Bright Business Consulting LLP

Wednesday, September 19, 2018

Why Investing in Brazil

In the following years the companies all over the world should look at Brazil  as the most interesting of all the emerging countries. Brazil is composed of 26 administrative states all with their own traditions and economic profiles that head to the Federal District of Brasilia. A country of these dimensions and differences can be a great opportunity. Considered the potential for the investment, both the companies and those that want to start-up new business, or diversify the investment plans, the small and the big ones, will find in Brazil the ideal country. The problems of the European markets that will still exist in the next 10/15 years and maybe beyond, the financial difficulties that make them weaker and the lack of investment opportunities, in spite of the availability of know-how and effective organization structures, make the Brazilian market very attractive under the general investment point of view. Not only, its being close to the United States of America and to the Strait of Panama, places this country in a strategic and privileged position in the network of world commercial exchanges.

Brazil is the fifth largest country in the world with a population made of more than 60% of young people and this means that there is a large amount of perspective consumers. The latest data of  “OCSE” (centre for the development for the Organization and for Cooperation and Economic Development), make that the average social background , the one that bestows large consume, represents in 2013 about 42% of the population, casting to 2020 with the percentage of about 60%. The country has at his disposal large natural resources , a well developed industrial basis, high standards in the field of scientific research and real availability of labour force at competitive costs.

Brazil is part of  “MERCOSUL o MERCOSUR ” (Common Market of the South and of the Community of the Countries of the South America), and it is also member of the five countries that make the so called  “BRICS” economies (a group that includes Brazil, Russia, India, China and South Africa), that are the five largest emerging countries that have the best economic growth in the world, also called the best dominating economies in the world by 2050.

Brazil has a “GDP” (GROSS DOMESTIC PRODUCT = PIL - Prodotto Interno Lordo), merely too big  to be ignored as market. 


ü  Territory: 8,5 million Square Km.
ü  GDP-PIL (calculated in 2012): US$ 2,87 trillion.
ü  GDP-PIL pro-capite: US$ 10.804,76.
ü  Monetary reserves: US$ 366 billion (July 2012).
ü  Balance of payments: in the second three-month period 2011 is  US$ 9,8 billion.
ü  Export: 12%.
ü  Inflation: 5,8%.
ü  Direct foreign investments: US$ 84 in 2012.
ü  Population: 190 million.
ü  Year demographic evolution: +3,4 million in 2012, bound to grow.

Brazil had an average 6% year growth of “GDP-PIL” in 2010 and 2011, except in 2012. The Brazilian Minister of Finance expected more than 5% year growth until 2014. There are great perspectives of economic growth  that will be also fostered by massive international financial reserves (US$ 352 billion) and by the direct foreign investments (US$ 77 billion in 2012). The growth perspectives of import are high but we must consider the attention the country paid to safeguard and promote the internal production and productivity: that’s why it is always suitable to create in Brazil a permanent organization. The policy of commercial opening, the modernization of the economy and the necessity of expansion and diversification instead  facilitate the sales towards foreign markets. The International press pays more and more attention to the Brazilian territory:

ü  7th  consumer market;
ü  98 million of economically active people;
ü  70 million of people with acquisitive power similar to the European middle-classes;
ü  30 million of new people with acquisitive power similar to the European middle-classes (by 2020);
ü  a very modern bank system on world level;
ü  one of the most developed markets in advertising industry.

With this data in the present (with reference to 2012), Brazil is one of the main catalyst of the International investments.


The Brazilian tax system is regulated by the Federal Constitution dated 1988 and by the National Tax code dating back to 1966, along with specific laws for each tax, is distinguished for:

   - a federal system on three levels.

In Brazil, the União, the Estados and the i Municípios – respectively “Federal Central Government (União)”, “Member States (Estados)” and  “Municipalities  (Municípios )”, are autonomous federal authorities. Among them there isn’t any hierarchy, but a mere task distribution. Each of these authorities is empowered to collect  and manage duties and taxes, within the stable limits of the Brazilian Federal Constitution dated 1988.

   - non-existence of a specific tax on the added value (IVA).

 In Brazil there isn’t any single tax that may be considered as a tax on the added value. The “Fiscal Niche” of VAT is occupied and regulated by three different taxes:

  1) IPI - (Imposto sobre Produtos Industrializados) – under the jurisdiction of the Central Federal Government (União). IPI is applied to the industrial transformation.
  2) ICMS - (Imposto sobre Circulação de Mercadorias e Serviços) – under the jurisdiction of the Member States (Estados). ICMS is applied not to all the services or products but only to those that aren’t subject to ISS.
  3) ISS - (Imposto sobre Serviços) – under the jurisdiction of the municipalities (Municípios). ISS is applied not to all services or products but only to those but only to those that aren’t subject to ICMS.

In order to warrant the competitiveness and the survival of a company in a market, is therefore necessary a continuous fiscal planning process so that it may include the taxation in a correct way, both in the business plan aimed at the new enterprise and in the anticipatory profits for the management of a company both small or large. The first step for an investor that intends enter the Brazilian market is understanding whether the fiscal load , that may affect its products or services or on its activity in general, will make the investment more or less suitable. During the tax planning, it will be necessary to choose the option for the suitable tax system. The option will not be an ultimate one, as it may be changed at the beginning of every management.

In Brazil there are three different types of tax systems, not all applicable to all companies:

1.) LUCRO REAL – suitable for large companies.

In such a system, the operating result is calculated by subtracting from the revenues the tax-deductible expenses.

2.) LUCRO PRESUMIDO – suitable for middle-sized companies.

In such a system, the operating result is calculated  with the lump percentage on the turnover, fluctuating according to the field, either industry or commerce or services.

3.) SIMPLES NACIONAL O SUPER SIMPLES – suitable for micro-companies (year turnover up to  R$ 360.000, about 140.000 euro) and small companies (year turnover up to R$ 3.600.000, about a 1.400.000 euro).   

In such a system the taxpayer pays the taxes that affect his activity in a single payment and with a single all-including rate, thus reducing the fiscal load, his own bureaucracy and the risks of being controlled.

Company Formations In Brazil

Practices For Visa Permanent

Deposit & Trademark Registration In Brazil

Emerging Markets


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