Business Opportunities in Brazil
Amidst the whole of Latin America, Brazil stands as one of the largest economies with a humongous supply of natural resources. The government of Brazil welcomes foreign investment by exempting taxes, providing funds, and limiting double taxation. All these factors contribute to a healthy return for foreign investors. According to the 2020 Ease of Doing Business Report, Brazil bags the 124th position out of 190 countries for starting a business and protecting minor investors.
Brazil has made gradual progress in creating a friendly business environment to capture foreign investment. With each year passing, the country successfully exports goods and services. To maintain a positive trade balance, imported $21.9 B and exported $26.6 B in December 2022. Furthermore, Commercial Service Brazil highlights seven core sectors, namely, infrastructure, energy, chemical, health, defense, aviation, information and communication technology, and telecom service.
Right from the diversity of the Brazilian market to the trade promotion services, the Brazilian market offers specific market opportunities for businesses all over the globe. However, if you have business to do in Brazil, you must be thoroughly aware of the rules and regulations. This is a detailed guide on company registration in Brazil.
Benefits of Starting a Business in Brazil
The advantages of doing business in Brazil are as follows:
Huge consumer market
In terms of the global population, Brazil bags the 5th position. With over 217 million population, the country hints at a large consumer market. The Brazilian market’s diversity and size create many commercial opportunities for foreign businesses. So, new entrepreneurs and businesses can easily tap into the Brazilian market.
Favorable geographical location
Brazil’s large and diversified geographical area promotes easy access to other countries of South America. The strategic trade agreements make Brazil an attractive location for business. The sturdy agricultural output of Brazil gives ample opportunities for businesses to invest in this sector.
Attractive government schemes
To set up an offshore company in Brazil, the Brazilian government has imparted its ‘pro business’ foreign investment schemes for entrepreneurs. This scheme aims to create a legally safe and secure environment for potential entrepreneurs in Brazil. InovAtiva Brasil is a public program supporting small and medium startup enterprises.
Optimal infrastructure for business operations
Brazil’s excellent transportation and infrastructure make it a suitable business location. The well-connected railway system of Brazil, along with the largest highway systems, make Brazil a fantastic business hub.
Brazil – A developing country
Brazil’s decreasing per capita GDP and high birth and mortality rates make it a developing nation. Although known as being a harbinger of growth, several aspects of the economy are yet to be explored. So, investors and entrepreneurs can tap into unexplored regions and develop businesses here.
Requirements for Starting a Business in Brazil
These are the requirements to do business in Brazil:
Work permit and visa
You need a work visa and residence permit to work and start a business in Brazil. There are three different types of work visas in Brazil, which are as follows:
- Permanent work visa
- VITEM V visa
- VITEM II visa
To get a work visa in Brazil, entrepreneurs and investors must have two years of professional experience. They should also possess educational experience of at least nine years with a relevant university degree or one year of professional experience. Further, you can also get a visa with a relevant post-graduate degree with zero professional experience.
- To select names of companies in Brazil, you can designate two specific names – denomination and firm. Both these names denote the structure of the company.
- The word denomination is associated with companies only when it is involved in a similar activity. In the case of corporations, the word ‘denomination’ is a must.
- The words used as company names should be original.
- The company names cannot use any initials. The words or expressions used should not be immoral.
- To open a business to do in Brazil, you must pay a corporate tax of 15%.
- Besides this, there is no value-added tax, stamp duty, or capital gains tax. The country makes businesses sign double taxation treaties.
- Forming a new company in Brazil does not need any formal investment. All you have to do is register with the Brazilian Central Bank.
- However, you must make a viable investment for a permanent Brazilian visa. Generally, you need $500,000 to get a visa to Brazil.
Directors and company secretary
- The number of directors and company secretaries depends on the business structure.
- The limited liability company must have one or more shareholders. On the other hand, corporation companies must have at least two shareholders.
Types of Business Structures in Brazil
Before you get into offshore company registration in Brazil, you must learn about the various business structures.
Limited liability company
- The limited liability company is one of the famous business structures in Brazil.
