Good weekend read about “Doing Business in Brazil” according to HSBC. The full report (which is very detailed) can be downloaded here. Highlights below…
Key points for foreign investors to consider when looking at this territory:
- Brazil is the biggest country in Latin America, occupying almost half of South America.
- The basic legal concepts regulating foreign capital in Brazil are defined in Laws 4131 of 962 and 4390 of 1964, which were regulated by Decree 55762 of 1965.The legal concept of foreign capital includes tangible and intangible assets.
- In Brazil there is a wide variety of federal programmes designed to encourage national economic development and also to promote regional development. They tend to favour operations in the poorer Northeast (SUDENE) and Amazon (SUDAM) regions. Several programmes provide export incentives.
- Relevant benefits are granted to foreign investors not domiciled in tax havens and who invested in Brazil pursuant to the regulations established by Resolution 2.689.
- There are no legal minimum share capital requirements for a corporation, except for financial institutions and insurance companies, and certain other legal entities with specific business purposes.
- Dividends remitted to non- resident shareholders or quotaholders are not subject to any withholding tax.
- Capital gains earned by local resident entities are taxed at a higher rate than the capital gains of non-residents.
- Payments of any type made to tax havens are generally subject to withholding at a higher rate.
- As a general rule, foreign exchange transactions made in order to allow payments to non-residents, considering royalties, technical services, technical, administrative and any other assistance or any other revenue, including the reimbursement of any costs, are subject to specific financial tax (IOF – see page 14 for more information).
- On 16 December 2009, the Brazilian government started to establish minimum capital requirement to invest through or ’the thin cap rules’ , through Provisional Measure 472, with immediate effects.
- Source: HSBC