See below the full text published by our partner Hélvio Santos Santana on September 05, 2020
The World Customs Organization (WCO) approved, during the Harmonized System Convention held that year, the Harmonized System Nomenclature 2022 Edition, adopted by customs around the world for the uniform classification of internationally traded goods. The approved decisions included a specific subheading, in Chapter 88, for Remotely Piloted Aircrafts (RPA), commonly referred to as “drones”.
Increasingly used in sectors such as agribusiness, infrastructure and public security, the drones represent a market that has been exponentially growing every year. Data from the National Civil Aviation Agency (ANAC) show an increase in new registrations, including during the Covid-19 pandemic, when 77 thousand aircrafts were registered from January to June, a 13% increase compared to the same period last year.
The WCO’s decision is important for the market of this product in Brazil, and should put an end to numerous tax disputes involving importers of drones. After classifying the equipment as “air vehicles” for years, many companies received tax assessment notices for tax reclassification and review, resulting from a controversial understanding that emerged in 2017 about the essential function of these goods. This issue ended up raising the tax levied on the product and reducing the official market for this type of aircraft.
The discussion about the correct tax classification of drones had its first public record in 2015, when the Harmonized System Nomenclature 2017 Edition, the current edition of the HS nomenclature was approved. In that document , a text was approved mentioning a “digital camera integrated to a remotely guided helicopter with four rotors”, implying that the digital camera would be the essential element of the product, a thesis vehemently opposed by engineers, aviation specialists and market enthusiasts.
The tax classification of any and all the RPAs under the framework proposed by the WCO in 2015 violates Article 106, caput, of the Brazilian Aeronautics Code and can cause serious risks to airspace. It also opposes Article 8 of the Chicago Convention, in which “each Contracting State undertakes to take the necessary measures to ensure that the unmanned flight of such aircraft in accessible regions of civil aircrafts is controlled, in order to avoid any danger to civil aircraft.” Actually, if a drone is imported under the MCN (Mercosur Common Nomenclature) of a digital camera, it cannot be resold as an aircraft and thereby does not need to be registered with ANAC, thus compromising control by the competent authorities.
This issue was also extended to the tax field and, on 10/02/2017, Normative Instruction 1.747 of the Brazilian Federal Internal Revenue Service was published in the Federal Official Gazette, approving the translation into Portuguese of the fourth edition of the WCO Classification Opinions Collection. From then on, some Brazilian customs started to demand, without distinction and without in-depth analysis of the product, the change in the import declarations classifying the drones in the MCN of aircrafts, so that the tax classification of digital cameras be used, whose taxation is almost 40% higher. Accordingly, imports of drones into the country experienced sharp reduction, resulting into increased smuggling, due to the surge in prices on the official market.
From a technical point of view, the essential nature of the drone was analyzed by the Integrated Systems Laboratory of the Polytechnic School of USP, which concluded: “the small Class 3 ANAC Aircrafts, associated with cyber-physical drone systems, are Remotely Piloted Aircrafts whose sophistication is equaled to that of larger ones” . The study, commissioned by the Brazilian Association of Information Technology Distributors – Abradisti and led by Professor Dr. João Antônio Zuffo, further states that the system of image acquisition by the first person view sensor (FPV) “is only a component, an image sensor whose cost, compared to the total cost of the cyber-physical system, does not reach 10 % of the price of the other components” .
Finally, so many problems around the world have caused a shift in the understanding of the WCO’s Harmonized System Committee itself. Hence, Tax Classification Opinions Collection 2022 was approved, with an Explanatory Note created in Chapter 88 (aircrafts and space devices, and their parts), which consolidated the correct classification of drones. The new subheading 88.06 (unmanned aircrafts) was also created, specifically for RPA.
Although the new Collection is only expected to entry into force in January 2022, this is a very important advance, since it overcomes the mistaken assessment that complex aerospace systems such as drones (regardless of class) should be classified as digital cameras.
For the time being, an understanding has to be set which guarantees Brazilian distributors conditions for importing these goods within the conditions established by the WCO’s Harmonized System Committee. Since it already defines that these products are remotely piloted aircrafts, there is no reason to maintain a different classification in our country.
 WCO’s Classification Opinions Collection
 Technical Opinion, page 266
 Technical opinion, page 265