Brazil- Economy and Opportunity
Brazil Showcase
Next global destination for your business
Welcome to Brazil, where investment meets innovation! As the largest economy in Latin America and a global player in sectors such as energy and technology, the country provides a dynamic ecosystem for investors seeking growth and diversification.
Brazil Economy
The Brazilian economy is the 3rd largest in the Americas. In 2022, according to International Monetary Fund, Brazil has the 10th largest gross domestic production in the world and has the 8th largest purchasing power
parity in the world.
Foreign Direct Investments
Brazil holds 4th place in the ranking of foreign direct investment in 2022 according to the OECD's 1st quarter report. Brazil also ranked 4th globally in 2021 with a balance of US$ 50 billion, indicating positive growth prospects for Brazil in coming years.
Opportunity Mapping
The Commercial Service Brazil has prioritized sectors with high export potential: architecture, construction and engineering, agriculture, chemicals, defense, e- commerce, education, energy, finance, information and
communications technologies, and healthcare.
India in Brazil
Brazil is emerging as an attractive destination for Indian investors and presents huge potential for South Asia's biggest country. Major Indian companies such as Glenmark, ZydusCadila, Sun Pharma, Dr. Reddy’s Laboratories, ONGC Videsh Limited (OVL), NMDC Limited, TVS, Tata Motors, Infosys and Wipro, have already established branches in Brazil. Brazilian and Indian companies are very interested in partnering especially for manufacturing and technology transfer. There is a high potential for joint ventures in the Agro-business and Tech industries.
Brazil offers a variety of structures, allowing one to select the one that best suits their business plan and allows freedom in conducting business.
Limitadas
Limitadas are the LLPS, primarily governed by the Civil Code. It can have one or more shareholders and do not require Brazilian individuals or companies to hold any equity. Shareholders may be one or more foreign individuals or entities. It only need one director but can have more..
Limited liability Corporation (S/A)
They are mainly governed by the Corporation Law. There shall be minimum two shareholders either natural or artificial without residential restriction. The capital of S/A is divided by shares which may be publicly held,
subject to the supervision of the Brazilian Securities Exchange Commission.
Empresa Individual de Responsabilidade Limitada(EIRELI)
The EIRELI can be incorporated by a single individual shareholder that holds 100% of the paid-in capital. Only individuals can be the quota holder(shareholder) of such entity and each individual can incorporate only one EIRELI.
Foreign Entiities in Brazil
A company may organize as a branch in Brazil. Establishing a branch of a foreign company requires a special authorization issued by the Ministry of Development, Industry and Trade (MDIC). A branch may not function until it has been registered and its authorization and documentary evidence are published in the Diário Oficial and a local newspaper. A branch in Brazil is taxed at the same rate as a Brazilian company.
Brazilian resident companies are taxed on worldwide income. Non-resident companies are generally taxed in Brazil through a registered subsidiary, branch, or PE, based on income generated locally.
Corporate Tax
Corporate income tax (IRP) is levied on the taxable profit of the entity at a rate of 15%. However, taking into account the surtax levied at the rate of 10% and the social contribution on net profit at the rate of 9%, the combined nominal rate is 34%.
Dividend Tax
Dividend received from Brazilian sources are not included in Taxable Income. Similarly, No withholding tax is
imposed on dividend distributions to a nonresident that are paid out from retained IFRS profits.
VAT & Excise
There are two types of IT in Brazil. One is a state tax ICMS, a tax on the circulation of goods and services, the rates vary across states from 0% to 35%. Second is IPI(Excise) a tax paid by manufacturers, rates vary from 0% to 300% on how essential the product is considered to be.
Taxation of Non Resident entities
Non-resident companies are generally taxed in Brazil through a registered subsidiary, branch, or permanent establishment, on their Brazilian-sourced income. Non-resident companies may also be subject to withholding tax (IRRF) on Brazilian- sourced income such as Interest paid to non-resident is subject to 15% withholding tax.
Brazil welcomes foreign investments in all areas. The National Investment Bank (BNDES), one of the largest development banks in the world, encourages foreign investment.
Branch Office
Foreign companies are required to open a branch office to operate. It is required to obtain authorization from the Federal Government, which requests proof of the company’s existence in its home country. The approval is granted for 12 months only during which the company must develop its activities.
Subsidiary Company
Foreign company can set up their presence in Brazil by establishing Subsidiary, which are legal entities opened according to domestic legislation. Subsidiary can select one of the company structure offered by Brazil to operate it's business.
Joint Venture
The formation and operation in Brazil of joint ventures is not regulated independently. Rather, the applicable legal requirements depend on the form of entity structure used to create the joint venture and the nature of the
joint venture’s operations and nature of agreement.
Brazil Business
The Brazil Corporate law makes it compulsory for foreign branches with 100% foreign ownership to have a local agent or sponsor. A Branch office does not require a resident director or resident shareholder. Although, a foreign company can use its branch to invoice Brazilian customers, sign local sales contracts and receive income from local customers.
