The special customs regime for drawback , instituted in 1966 by Decree Law No. 37, of 11/21/66, consists of the suspension or elimination of taxes levied on imported inputs for use in exported products.

The mechanism acts as an incentive to exports, as it reduces the production costs of exportable products, making them more competitive in the international market.

There are three types of drawback: exemption, suspension and refund of taxes. The first modality consists of exemption from taxes levied on the import of goods, in equivalent quantity and quality, intended to replace another one previously imported, with payment of taxes, and used in the industrialization of exported products.

The second, on the suspension of taxes on the import of goods to be used in the industrialization of products that must be exported. Meanwhile, the third deals with the refund of taxes paid on the import of imported input used in exported product.

The refund drawback is practically no longer used. The export incentive instrument under examination basically comprises the modalities of exemption and suspension.

Source: Receita Federal