Your guide to doing business in Brazil
Brazil is the largest country in Latin America - and the region’s largest economy. With the Atlantic Ocean on its eastern coast, and numerous neighbours along its western and border, including Uruguay, Paraguay, Argentina, Bolivia, and Peru, Brazil is becoming a significant presence on the international economic landscape. The Brazilian economy has historically been supported by a strong agricultural sector, and an abundance of natural resources, including iron ore and range of precious metals, but has been industrialising since the mid-20th century. Major exports in Brazil include soybeans, coffee, sugar, tobacco, poultry, and beef, while recent discoveries of fossil fuel deposits have also made it one of the world’s top oil and gas exporters. Important domestic sectors include manufacturing (petrochemicals, automobiles, cement, and paper), high-tech industries, service industries, transport, and communications. In the 21st century, government reforms made Brazil one of the world’s fastest-growing economies - today, it is the 9th-largest in the world by GDP. Brazil is a founding member of the UN, a member of the G20, and the Organization of Ibero-American states.
Why invest in Brazil ?
Interested financiers will find a number of reasons to explore an investment venture in Brazil:
The Constitution states that foreign investment should be of national interest for the citizens of Brazil. Subsequently federal and state governments are open towards foreign investment that provides economic development, for example, providing wealth and job opportunities. Foreign and local investors are treaty equally, and are both eligible for investment incentives.
There is additional incentive for industrial exporting companies. The Recof-Sped is aimed at industrial exporting companies and allows the suspension of taxes in the importation or the domestic acquisition of goods to be used in manufacturing products, parts or components intended for exportation or the local market.
Previously, only assembling companies had the right to apply for the Recof. However, Recof-Sped expanded its benefits also to the industries of transformation, processing, packaging and repackaging. Thus, for instance, companies in the food, chemical or pharma segments may now benefit from Recof-Sped. The special regime provides for suspension of Import Tax (II), Excise Tax (IPI) and the Contributions to PIS / PASEP and COFINS in the acquisition of goods/inputs in domestic and foreign markets.
A company in Brazil is required to have a legal entity established in order to process a payroll.
The most common forms of entity are the corporation (sociedade por aҫӧes, commonly known as a S.A) and the private limited company (sociedade por quotas de responsabilidade limitada, commonly known as a limitada). Both may be wholly owned by private investors.
Registration number with the city hall
The timescale for completion of this process varies a lot depending on the city of incorporation but it will be a minimum of 75 days.
It is mandatory to make payments to both employees and the authorities from an in-country bank account. Generally, banks are open to the public from 10:00AM to 4:00PM, and closed on Saturdays.
The Supreme Court has decided that the Brazilian IRS has the right to access confidential bank information of both legal entities and individuals independently of justice authorisation. The RFB can extend control over financial transactions. The RFB will receive information on monthly transactions that exceed R$6,000.00 for legal entities and R$2,000.00 for individuals.
The working days in Brazil are Monday to Friday. The working day for commercial offices is usually eight hours, typically from 8:30AM or 9:00AM to 5:50PM or 6:00PM. Lunch breaks range from one hour to one and a half hours.
General Information: -
Brazil is South America's largest and most populous country, situated on the western coast of the Atlantic and sharing an extensive land border with all but two of its continental neighbours. Home to a variety of prehistoric and indigenous civilisations, Brazil was first colonised by Europeans in the 1500s. After a turbulent history, and a variety of governing powers, including the United Kingdom and Portugal, Brazil eventually emerged in the late 19th century as an independent republic. In the modern era, Brazil became a significant economic and political presence on the world stage, joining the UN, the G20, and the Organisation of American States - amongst many other international organisations. Brazil’s climate is varied, ranging from equatorial to temperate while seasonal patterns include sweltering, hot summer and torrential rainy seasons. Covered by vast swathes of Amazon rainforest, Brazil’s biodiversity is high, while the country itself hosts a variety of natural landscapes, including mountains, forests, dense urban centres, and long stretches of beach coastline.
Population: 198,7 million (UN, 2012)
Capital: Brasilia Largest City: Sao Paulo
GDP (2012): USD 2,253 trillion
Main Industries: Natural resources: Iron ore, manganese, bauxite, nickel, uranium, gemstones, oil, wood, and aluminium. Brazil has 14% of the world's renewable fresh water.
Main Language: Portuguese
Monetary Unit: 1 Real = 100 Centavos
Internet Domain: .br
International Dialling Code: +55
Good morning Bom dia
Good evening Boa noite
Do you speak English? Fala inglês?
Good bye Adeus
Thank you Obrigado (if you are male) Obrigada (if you are female)
See you later Até logo
Dates are usually written in the day, month and year sequence. For example, 1 July 2016 or 1/7/16.
Numbers are written with a period to denote thousands and a comma to denote fractions. For example, R$ 3.000,50 (three thousand reais and fifty centavos).
The tax year runs from 1st January to 31st December.
All companies are required to register with tax/social security authorities and obtain CPNJ (federal tax ID number). The incorporation process takes from three to four months to be completed.
There is no requirement for a third party to be licensed in order to make any tax and/or social security filings on the behalf of a client.
Further information can be found via the following governmental websites:
Residents who reside in Brazil or who are abroad but are a dependent of someone who must submit an Individual Tax Return (DIRPF) must apply for a reference number from the age of 14 years old.
The Brazilian IRS published the Normative Instruction 1,619, approving the multiplatform program to be used for filling the Individual Income Tax Return, Final Declaration of Inheritance and Departure Income Tax Returns, related to fiscal year 2016, calendar year 2015 (IRPF2016).
The tax returns generated by IRPF2016 must be submitted within March 1st and 29th of April 2016, by Internet, through Receitanet Java transmission program, available for download at RFB website.
According to Normative Instruction 1,613, individuals must submit the Annual Income Tax Return, if they were resident in Brazil during the 2015 calendar year and:
Monthly income tax contributions are paid on the 20th of the following month.
The penalty for late payment is 0.33% of the outstanding/due amount per day of delay, limited to 20%.
Monthly social security contributions are paid on the 20th of the following month. The penalty for late payment is 0.33% of the outstanding/due amount per day of delay, limited to 20%.
CAGED (until 7th of the month) Gfip (Social Security 20th of the month; Severance Fund 7th of the month)
RAIS (February 28th) DIRF (February 28th) All of the above mentioned documents do not require the client signature; they do, however, require a digital certificate (electronic signature). All filing is performed by the service provider unless the client has not allowed for a power of attorney of the digital certificate.
When an employee is hired, the Labour Ministry must be informed following the specific procedure (CAGED) in the following month. This procedure requires registering with the authorities until the 7th working day of the next month and within the 24 hours of contracting.
Expat new starts are required to provide the following documentation:
Payment for leavers must be made within 10 consecutive days of the employee’s last day. If it is a pre-determined contract, payment must be made by the next working day after the last day worked. Notification of leaver to authorities must be made i.e. CAGED, FGTS.
Brazilian payroll involves withholding obligations on the part of employers, during each pay cycle - principally income tax and social security which are deducted at source and paid to authorities.
Employees in Brazil are taxed at a progressive rate of 7.5-27.5%, depending on their salary amount. Residency status is relevant to income tax in Brazil: residents of Brazil are taxed on all worldwide income, while non-residents are taxed only on income sourced from within the country.
Brazil’s social security system includes pension funds, health and sickness insurance, and unemployment insurance. Monthly contributions to social security are due from both employees and employers: