Brazil – New Growth Path Through International Business

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Brazil is the world’s third largest emerging market, with a nominal GDP of R$5.9 trillion (or US$ 1.8 trillion).

It is the world’s 8th largest economy and it is the largest economy in Latin America. In 2014 it was the world’s 5th largest foreign direct investment recipient.

Brazil counts on relevant institutions and initiatives to support international business.

Ministry of Foreign Affairs – (MRE) – Itamaraty
www.itamaraty.gov.br

Department for Trade Promotion and Investment – DPR
Department for Trade Promotion and Investment (DPR) and the network of Trade Promotion Sectors (SECOMs), located in 104 Brazilian Embassies and Consulates all over the world is the reference for trade promotion , foreign direct investment attraction and internalization of Brazilian companies. There are 4 division areas in DPR. Get to know the main responsibilities each one is responsible for:

Investment Area:
dinv@itamaraty.gov.br
Support for foreign direct investment attraction and internalization of Brazilian companies. Some activities follow specific guidelines from the Federal Government of strategic sectors to focus (energy, infrastructure, logistics and IT). In order to support Brazilian companies aiming to become international, It develops contents about potential markets and uphold Brazilian companies’ specific interests alongside foreign governments.

Trade Promotion Projects Area:
dpg@itamaraty.gov.br
Responsible for the strategic planning and management of SECOMs network. It manages the website and the Foreign Trade and Investment Guide – Invest&Export (www.investexportbrasil.gov.br). Responsible for coordinating and integrating actions with APEX.

Commercial Intelligence Area:
dic@itamaraty.gov.br
Produces information and reports related to business sectors, potential markets – to support the main actions of the Ministry of Foreign Affaires.

Operation and Trade Promotion Department:
doc@itamaraty.gov.br
Responsible for commercial assignments organization in international missions involving different business sectors : workshops, roadshows, international fairs – events for expanding Brazilian exports of goods and services. It also promotes and fosters Brazilian tourism.

Cooperation Agreement – ACMinas and Ministry of Foreign Affairs (MRE)
ACMinas and Department for Trade Promotion and Investment – DPR signed in august 2016 a Cooperation Agreement in order to cooperate and put in place actions in order to expand Brazilian exports and foreign direct investment based on trade promotion action, sharing of products and services, joint actions to foster the internalization of Brazilian companies and increase foreign direct investment in Brazil, production and exchange of information and commercial intelligence products; training programs.

 

The cooperation already underway will be carried out through a strong and continuous action.

 

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Brazilian Trade and Investment Promotion Agency (APEX – Brazil)
www.apexbrasil.com.br

Brazilian Trade and Investment Promotion Agency (APEX – Brazil) works to promote Brazilian products and services abroad, and attract foreign investment to strategic sectors of the Brazilian economy. Apex-Brasil uses different strategies to promote the competitiveness of Brazilian companies during their internationalization process.

It is worth highlighting the international campaign “Be Brasil”, which aims to consolidate Brazil’s foreign perception as a strong business partner as well as spreading “Be Brasil” related to the attributes of its products, services, and Brazilian productive sectors.

 

Export Culture National Plan (PNCE)
www.mdic.gov.br

The Export Culture National Plan (PNCE) aims to spread the amount of companies which work on foreign trade in addiction to further the growth of exportable products and services specially focused on manufactured goods with greater added value.

The Export Culture National Plan (PNCE) – coordinated by The Ministry of industry, Foreign Trade and Services counts on efforts from other government bodies and private partners in each state of Brazil (ACMINAS is a member of the Managing Committee in Minas Gerais).

 

Doing Business in Brazil

Brazilian definition of foreign capital
Under Federal Law nº. 4131, of 1962, foreign capital can be defined as goods, machinery or equipment brought into Brazil without initial payment, for use in the production of goods and services, as well as financial or monetary resources brought into the country for use in economic activities. In both cases, foreign capital must belong to companies or individuals with permanent residence or headquarters in foreign countries.

Foreign direct investment modalities
Foreign investment in Brazil can be carried out as a direct investment or through an investment portfolio. If the investor holds 10% or more of ordinary shares or the right to vote in a Brazilian Company, it will be considered a Foreign Direct Investment (FDI). If the percentage is less than 10%, the investment will be considered a Foreign Portfolio Investment (FPI). Portfolio investmentsrefer to foreign investments in the Brazilian financial and stock Markets in the form of share acquisitions or fixed-income or securities, traded in Brazil or abroad.

Foreign Direct Investment is divided into two modalities: (i) capital participation and (ii) intercompany loans.
Capital participation is a capital contribution in form of: (1) money; (2)Importation of goods (machines, equipment or intangible (rights) – without exchange coverage; (3) reinvestment of profits, “interest on own capital” or future profits reserve. Intercompany loans are financial loans made between international parent company and Brazilian affiliates, subsidiaries and/or business units to shift cash into capital participation or investments.

Brazilian Business Visa
Three types of visa are granted to investors who intend to do businesses in Brazil: 1) a business visa; 2) a work visa; 3) a permanent visa.
The business visa is obtained for business meetings, fairs, congresses, interviews, investment opportunities analysis and market evaluations. The foreigner cannot be hired and consequently receive wage or salary to work in the country, but it is possible to receive payments related to business contracts (for example: import and export payments). Such Visa is valid for 90 days and may be renewed for further 90 days, with a maximum length of 180 days.

The work visa is obtained if a Brazilian companyhires the foreigner for a job which must have two Brazilian employees in similar functions. The modality allows the holder to receive a payment or a wage, but he may live in Brazil for two years. After such period, the visa can either be extended or converted into a permanent visa (in the event of the labor contract not having a determined deadline).

The permanent visa
The Brazilian investor visa is a type of permanent visa. Only the foreigner bearer of a permanent visa can live permanently in the country, either to assume the function of manager or administrator or to become the director of a local company. In terms of The Normative Resolution no 118/2015, of CNI (National Council of Immigration), the condition for granting the visa is the amount invested in Brazil for each Investor as follow:

1) Direct foreign investment of R$ 500,000.00 (five hundred thousand Brazilian Reais), or;

2) Direct foreign investment of R$150,000.00 (one hundred and fifty thousand Brazilian Reais), if the company/entrepreneur intends to settle in the country with the purpose of investing in innovation support, basic or applied research, scientific or technological nature.

Other cases in which it is possible granting of permanent visa are: (i) novelty of product, process or service to be introduced; (ii) breadth of product, process or service to be introduced; (iii) relevance of the product, process or service to be introduced.

 

Brazilian tax system
The Brazilian Taxation System has 3 (three) tiers of taxation: Federal; State level and Municipal. Taxation will vary depending on the activity of the company and the location where it operates (City and State);

Brazilian companies constituted or controlled by foreign capital, in general, have no special tax benefits in relation to companies constituted or controlled by Brazilians; However, Cities and States generally offer tax benefits and concessions of land for relevant foreign investiments.

Do you want to know more about doing business in Brazil?

 

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