5 Things to Know When Doing Business in Brazil
With an estimated population of 214 million people in 2021, many of them literate and middle class, Brazil is an economic powerhouse in Latin America.
The 9th biggest economy globally, Brazil's massive consumer base has made it attractive for many US-based businesses.
While complex regulations and changing tax structures can make it challenging for businesses, especially those entering the Brazilian market for the first time, the foreign investment future is bright.
The government is eliminating corruption, reducing bureaucratic bottlenecks, decreasing its intervention in local markets, and opening its doors to foreign investors. And with a Brazilian market expert guiding you, expanding your business operations into Brazil can be seamless.
Here are 5 important things to know when doing business in Brazil.
#1. Brazil is a Developing Nation
It might be the 9th largest economy in the world or the number one economy in Latin America.
However, the fact remains that Brazil is still a developing nation. Many still don't have access to quality healthcare, the mortality rate is still high, and several aspects of the economy are yet to be developed.
You also have to know that the regulatory environment can be challenging, and the consumer base is not as mature as that of developed countries.
However, there are opportunities for companies in several industries.
#2. Doors Are Open to Foreign Investors
The government is pro foreign investment, supporting foreign investment and doing all it can to attract foreign businesses. One way the government is encouraging foreign investment is by allowing 100% foreign ownership of a company.
Also, you can start a new business a Brazil without visiting the country, making the incorporation process entirely hassle-free.
#3. Government is Fighting Corruption
While the country is attracting businesses and investments from every part of the world, it is no news that Brazil is a hub of corruption and bribery.
In 2020's Transparency International's corruption perception index, Brazil ranked 94, indicating that corruption is still an obstacle. Public officials can demand bribes, and organized crime thrives in some parts of the country.
But the good thing is the government is doing all it can to fight the menace through initiatives through Integrity Programme and the Clean Company Act.
#4. The Tax System is Complex But Improving
In Brazil, there are federal taxes, state taxes, and municipal taxes, making the tax structure complex. In existence are 4 types of VAT and 5 production and consumption of goods and services taxes at the three government levels.
However, discussions on merging the taxes into one are ongoing. Also, there are federal, regional, state, and municipal tax benefits and reliefs offered to businesses.
#5. Quality of Infrastructure Isn’t That Great
Another thing to know when doing business in Brazil is that the quality of infrastructure is incomparable to that of the developed countries. But there's been progress.
From 2015 to 2017, Brazil moved from 123 to 108 in the World Economic Forum's quality of infrastructure ranking. And according to Statista, Brazil ranks 78 out of 100 for overall quality of infrastructure.
However, compared to other countries in South America, Brazil’s infrastructure is great. There’s an extensive network of roads and the railway system is developed. The country also has about 50,000 km of waterways, making water transport a viable alternative. The communication infrastructure is also well developed.
Ultrabrics - A Trusted Partner in Business Expansion
With the many opportunities and the growth potential, lots of companies are investing in the economy.
However, as with emerging economies and markets, there are challenges in doing business in Brazil, making it easier to work with a trusted consultant rather than attempt to navigate the complexities on your own.
Ultrabrics is an expert at navigating the complexities of the Brazilian market, helping you cut through the red tape to establish and expand your business successfully. Whether you need comprehensive market research or want to build a factory, we deliver.