Let brief on history of Brazil before discussing of business license in Brazil. The Federative Republic of Brazil, being the largest in both South and Latin America. In terms of population, it is the fifth-largest in the world, while Portuguese is the most spoken and official language here in Brazil. Having a coastline of 7,491 kilometers on the east along Atlantic, It borders all the South American countries but Ecuador and Chile. In fact, it is the business hub of Latin America.
Among Latin American Nations Brazil has the largest economy, while ninth in the world. Brazil is ranking eighth in Purchasing Power Parity PPP in the world according to the 2017 estimates. A member of BRICS [an association of five major emerging national economies: (Brazil, Russia, India, China, and South Africa) since its inception. The currency is Brazilian Real or BRL. The exchange rate of BRL to US$ is around 1US dollar = BRL3.483.
In doing a business in Brazil one required to set up a registered company. There are two types of legal structures for companies:
- Limitadas or LTDA, almost similar to a limited liability, and
- Sociedadeanónima or SA, similar to a corporation, [Public Limited Company].
Limitadas don’t have shares; they have quotas [like share but different name]. You need to have at least two quota holders [two share holders] but a required provision to form a Board of Directors.
Business licensing in Brazil
Thinking of opening a business entity or company in Brazil you need to keep in mind that Brazil is known for Red-tapism. Rules and regulations are there with times required to obtain a good number of documents to embark into a business. Well, as I have said, bureaucratic hurdles cost you more time and money than those prescribed.
A business license in Brazil is called alvará de funcionamentoin Brazil is to be obtained at Secretaria Municipal da Receita e do PatrimônioPúblicoImobiliário. In two phases the issuance of the alvará de funcionamen to would be completed:
- In doing so following documents are required to be furnished:
- Real estate clearance certificate [fromSecretaria Municipal da Receita e do PatrimônioPúblicoImobiliário.
- CNPJ or CPF [CadastroNacional da Pessoa Jurídica or the National Registry of Legal Entities] Tax Identification Number in case of a Company, from Banco, do Brazil, CaixaEconômica Federal or to the local post office submitting your passport. This required not only to start a business but also to open a Bank Account. CPF stands for Cadastro de PessoasFísicas or Natural Persons Register. This to a Tax ID like CNPJ but meant for an individual investor and not a company.
- RG [RegistroGeral and refers to an ID card used in Brazil].RG is issued too by Secretaria Municipal da Receita e do PatrimônioPúblicoImobiliário.
- Articles of Association. This registration is done by State Board of Trade or Junta Comercial do Estado. More information at Ministry of foreign trade, Brazil.
- Obtaining above documents or permits or licenses would cost you around BRL 53,000 and 140 days plus provision for Red Tapes. Well, upon completing the phase you will be issued a Business License in Brazil. But to complete the issuance of a business license return Brazil you need a sanitary permit, being the second phase of the procedure. To have you awarded a Sanitary permit you need to proceed to Secretaria Municipal de Saúde e VigilânciaSanitária armed with the following documents:
- Document proving the conditions of health of all employees, issued by a sanitarian
- Document proving employment relation with the pharmaceutical in charge
- The floor plan
- CNPJ and Article of Association
The average processing time for this permit is roughly 20 days and the cost is BRL 40,000.
Business License requirement in Brazil
Once you are awarded Sanitary Permit by Secretaria Municipal de Saúde e VigilânciaSanitária you are required to get back again to Secretaria Municipal da Receita e doPatrimônioPúblicoImobiliário being your final leg of your journey. This authority would finally endorse your Business license to start working. This requires roughly 20 days and BRL 22,000 being the costs.
In fact, it is considerably expensive and time-consuming to register a company in Brazil likes other developing nations. The above costs are standard in case investor or entrepreneur himself handles the formalities. These can be done through a lawyer in exchange for charges or fees in addition. There is no specific rule as to how many lawyers can charge for their services. This depends on the structure of law firms and the clients.
In general, foreigners are allowed to own and operate businesses in Brazil. But there are sectors foreigners are prohibited from entering into and apply for business licenses in Brazil. This includes sectors like:
- Radio, TV, and publishing
- Cable television
- Air transportation
- Health care
- Security services
- Road transportation