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Authorized Economic Operator

Brazilian Program

June, 2015

Global view

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The Authorized Economic Operator (AEO) is defined by the World Customs Organization (WCO) as “a party involved in the international movement of goods in whatever function that has been approved by or on behalf of a national customs administration as complying with WCO or equivalent supply chain security standards”.

Global view

Authorized Economic Operator

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Global view

Operational AEO Programs

AEO under analysis and/or implementation

Customs Compliance programs

Brazilian Program

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Brazilian Program

The Brazilian Program for Authorized Economic Operators –AEO was set forth by the Federal Revenue’s Normative Instruction n.1,521/2014. The program will certify international trade stakeholders which present low operational risks, concerning both cargo physical security and tax and customs compliance.

Those certified as Authorized Economic Operators may benefit from several operational preferences, including being able to use the AEO seal, which states the company’s reliability before clients and authorities.

The application for an AEO certification is voluntary. Accordingly, not applying for the certification shall not hinder or impose limitations to the stakeholders’ activities regarding international trade.

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Brazilian Program

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AEO-Security (AEO-S): international trade stakeholders’ certification based on security criteria applied to the logistics chain, following the requirements set forth by the Brazilian Federal Revenue and the World Customs Organization (WCO).

AEO-Compliance (AEO-C): international trade stakeholders’ certification based on the compliance with tax and customs obligations.

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AEO-Full (AEO-F): certification comprising both AEO-S and AEO-C. 3

Implementation timeline

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Implementation timeline

December/2014 December/2015 December/2016

Implementation of AEO-S, focusing on the certification of

the stakeholder involved in the

export flow.

Implementation of AEO-C, focusing on the certification of

the stakeholder involved in the

import flow, and, therefore,

implementing AEO-F.

Integrating the Brazilian Program of AEO with other State agencies, e.g. authorizing agents, in order to simplify and integrate the

international trade procedures.

Benefits

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Benefits

i. Reduction in the percentage of cargo selected for conference channels and priority processing in export procedures;

ii. Priority in certification for the programs Phase 2;

iii. Waiving of the warranty required for Customs Transit Special Customs Regime;

iv. Waiving of requirements already fulfilled in AEO application for special customs regime application purposes; e

v. Participation in the AEO Forum, trainings and seminars for improving AEO Brazilian Program.

i. Benefiting from Mutual Recognition Agreements (MRA);

ii. Exclusive communication channel with the Brazilian Federal Revenue;

iii. Improvement of the company’s image and reputation as an AEO; e

iv. Simplification and integration of customs procedures regarding security and control.

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Eligibility and admissibility requirements

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Eligibility and admissibility requirements

Are eligible to the Brazilian AEO program the following stakeholders*:

Freight Forwarder Customs Broker Transporter

Port’s or airport’s operator

The depositary of goods under customs control

Importer or exporter

* The aforementioned list may be expanded by the Brazilian Administrative Customs Coordination (COANA).

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Eligibility and admissibility requirements

Are eligible the stakeholders which fulfill the following requirements: History of compliance with customs

legislation.

Computerized system for commercial, accounting, financial and operational management.

Financial soundness in order to maintain and improve logistics chain security.

Policies setting forth regular internal control audits.

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Eligibility and admissibility requirements

Additionally, the authorities also require from AEO-S’ applicants:

Commercial partners who adopt the security criteria required regarding the logistics chain.

Cargo unit control.

Access controls.

Human Resourses policies.

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Security procedures.

Security and threat awareness trainings.

Physical security of the facilities.

Information Technology.

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Eligibility and admissibility requirements

In combination with the eligibility requirements, the company shall also comply with the admissibility requirements regarding the certification procedure, as follows:

Electronic Tax

Domicile

Electronic Account Records

Corporate Taxpayer

Number with more than 2

years

Being an eligible

stakeholder for more than 2

years.

