JOIN US FOR A WEBINAR WITH THE EXPERTS Webinar by Amicorp Group Fabio Rabelo Hanno de Vriend Caio Fernando Jase Choenni Country Sales Manager Brazil Sales Director Managing Director Brazil Global Head Amicorp Group Amicorp Group Outsourcing Services Amicorp Group Amicorp Group
TOPICS WE WILL ADDRESS Important considerations when establishing a business in BRAZIL What are the opportunities worth considering and how to capitalize these What are the challenges to take into account
DOING BUSINESS IN BRAZIL IMPORTANT CONSIDERATIONS WHEN ESTABLISHING A BUSINESS IN BRAZIL
COUNTRY OVERVIEW BASIC FACTS Area: 8,515,770 sq. Km. 5th largest Year of Current Constitution: 1988 Population: 212 million. 6th largest Language: Portuguese Economy: $1.85 trillion. 9th largest Religion: 70% Roman Catholic; 30% Protestant Year of Independence: 1822 26 states and the Federal District; 5570 cities Proclamation of the Republic: 1889 Member of the BRICS (25% of the global economy) Home to several natural wonders
COUNTRY OVERVIEW POLITICAL AND ADMINISTRATIVE THE EXECUTIVE THE LEGISLATIVE THE JUDICIARY The President is both the National Congress is made up Comprises the Supreme Court, head-of-state and the head of of two houses. Both can initiate the Superior Court, five the government. President legislation and they share the regional federal appeals courts, and Vice-President are elected power to review the national labour courts, electoral courts, jointly by democratic vote for budget. Senate: has a total of 81 military courts, and state a four-year term (Re- election members. Three for each state courts. For the Supreme Court for a 2nd term in a row is and the Federal District. there are 11 “ministers” allowed) named by the presidente and approved by the Senate Brazil Chamber of Deputies: uses Civil Law the system comprises 513 representatives from 26 states and the Federal District
COUNTRY OVERVIEW WHY TO INVEST IN BRAZIL The economy is diversified and well positioned globally Strategic location and access to other markets in Latin America Respect for private property Well-established democracy free press Rich mineral and energy resources Vast agriculture land Enormous internal market Qualified labor Solid institutions No major natural hazards
COUNTRY OVERVIEW TYPES OF BUSINESS ENTITIES The most common types of legal entities used by local and foreign investors are: Private Limited-Liability Company (Sociedade Limitada) Corporation (Sociedade por Ações) In general they can be wholly foreign-owned (Except for some activities where some limitations apply) There are no legal minimum capital requirements (Except in the case of financial institutions and certain other legal entities). Also, there are no maximum capital limitation. The foreign quota holder must be legally represented by a citizen domiciled in Brazil A foreigner can be eligible for a management position if they hold a permanent visa and are domiciled in Brazil Other forms in which business can be conducted include: (i) Individual Limited Liability Company; (ii) Mixed- capital companies; (iii) Partnerships; (iv) Joint Ventures; (v) Branches of a foreign company
COUNTRY OVERVIEW TAX SYSTEM AND CONSIDERATIONS The Brazilian tax system is highly complex. It includes multiple taxes at federal, state and municipal levels each with its own specificities There are three tax regimes for Business with significant differences and implications: Simple (“Simples Nacional”) Deemed Profit (“Lucro Pressumido”) Classic System-Earnings before tax (“Lucro real”) Tax incentives are available (At Federal, State and Municipal levels) Double taxation treaties are in place with many countries Inflow and outflow of funds must be registered with the Brazilian Central Bank Invoices must be issued through official channels
COUNTRY OVERVIEW MACRO ECONOMIC UPDATE Brazil was recovering from the 2015-16 recession posting positive GDP growth from 2017 to 2019 Although unemployment was still high before COVID, the country was having positive net Jobs creation since 2018. Inflation rates have been in control and in a descendent trajectory allowing the Central Bank to cut the oficial interest rates. Trade balance has been positive since 2015 A series of measures are being taken to reduce the public defic including privatization, reduction of certain public expenses and tax reform (Pension reform already approved in 2019) Brazil was the world´s forth destination of FDI in 2019 with $75 billion The country holds a strong position in International Reserves (+$340 billion)
DOING BUSINESS IN BRAZIL WHAT ARE THE OPPORTUNITIES WORTH CONSIDERING AND HOW TO CAPITALIZE ON THESE
BUSINESS SECTORS HIGHLIGHTS: AGRICULTURE Agriculture is historically one of the principal bases of Brazil´s economy Brazil is the world´s largest exporter of coffee, soybeans, beef and crop-based etanol Brazil is breaking successive records of production in recent years thanks to its favourable soil, weather and investments in technology With the world growing population and the consequent need for food supply Brazil is well positioned to generate a number of business opportunities in this sector
BUSINESS SECTORS HIGHLIGHTS: OIL AND GAS The oil and gas industry accounts for 13% of the Brazilian GDP Brazil is the 10th largest global oil producer and the largest in Latin America The potential of the pre-salt layer is enormous and only a fraction has been utilized so far. A number of measures has been implemented to improve the legislation, reduce tax and attract investments.
