What Is NCM?
The Mercosur Common Nomenclature (NCM) is the goods classification system used by Brazil and other Mercosur countries. Based on the WCO Harmonized System (HS), every imported or exported product must be classified under an 8-digit NCM code.
The NCM code matters because it determines: federal tax rates (II, IPI, PIS, COFINS), state ICMS, technical regulations (ANVISA, INMETRO), tax benefits (drawback, ex-tarifário) and official foreign trade statistics.
Classifying a product under the right NCM is one of the most important decisions in any foreign trade operation. A misclassification can lead to fines of up to 75% of the tax value.
NCM Code Structure
The NCM code has 8 digits, organized in 4 levels:
Chapter
2 digits — e.g. 84 = Machinery and mechanical appliances
Heading
4 digits — e.g. 8471 = Automatic data processing machines
Subheading (HS)
6 digits = international HS code — e.g. 847130 = Portable machines ≤ 10kg
NCM Item
8 digits = Mercosur-specific — e.g. 84713011 = Notebooks
The first 6 digits are identical in 200+ countries that use the HS. The last 2 are Mercosur-specific.
NCM vs HS vs HTS
6 digits — International standard, WTO tariffs, global statistics
8 digits — Brazil, Argentina, Paraguay and Uruguay — taxes and regulation
8-10 digits — United States — US import tariffs
How to Classify a Product
NCM classification follows the WCO General Rules of Interpretation (GRI). To classify correctly:
- Read the heading text — GRI 1 says classification starts with the legal text
- Consider Section and Chapter Notes — they may include or exclude specific products
- Apply the other GRIs — essential character, majority proportion, sets, etc.
- Check the official NCM — available on the Receita Federal portal
To speed things up, TRADEXA offers an AI-powered NCM classifier that processes natural-language descriptions and suggests codes with a confidence level.
Common Classification Mistakes
Description too generic — machine parts without specifying the type
Confusing raw material with finished product — cotton yarn is not a T-shirt
Ignoring the General Rules of Interpretation (GRI)
Not considering Section and Chapter Notes — specific inclusions and exclusions
Classifying by appearance instead of function — a smartphone is not just a communication device
Practical Tips
Always check the official NCM before each shipment — codes can be updated
Keep classification documentation — it may be required in audits
Use AI to speed up the process, but validate with a qualified professional
Check for special regimes that can lower taxes for your NCM
Follow NCM table changes — updates happen periodically