Certified tax regularity

3 years as a certified customs

broker, if applicable

Issuance of Electronic Transport

Bill (CT-e), if applicable

Formal Request

(electronic)

Absence of denied

applications in the last 6 months

Certification steps

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Certification steps

The procedures to apply for an AEO certification include the following sequential steps:

Self-assessment Questionnaire

Mantainance and Monitoring

Formal Request *

Assessment of admissibility

requirements.

Compliance assessment

Certification

The AEOs shall be subject to monitoring concerning the maintenance of the requirements and criteria for certification as well as a reviewing procedures in under 5 years.

Issuance of the AEO Certificate in recognition of the Customs-Company partnership. The certificate has not determined deadlines and shall comprise the headquarters and branches.

Assessment of compliance with the specific and general requirements of eligibility and safety of the logistics chain (90 days, extendable for equal period.

Certification AEO

Completion of the self-assessment questionnaire, and documentation to support

the answers.

Formal application request comprising the

aforementioned, questionnaire, supporting

documentation, among others.

Consists of an assessment of the company’s compliance

with the mandatory requirements from article 8,

mostly concerning the observance of tax and customs obligations.

* A Federal Revenue may request further information and documents, which shall be summited within 30 days from the notification.

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Certification steps

Self-assessment questionnaire

General information

Eligibility requirements

Security requirements

9 questions mostly regarding the company’s activities, structure and records.

10 questions which verify if the company fulfills all the eligibility requirements.

33 questions regarding the company’s supply chain structure and security measures in force.

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AEO and Blue Line

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AEO and Blue Line

AEO Blue Line

Applicable to different stakeholders of international trade, regardless of the number of transactions performed or equity;

The application consists of the self-assessment questionnaire and supporting documentation, without the mandatory presence of a audit company;

The evaluated criteria comprises the general record and structure information, eligibility requirements and security of the supply chain; and

Should be renewed every 5 years.

Applicable only to importer and exporter with equity equal or superior to BRL 10,000,000.00 and high number of transactions performed;

The application requires an audit report based on the standards set forth by the Federal Revenue;

The evaluated criteria comprises the company’s corporate information and structure, accounting records, international trade aspects (transactions, amendments, special customs regimes, etc.) and security of the supply chain; and

Should be renewed every 3 years.

Our methodology

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Our methodology

Our methodology

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Our methodology – AEO Presentation

The client Companies which are aware of being not compliant with the AEO requirements.

Objective Provide cliente with AEO information.

Approach

Complete mapping of the company’s structure and comparison with the requirements set by the AEO legislation. After the review, PwC, along with the client’s management, will prepare an action plan for the company’s compliance with the aforementioned requirements.

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Our methodology – Pre-Diagnosis

The client

Clients which intend to apply for the AEO certification, but wish to verify if the company is compliant with the main requirements of the program.

Objective Verifying in a shorter time and at lower cost if cliente complies with the main requirements to avoid denied applications.

Approach Mapping of the company’s main structure and comparison with the most critical requirements set by the AEO legislation.

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Our methodology – Complete Review

The client Clients which intend to apply for the AEO certification and are aware of its compliance with the requirements.

Objective Prepare answers to the questionnarie and analyze the support documents

Approach

Complete mapping of the company’s structure and comparison with the requirements set by the AEO legislation. After the review, PwC will issue the report with the results of our analisys.

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Our methodology - Certification

The client Clients which are applying for AEO certification.

Objective Assisting the company with the AEO certification process.

Approach

Assisting the company in the completion of the self-assessment questionnaire and in the preparation of the supporting documentation. Preparing the electronic files in accordance with the procedures set forth by the Federal Revenue, summiting the application and follow-up of the process.

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Our methodology

Steering committee

Management

Execution

PwC Client

Tax Partner Customs and International Trade

Director Advisory Partner

Directors

Customs and International Trade Manager

Advisory Manager Facilitators

Customs and International Trade Manager

Senior consultant

Our professionals

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Tax Partner Telephone: 3674-3747 lucimara.santos@br.pwc.com

Customs and International Trade Director Telephone: 3674-3553 daniel.maia@br.pwc.com

Lucimara Santos

Daniel Maia

Our professionals

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