however, can be a challenging endeavor for many reasons. Brazil is a large and complex country, with a wide range of regulations, taxes, and customs duties that can make it difficult for foreign companies to navigate. However, there are two key strategies that can help mitigate these challenges: working with an importer of record (IOR) and a merchant of record (MOR).

First, it's important to understand the challenges of launching in Brazil.

Brazilian Tax System

One of the biggest problems is navigating Brazil's complex tax system.

Brazil has one of the highest tax burdens in the world, and there are a variety of taxes that apply to e-commerce transactions, including:

These taxes can vary depending on the product sold, the location of the buyer, and other factors, which can make it difficult for foreign companies to accurately calculate their tax responsibilities.

Brazilian Customs Regulations

Another major challenge is navigating Brazil's customs regulations.

The country has strict rules around the importation of goods, including requirements for specific documentation, packaging, and labeling. Non-compliance with these regulations can result in delays at the border, fees, additional fines, and even the seizure of goods.

Variety of Other Regulatory Challenges in Brazil

Finally, there are a variety of other regulatory challenges that can make it difficult for foreign companies to implement in Brazil. For example, there are restrictions on the types of products that can be sold in the country, as well as requirements for product testing and certification.

Given these challenges, how can an Importer of Record (IOR) and a Merchant of Record (MOR) help a global D2C e-commerce brand enter Brazil?

3 Key ways that IOR and MOR can be useful:

Here are some of the key ways that these services can be useful:

1. Simplifying Tax Compliance:

One of the biggest benefits of working with an IOR and MOR is that they can help simplify tax compliance.

These companies are responsible for registering with the appropriate tax authorities; calculating and remitting taxes; and keeping track of all necessary documentation.

By working with an IOR and MOR, a foreign company can delegate these responsibilities and focus on other aspects of their business.

2. Managing Custom Fees

An IOR can also help manage customs duties and other import fees.

They can handle the clearance of goods at the border, pay any necessary fees and taxes, and ensure that all necessary documentation is in order.

This can help avoid delays and ensure that goods arrive at their destination on time.

3. Navigating Regulations 

An IOR and MOR can also help navigate the various regulations that apply to e-commerce transactions in Brazil.

They can help ensure that products meet all necessary testing and certification requirements and can help ensure compliance with data protection regulations. Here are some specific examples of the complex customs regulations that brands need to be aware of when entering Brazil:

Here are some specific examples of the complex customs regulations that brands need to be aware of when entering Brazil:

It is important to emphasize that although an IOR and MOR can help a global e-commerce brand enter Brazil, they are not a long-term solution.

Ultimately, it's important for a foreign company to establish its own entity in Brazil to fully capitalize on the market. However, working with an IOR and MOR can help a company test the market and gain a foothold in Brazil while working to establish its own entity.

Conclusion

Launching a direct-to-consumer (D2C) e-commerce brand in Brazil can be a complex and challenging process, but working with an IOR and MOR can help mitigate many of these challenges.

By simplifying tax compliance, managing customs tariffs, and navigating regulations; an IOR and MOR can help foreign companies successfully enter the Brazilian market and test it out while working to establish their own entity.

The International Expansion team at Cubbo has a comprehensive IOR and MOR solution for leading global direct-to-consumer (D2C) e-commerce brands looking to enter Brazil.

Our team is ready to use our experience and expertise to make entering Brazil a success.

We offer a high-quality service throughout the entire process, from a detailed analysis of the duties and specific regulatory requirements that apply to your product, to the coordination of the nationalization of your product and the collection of appropriate taxes and other items when your product is sold in Brazil.

All partner brands can take advantage of Cubbo's e-commerce fulfillment infrastructure in Brazil.

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