SISCOSERV AND NBS – THE BRAZILIAN EFFORT IN MEASURING ITS FOREIGN TRADE IN SERVICES

1. SISCOSERV AND NBS – THE BRAZILIAN EFFORT IN MEASURING ITS FOREIGN TRADE IN SERVICES Meeting of the WPTGS, Paris, 16 – 18 November 2009 1

2. BACKGROUND • Service sector in Brazil has traditionally accounted for the great part of the country’s GDP. Today, it is also the greatest recipient of Foreign Direct Investment. • Brazilian service exports in particular have been increasing in recent years at a faster rate than have the world’s total exports of services. Their growth has been limited by the low availability and soundness of current statistics in services trade. • To address the demands for more relevant, detailed and internationally comparable statistics on services trade, the Brazilian Government (through the Ministry of Development, Industry and Trade) has advanced two main initiatives: the SISCOSERV and the NBS.

3. SISCOSERV INTEGRATED SYSTEM OF FOREIGN TRADE IN SERVICES, INTANGIBLES AND OTHER OPERATIONS THAT PRODUCE VARIATIONS IN THE CAPITAL OF THE ENTITIES

4. INTEGRATED SYSTEM OF FOREIGN TRADE IN SERVICES, INTANGIBLES AND OTHER OPERATIONS THAT PRODUCE VARIATIONS IN THE CAPITAL OF THE ENTITIES • Online measurement of Brazil’s foreign trade in services and the production of statistics relevant for the formulation and implementation of public policies. • Help the management of the support mechanisms (credit and financial incentives, tax relief, trade promotion, etc.) created at the Federal, State and Local levels to strengthen Brazilian services exports. • Support international negotiations on trade in services.

5. ORIGINS OF THE SISCOSERV: • Action 1H20 of the “Pluriannual Plan” 2008-2011 • Responsibility: Ministry of Development, Industry and Foreign Trade (MDIC) • Coordination: • Secretariat of Commerce and Services (SCS) / Department of Commerce and Service Policies (DECOS)

6. SISCOSERV COMMISSION SCS/MDIC RFB/MF BACEN Trade Policy Fiscal/Tax Policy Exchange Policy The Joint Act nº 170, of 8/20/2008, signed by the Minister of Development, Industry and Foreign Trade (MDIC), the President of the Central Bank (BACEN) and the Minister of Economy (MF), created the SISCOSERV Commission.

7. TECHNICAL GROUP Act nº 01 (9/19/2008) of the SISCOSERV Commission created the Technical Group to assist the Commission, composed of three subgroups: • Harmonization of Concepts • Legal definitions • Creation of registries • Establishment of the SISCOSERV Subgroup 1: Legislation (SCS / RFB / BACEN) Subgroup 2: System Development (SCS / RFB / SERPRO) • Development of the Sales and the Acquisition Modules of the SISCOSERV • Homologation, Training and Production Phases Subgroup 3: Nomenclature (SCS / RFB /BACEN / IBGE) • Creation of the 9-digit classifier, based on the CPC, with a structure similar to the Mercosur Common Nomenclature (NCM)

8. BASIC CHARACTERISTICS OF THE SISCOSERV • The System will be available online, where operations will be registered. • Access by Digital Certificate and an Electronic Warrant. • Classification of the operations: Brazilian Nomenclature of Services, Intangibles and Other Operations that Produce Variations in the Capital of the Entities (NBS). • Only running or completed services will be registered. • There will be no need for previous approval of the registry by the government.

9. BASIC CHARACTERISTICS OF THE SISCOSERV • The four GATS Modes will be easily identifiable. • Tool functionality to assist users. • News functionality related to operations carried out in SISCOSERV. • Periodical and customized reports will be available to the federal, state and local agencies responsible for the mechanisms that support services exports. • Possibility of communication with other electronic systems of the Brazilian Government in the future.

10. STATISTICAL REPORTS • The Reports will be a central feature of the system. • Managers of the SISCOSERV (SCS and the Federal Revenue) will access, select, sort, filter, average, disperse, consolidate or refine the data. • Crossings of information will be possible through periodical management reports, for instance: between each service in the NBS and the countries of destination; each GATS Mode and the service supplied; each government incentive and services supplied; etc. • “N” by “n” combinations will also be possible.

11. STATISTICAL REPORTS - PROTOTYPE EXAMPLE: NBS X COUNTRY X MONTH

12. TECHNICAL MEETINGS: • Technical meetings were held aimed at: • Demonstrating the main functionalities of the SISCOSERV; • Presenting additional information for the public and private sectors; • Resolving possible inquiries concerning the system (since it will enter into operation in early 2010)

13. SUPPORT MECHANISMS: • The SISCOSERV will identify the public mechanisms that provide some type of incentive to services exports. • A list of these mechanisms was developed in consultation with the agencies in charge of them. • Mechanisms listed: • Credit supplying, financing and guarantees; • Trade promotion; • Tax exemption; • Federal, State and Local mechanisms.