- In this type of business, shareholders are limited to their share capital.
- Here, you need at least two shareholders belonging to any nationality.
- There is no requirement for minimum capital for limited liability companies.
Limited liability corporation
- The Corporations Act governs the limited liability corporation.
- Here, corporations can avail of both voting and non-voting shares.
- To set up a limited liability corporation, you need two shareholders.
- Limited liability corporation’s minimum initial share capital should be 100% subscribed. A minimum of 10% of the capital should be deposited to the bank before incorporation.
- The branch offices direct extensions of a parent organization.
- In the case of a branch office, its entity in Brazil has to be of a similar name.
- You must appoint a legal representative to set up a branch office in Brazil.
- The Empresa Individual de Responsabilidade Limitada is mainly a single-holder limited liability chosen by most individual entrepreneurs.
- Here, only one shareholder is required who is held responsible for all the company shares.
Company Registration Process
The steps to incorporate a company in Brazil are given below:
Step 1: Obtain a Brazilian tax identification number
- Before registering any company in Brazil, two shareholders must get their Brazilian tax identification number.
- This tax identification number in Brazil is provided by the Federal Revenue Bureau either in person or online.
- In the case of companies, it is known as the CNPJ, while for individuals, it is the CPF.
- The Special Department Federal Revenue Bureau is responsible for providing the CNJP.
- To obtain CNPJ, you must register your company at the State Board of Commerce.
Step 2: Legal representative appointment
- To represent your company, you must appoint a legal representative in Brazil.
- You have to draft and sign a Power of Attorney, allowing them to act on your behalf and make decisions.
Step 3: Drafting company bylaws
- Draft a company’s bylaws, including details on the company’s structure, nature of business, and internal procedures.
- A legal representative can assist the company owners in drafting company bylaws.
Step 4: Registering company’s bylaws
- Once the bylaws are drafted, you must contact the local Board of Trade to register your business.
Step 5: Corporate bank account opening
- After your business gets registered before the authorities, you can open a company bank account.
- Here, take the legal representative’s help to choose a suitable service provider according to the structure and nature of the business.
Step 6: Registering paid capital
- In this step, you can proceed with the paid capital registration associated with the Central Bank of Brazil.
Step 7: Initial capital deposition
- This is the final step: depositing the initial capital in the company’s corporate bank account.
How Much Does It Cost to Incorporate a Company in Brazil?
The cost of incorporating a company in Brazil is 4,875 USD. However, in the second year, the cost gets reduced to 2,550. But no companies in Brazil have to pay a charter capital.
Are Foreigners in Brazil On Certain Passes Allowed to Start a Business in Brazil?
Yes, foreigners can look forward to Brazil’s new company incorporation, provided they have the required work visa. There are three different types of work visas available for foreigners. These are the permanent work visa, VITEM V visa, and VITEM II visa.
The permanent work visa is available for foreign entrepreneurs who reside in Brazil. To get this visa, entrepreneurs need to invest at least $50,000 per person, or they can invest $200,000 in a company.
The VITEM V visa is a temporary visa for foreigners entering the country to work in Brazil. Here, professionals can get this visa only if they have an agreement or contract for their work. The Ministry of Labour and Employment approves this visa.
Foreign investors who desire to do business in Brazil apply for a VITEM II visa. It remains valid for ten years and allows stays up to 9 days after expiration.
Government Assistance for Foreign-owned Businesses
The government of Brazil has proposed a plan for startups that aims to help develop technology-based companies. This plan also promotes easy bidding for government contracts. The primary objective of the Brazilian government is to foster innovation in the startup ecosystem.
Other governmental programs and grants for starting a business in Brazil include InovAtiva Brasil, StartOut Brasil, and National Committee for Startup Support Initiatives.
- The Ministry of Economy and SEBRAE propagate the InovAtive Brazil program. The program aims to support startups from different sectors free of cost.
- StartOut Brasil is a non-profit program that supports Brazilian startups.
- Lastly, the Brazilian government promotes the National Committee for Startup Support Initiatives, which aims to foster Brazil’s startup ecosystem.
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