Brazil is famous for a lot of things: beaches, nightlife, a booming economy—and some very complex business regulations. The country is ranked as number 120 among 183 countries by the ease of doing business in the world. Though the rating is not very high, Brazil is a market that one should consider: population of almost 203M inhabitants, the 7th largest economy in the world, member of different international organizations, known as stable democracy. So what could go wrong when you’re doing business with Brazil?
Brazil remains a complicated place to do business for foreign-based companies. Challenges include a highly complex and expensive tax and labor environment, burdensome bureaucracy, costly credit, lingering corruption and deep social imbalances. We provide you with some basic information about doing business in Brazil below.
Starting a Business in Brazil can be a daunting task without the right help. The process of registering a new business can be lengthy, since it involves many procedures. Foreign companies must appoint a representative (who does not need to be a native Brazilian but must be a resident in Brazil) to act on their behalf, therefore you need to find a reliable local contact.
The two main types of business organizations in Brazil are the limited liability company (LTDA) and the corporation, known as “Sociedade Anónima” or “SA.” Please learn more about the business types in Brazil HERE.
Brazil’s labor system is complex and costly. Its principles are grounded in the country’s federal constitution, which makes changes extremely difficult.
Compared to other countries, Brazilian labor law involves a high level of state intervention. It is not uncommon for Brazilian companies to have an extensive written contract with employees. Additional costs for workers, such as taxes, health insurance, meal and grocery stipends, transportation stipend, vacation pay and a “thirteenth salary” (an additional month’s pay every December) can add up to more than 70% of base pay. Dismissal of employees also can be expensive and if not done properly can be fined by the state institutions.
Find a local partner
For your business to succeed you must have competent local business contacts. Brazil’s legal system is much more bureaucratic than most countries; we can help you cut through the red tape.
Brazilians value personal relationships and prefer to establish them before business negotiations take place.Everything isn’t all business, even during meetings, where the ability to discuss popular topics such as soccer, literature, culture or your hometown is very useful to “break the ice.”
Punctuality is not as important as in other cultures, therefore 10- to 15-minute delays can be expected for meetings. Interruptions, particularly at the highest levels, are common. So it is advisable to demonstrate patience.
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