BUSINESS SECTORS HIGHLIGHTS: FINANCIAL SECTOR Brazil has a sophisticated and well regulated financial sector The banking system is well capitalized, profitable and resilient to shocks However: The system are concentrated Credit to GDP is still low Spreads are high Short-term floating or indexed securities and derivatives are the predominant asset classes Opportunities exist in multiple áreas including home equity, microcredit, fintechs and among the unbanked population.
BUSINESS SECTORS HIGHLIGHTS: INFORMATION TECHNOLOGY AND COMMUNICATIONS Brazil has a Strong ICT sector accounting for almost 11% of the GDP Investments in ICT have been in excess of US$100 billion in recent years The banking sector, agribusiness, energy, education and heathcare have been making massive investments in ICT to increase productivity; Areas of opportunity for investments include: 5G, optical fiber, cloud computing, IOT, smart connected cities, software development and services.
BUSINESS SECTORS HIGHLIGHTS: MANUFACTURING The manufacture industry accounts for about 20% of the GDP and reflects the level of diversification and sophistication of the Brazilian economy. Brazil has been a major world supplier of automobiles, producing nearly two million vehicles per year. Other major manufactures include eletrical machinery, paints, soaps, medicines, chemicals, aircrafts, steel, food products and paper. The country has also been a major producer in textile, cloting and footwear industry since the early 19th century. There are opportunities related to the deployment of environmentally friendly processes, workforce development and industry 4.0 (automation, 3D printing, Artificial Intlligence and Internet of things)
BUSINESS SECTORS HIGHLIGHTS: RETAIL A huge internal Market fuled by the expansion of credit has driven up retail sales in recente years. Supermarkets accounts for the majority of Brazilian retail industry. Superstores, clothing, eletronics, pet shops, appliances specialists, drugstores and garden centers have presented an increse in sales at a high rate. The new wave for internet shoppers is representing opportunities for small and large players to advance into the internet retailing
DOING BUSINESS IN BRAZIL WHAT ARE THE CHALLENGES TO TAKE INTO ACCOUNT
BUSINESS ENVIRONMENT CHALLENGES Brazil is ranked 124 out of 190 countries in the World Bank´s 2020 Doing Business ranking It is expensive: “Custo Brazil” is a widely used term refered to the extra costs that come along. Compliance and regulatory requirements Highly complex tax system Excessive bureaucracy involved Some grey zones on laws Lack of adequate infrastructure High social and regional inequalities Covid impact
DOING BUSINESS IN BRAZIL HOW AMICORP CAN HELP
ABOUT AMICORP Known as a leading global service provider, Amicorp Group offers multi-level and business critical solutions to global corporates, international advisory groups, financial institutions, investment firms and family offices. We provide personalized service, and we tailor our offerings to the needs of our clients. 700+ 30+ 10,000+ 40+ SPECIALISTS COUNTRIES ENTITIES OFFICES
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BRAZIL HOW AMICORP CAN HELP Amicorp has the international experience and local know-how to help you grow your business. With our abundant experience in doing business in over 30 countries and associations in at least another 40, we can help expanding companies in creating an instant global reach. We take care of all the 'non-core' work on an ongoing basis so you can focus on the core activities of your business. We have the flexibility to create tailor-made solution to meet specific needs
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