14. SISCOSERV - MODULES SALES ACQUISITION • Will be registered in SISCOSERV information about transactions between residents or domiciled in Brazil and resident or domiciled abroad, involving services, intangibles and other operations that produce variations in the capital of the entities, including transactions of import and export services. • The Test Phase of the Sales Module initiated in October 1st, 2009, and will finish in November 30, 2009.

15. SISCOSERV SUB-MODULES • Commercial Sub-module • Will target the creation of more accurate statistics on services supplied under GATS Modes 1, 2 and 4 and will be administered by the SCS/MDIC. • Commercial Presence Sub-module • Will target the creation of more accurate statistics on services supplied under GATS Mode 3 and ultimately on foreign affiliates trade in services (FATS). • Revenue/Billing Sub-module • Will be administered by the Federal Revenue of Brazil and will integrate gathered data with the other information provided by the taxpayers, thus allowing for a better control over the taxes involved.

16. Registry (RVS) Include Rectify Consult Adding to the RVS Include Rectify Consult COMMERCIAL SUB-MODULE:

17. Data of the Purchaser Name, Address, Purchaser’s Country; Data of the Business NBS Code, Country of Destination, Currency, Mode of Supply, Data of Beginning and Finishing, Amount, Support Mechanism; Connection with export of goods; Complimentary Information; REGISTRY (RVS):

18. Frames Prototypes

19. Accessing the System

20. Accessing the System

21. Accessing the System

22. Including Registry

23. Commercial Sub-module

24. Commercial Sub-module

25. Commercial Sub-module

26. Commercial Sub-module

27. Commercial Sub-module

28. Commercial Sub-module

29. Commercial Sub-module

30. Commercial Sub-module

31. Commercial Sub-module

32. Commercial Sub-module

33. Commercial Sub-module

34. Including Data on Commercial Presence

35. Commercial Presence Sub-module

36. Commercial Presence Sub-module

37. Commercial Presence Sub-module

38. Commercial Presence Sub-module

39. Commercial Presence Sub-module

40. NBS: BRAZILIAN NOMENCLATURE OF SERVICES, INTANGIBLES AND OTHER OPERATIONS THAT PRODUCE VARIATIONS IN THE CAPITAL OF THE ENTITIES

41. The NBS is a 9-digit classification system that will identify the services, intangibles and other operations that produce variations in the capital of the entities Examples:1 ) SERVICES: engineering services; web management services; photographic services.2) INTANGIBLES: licensing of patents and trademarks.3) OTHER OPERATIONS THAT PRODUCE VARIATIONS IN THE CAPITAL OF THE ENTITIES: food and beverage supplies; financial leasing; franchising. NBS

42. NBS • The NBS will provide a straightforward, technical mechanism for the classification of services (taken in their broader definition), with an easy and familiar structure. • The NBS (as well as its explanatory notes, the NEBS) will be ordered by an Act of the Executive Branch at the Federal level. • It will have a neutral nature with respect to the: • Tax laws; • Economic laws; • Other regulating norms of the Public Administration.

43. NBS • Will allow for the creation of the Business and Revenue Registries of the operations. • Will also allow the consolidation of the data on service operations, which in turn will allow for more targeted public policies, the tax control of service operations and the negotiations of international trade agreements. • It is possible that over time the NBS will be used (as has the NCM) in a subsidiary manner by the Federal, State and Local governments.

44. NBS • The NBS was developed jointly by the following agencies: • The GT-3 of the SISCOSERV (MF, RFB, MDIC, SCS, BCB and IBGE); • 55 consulted government agencies; • Local governments with relevant services exports; • Public consultations. • The United Nations Central Product Classification, Draft Version 2.0 (CPC 2.0), served as a starting point and the basis of the NBS. Not all the of the CPC was used though, only its sections related to the provision of services. • The focus of the NBS, however, is not on the service economic activity but on the characteristics of the service provision.

45. NBS • Contents of the NBS: • Summary • Section and Chapter Notes • Explain what may or may not be classified under them. • These notes have legal effects. • Rules • Allow the definition of a given service by the NBS.

46. NBS • Structure of the NBS: • I. 6 Sections • II. 27 Chapters Codifying (similar to the NCM): Note: The digit “1” was added in all NBS codes. NBS NEBS

47. NBS Sections I to III

48. NBS Sections IV to VI

49. THANK YOU VERY MUCH! Ministry of Development, Industry and Foreign Trade (MDIC) Secretariat of Commerce and Services (SCS) JANE ALCANFOR DE PINHO General Coordinator for Services Telephone: (+ 55 61) 2027-7214 E-mail: cgse.decos@mdic.gov.br SISCOSERV link: www.siscoserv.mdic.gov.br 49