How to start a business in Brazil as foreign investor
Brazil, the largest economy in Latin America enriched with young population [ 85% under 55 and 40% under the age of 25 ] and abundant and diversified energy resources, a pre-condition for investment opportunities. The country enriched with huge mining like iron, ore, oil and agricultural resources like meat, beef, coffee beans etc. Brazil is self-sufficient in Oil. A founder of BRICS it has The Brazilian energetic matrix is abundant and diversified. It has diverse clean energy sources, like water, wind and ethanol. Importantly, about 85% of Brazil’s energy needs come from renewable sources. Characterized by these, business opportunities are huge and wide. May people ask how to start a business in Brazil as foreign investor?
It’s better to have a local representative if you are not a Brazilianto fight your way through language barrier and the Red tapes. Hiring a good lawyer and an accountant would be the best to represent you in the process, which would require minimum 3 months and maximum 6 months. Around BRL 6000 to 7000 [$R] and BRL 4000 to 5000 will be required monthly respectively to hire a lawyer and an accountant.
The exchange rate of BRL to US$ is around 1US dollar = BRL3.483.
You will need to create and file at Contrato Social at the Federal level and receive your CNPJ number. From there your accountant will file your proposal at the state and local level that would kick off a 5 steps processing venture and find solution of how to start a business in Brazil, as follows :
- Selecting your business name – To begin with you should select your business name and check that your proposed business name is not too similar to another business registered with your state’s Secretary of State or not prohibited by the laws concerning this. This has to be done with
JUCESP [Junta Commercial Do Estado De Sao Paulo].
- Selecting a Fictitious Business Name or DBA[Doing Business As] – If, in case you’re creating a business different from your personal name or the officially registered name of your LLC or CorporationYou need a Fictitious Business Name.
- Obtaining an Employer Identification Number (EIN) – This is an identification number assigned by the IRS [ authority that register tax payers ]and used to identify taxpayers that are required to file various business tax returns. You can easily file for an EIN online if you have a social security number, the If you do not have a this number you need have it from Banco do Brazil, CaixaEconômica Federal or to the local post office submitting your passport.The process for foreigners to obtain a CPF is different from that of Brazilian.
- Required business license in Brazil – As normal procedure of starting business is business licensing like company incorporation, trade permission from local government office, tax, VAT, export, premises license, health license and so on. . A business license called alvará de funcionamento 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.
- Deciding the types of business entity – There are two types of legal structures for companies, Limitadas or LTDA and SociedadeAnonima or SA. At this stage you have to decide which form of entity you would be going with.
Employment condition of Brazil
Employees are required to be hired through an Employment Agreement and within 48 hours of appointment this has to be registered. Employees are can be on a trial period starting from 90 days to 2 years maximum. Employees are required to work 8 hours per day from Monday to Friday and a maximum of 44 hours in a week. In addition they would work 4 hours on Saturdays .Working hours can be stretched to maximum 2 hours daily with a surcharge of 50% of the regular hourly rates. As smart investors need to know how to start a business in Brazil before start of investment.
Benefits of starting business in Brazil
Businesses that populate high percentage of women should provide foods and Day care assistance. Standard benefits include Health care & life insurance Transportation etc. Companies with more than 30 employees must at the least have a proper place where employees can have their meals. A four months long maternity leave is prescribed in addition to a 60 days paid leave to mothers adjusted with the Corporate income tax IRPJ. At the of birth of child male staffs are too allowed on leave for five days with pay. A thirteenth salary corresponding to one full month salary also to be paid as Christmas Bonus in parts, half in November and half in December.
Employees are entitled to enjoy a paid vacation leave of 30 days after each 12 months of work.
In Brazil your employee costs the double of their salary owing to various charges involved in the hiring process. Employers are charged every month a total of 68.18% on each of their employees’ payroll, in addition to benefits described above. Say, one employee gets BRL 1000 per month, would actually costs the employer BRL 1,681.80.
Income Tax Rate in Brazil
In Brazil corporate tax rate stands at 34 percent, which is a combination of 15% basic rate, 10% surtax on income exceeding BRL 240,000 yearly and 9% social contribution on pre-tax profits.
Well, you need to be a patient and ready to sweat in opening a business in Brazil looking at the huge business prospects as I said herein above. The laws here are more or less chaotic in nature and user friendly. There are some problems as foreign investors to start a business in desirable sectors (competitors, market, price, man power cost and so on). Without knowing income tax rate for corporate and employees should not proceed of investment in Brazil. I hope this information will help you deciding how to start a business in Brazil as foreign investor.