DOING BUSINESS IN BRAZIL

Transcription

1 DOING BUSINESS IN BRAZIL A SHORT LEGAL GUIDE FOR FOREIGN INVESTORS BROUGHT TO YOU BY ALMEIDA GUILHERME ADVOGADOS ASSOCIADOS

2 OVERVIEW BRAZIL is a rapidly developing country which offers great opportunities for investment as well as the establishment of new companies to operate in several different areas. As part of the so-called BRIC (Brazil, Russia, India and China) group, BRAZIL has enormous potential with its huge domestic market and a diversified economy.

3 INVESTMENTS In BRAZIL, all investments must be registered with or approved by BRAZIL s Central Bank (Banco Central do Brasil). All contracts and financial transactions in BRAZIL must be executed and carried out in Brazil s currency, the Real. The participation of a Brazilian financial institution in the handling of transactions and conversions of foreign currency to Reais, is important.

4 TYPES OF INVESTMENTS A company seeking to invest in BRAZIL may choose one of the options bellow : Incorporation of a Brazilian company Opening of a branch Investment in the capital or financial market Opening of a new company In case the foreign company desires to open a branch or a new company, it must submit an application to the Brazilian Government for approval.

5 RESTRICTED AREAS Although BRAZIL`s market is broad and very diversified, some areas are reserved strictly for Brazilian citizens. These areas are: nuclear energy, health services, businesses set up abutting international borders, post office and telegraph services, domestic flight routes, aerospace industry, ownership and management of newspapers, magazines, periodicals, and radio and television networks.

6 CORPORATE ENTITIES In BRAZIL, there are several corporate entities, each with different characteristics. The most commonly employed are the Limited Liability Company (Sociedade Limitada) and the Joint- Stock Company (Sociedade por Ações). The common characteristic to both corporate entities is the restricted liability of the partner, which corresponds to the amount paid for shares or quotas. A company, whether a Limited Liability Company or a Joint- Stock Company, must have its documentation filed with the Board of Commerce in the state where it will be doing business, in order to start functioning properly.

7 LEGAL REPRESENTATIVE The partners do not necessarily have to live in Brazil. They may all reside abroad if so desired. However, legislation requires that, in the case of partners living abroad, the company appoints a legal representative who must reside in the country and have full legal powers to represent the company as a partner.

8 LABOR LAWS When opening a branch office or starting a new business, the foreign company must be aware of the labor laws in BRAZIL. Awareness and careful adherence to the rules will help avoid fines and court proceedings. Brazilian labor legislation permits foreign employees to be hired through a special regime. When needed, partners may send someone they trust to work in their new company in Brazil.

9 ENVIRONMENTAL AND COMPETITION LAWS Depending on the chosen area, there may be environmental issues involved. The company needs to be aware of the applicable legislation since there are administrative penalties, and both civil and criminal liabilities on the books. Regarding the competition laws, the company needs to follow them carefully so as not to be held responsible for crimes involving competition. This legislation is designed to protect fair trade in the country.

10 INTELLECTUAL PROPERTY BRAZIL is a signatory of the Paris Convention, which will help the foreign company to establish its trademarks nationwide. All the procedures regarding the registration/ protection of any intellectual property must be handled through the INPI (Brazilian Industrial Property Institute).

11 TAXES There are several taxes which the investor must be aware of. Some are directly connected to the type of commercial activity. Other taxes will depend on the activity type as well as products sold; rates will vary accordingly. Some of these taxes are of a local/municipal nature. There are state taxes which vary from state to state, and still, others that are the same nationwide.

12 TAXES The rate used to calculate the amount of taxes to be paid will depend on several issues. For example, if the investor decides to buy a property in Brazil, they will have to pay an annual property tax (IPTU). If the company owns vehicles, an annual vehicular tax (IPVA) applies just as it does to private citizens.

13 TAXES Type Based on: II (Import Duty) IPI (Tax on Industrialized Products) ICMS (Sales Tax) ISS (Tax on Services) IRPJ (Corporate Income Tax) CSL (Social Contribution on Profits) PIS (Profit Participation Program Contribution) COFINS (Social Security Financing Contribution) IPTU (Urban Land and Building Tax) IPVA (Vehicle Tax) Importation of goods Production or importation of industrialized goods Sale of goods Services rendered Profits Profits Profits Profits Urban property ownership Vehicle ownership

14 PROFESSIONAL ASSISTANCE This guide is intended to be a brief overview of what is necessary for one to settle on an investment in BRAZIL. Investors wishing to become part of BRAZIL s market and economy should find a law firm here in BRAZIL that can assist them in taking all the necessary steps to make their new company fully operational.

15 Thank you for your interest in Brazil. Please contact us with any comments or questions: