Let’s talk about “RADAR” !

Before initiating any international trade transaction, the company duly incorporated in Brazil, must be registered on the International Trade Integrated System ( SISCOMEX), through the “RADAR” system (System for the Monitoring of Activities of Customs Agents) which consists of a integrated computerized system through which all international trade transactions must be electronically processed in order to allowed them to be registered, monitored and controlled.

The simplified and ordinary “RADAR” categories no longer exist….. they were superseded by the limited one which establishes a US$ 150,000 limit of foreign trade commerce operations per semester. Another category is the “RADAR” unlimited, different from the name, it has limits. In fact, the Brazilian Internal Revenue (RFB) determines the range value for operations after analyzing the company’s financial health. First, the company have to present a required documentation to apply for the “RADAR” limited and after it has being deferred, the tax payer can present a specific finance documents of the company to review the process which is called: estimative finance review.

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How to get a license?

To legalize a foreign company in Brazil goes beyond obtaining a corporate taxpayer’s identification number and also a license may be required depending on the type of business.

The bureaucracy to get all these licenses done should be considered and the Investor needs to have patience and spend some money that has to be part of your business and action plan.

Below we have listed some of these required licenses

Types of Licenses

Certification Authority

Who Needs

License of business operation

City-hall

All businesses

Inspection and Compliance with Safety Regulations

Fire Department

All companies ( but there are exceptions depending on the location)

Environmental certification

Municipal bodies, environment study and IBAMA

Metallurgical and mechanical industries,    transportation equipment, textiles, clothing, footwear, timber trading, food and beverage chemical processing, civil construction, tourism, agricultural activities, among others

Sanitary Regulation

 ANVISA – Health and Sanitary Surveillance National Agency

Food sector, cosmetics, essence, perfume and hygiene products, drugstores,  pharmaceutical and health care products and  household sanitizing products.

Registration of controlled Chemical products

Federal Police

All activities involving the list of 146 controlled products

Animal origin products

Ministry of Agriculture

All Companies producing animal origin products, mainly consumed by humans or commercialized  within Brazil and  internationally.

Cadastur(Record for Tourism activities registration)

 Ministry of Tourism

Service providers engaged in tourism supply chain activities

*Revised text based on the PEGN Magazine.

Minimum capital to invest in Brazil

Good news: there is no minimum capital specific requirement for a foreign investor in Brazil.

Even if there is no specific provision regarding for foreign investment, it is important to consider the following 4 topics:

1.      Industry – Not only in Brazil, regulators recognize the different sectors in the economy to operate smoothly and to protect third parts  will require a minimum capital investment.  For example;  banks and Insurance brokerage companies. In Brazil it is not different.

2.      Tax administration – In some States tax administration will verify if the capital is in line with the company activities and objectives. Moreover, if a brand new Brazilian company is interested in importing products, it shall get the RADAR license.  In order to determine the authorized volume of imports, the Federal Revenue will look mainly to the company capital and its economic financial performance.

3.      Immigration – It depends on immigration purposes,  for an individual investor visa or Director,   the company should have a minimum capital of R$ 150.000 or R$ 600.000, respectively.

4.      Business Plan – It is an essential step for any project to complete a Business Plan and it becomes even more important in a country like Brazil.  Once all operational cost and investment  are estimated you can define the minimum capital requirement.

Foreign Investment in Brazil

In order to encourage the foreign investment in the Country,  the  Brazilian Government has been seeking to reduce the restrictions  applied in certain  sectors of the national economy . However, there are segments  where the foreign investment is yet not allowed even in Brazilian companies . Thus, to clarify what is being said, we will list the sectors of the economy  which are still closed to foreign investors  and those that are subjected  to restrictions:

VETOED

Development of any activity involving nuclear energy;
Post Office and Telegraph services
Aerospace industry

RESTRICTED

Health Insurance provider
Cabotage Freight Transportation
Journalism, Broadcasting of sound and images
Cable TV services;
Exploration and mining activities and any others mineral resources and hydroelectric power supply
Road  Cargo Transportation
Airline
National security industry and borderline control
Land exploration in rural areas

To have or not to have a branch? That is the question

The idea of expanding the business by investing in a new branch location appears to be the most suitable procedure. However some important points should be considered in order to make the right decision.

Advantages:

The  greatest advantage for the partners is to have the total control of the activities and profits made by the branch.  But on the other hand…

Disadvantages:

The branch is totally dependent on the Head-Office that will have to cover the costs to open the branch, such as facilities, equipment etc. And the taxation ends up to be the same of a new and independent company which becomes the best way to invest.

Here are some of the disadvantages:

1)      The subsidiaries are subjected to approval of the executive power and supervision of the public prosecutor;

2)      It is a requirement to publish annually, the balance sheet, the economic results and the administrative measures of the subsidiaries,  with the penalty of having the authorization taken away;

3)      Acts of branches can charge patrimonially the Head Office.

4)      At last, a branch registration procedure ends up being more bureaucratic than a Brazilian company with foreign partners.

As you can see, the opening of branches in Brazil is not simple and requires a big, detailed and specific planning. Other initiatives can be as effective as that and a lot less complicated.

The Four Essential Steps to Invest in Brazil

The history of steady growth and solid stability of International Markets is going through its most delicate and difficult times in recent years. Many companies and industries, from the major players to the medium and small ones are willing to expand their businesses and now have decided to turn their attention to emerging countries.

Brazil is one of those countries and now is in vogue. With the sixth biggest economy in the world – expected to occupy the fifth position in the next decade –, and the largest in Latin America, Brazil is currently one of the best markets for foreign investments.

The estimated GDP is expected to increase by 2,21% in comparison to 2012 (which closed with R$ 4,403tri) and an estimated R$ 60bi in foreign investments has made Brazil the land of opportunity. Source: http://g1.globo.com/economia/mercados/noticia/2013/08/mercado-reduz-previsao-de-alta-do-pib-neste-ano-e-em-2014.html

Nevertheless, it is very important to take into account the qualitative and quantitative risk assessment which represents a crucial step in the process of investing in Brazil.

Before foreign investors move forward with this venture, it is absolutely important to learn how to deal with the bureaucracy and cultural differences involved in the process.

Be aware of the steps ! We will post this week all you need to know.

Step 1:

Get all the information you can.

The Internet is certainly a good source to get started however it is strongly recommended to pursuit information on government websites. Consider visiting the Brazilian Government portal websites, such as:

. APEX (BrazilianTrade and Investment Promotion Agency): http://www2.apexbrasil.com.br

. Brasil Global Net (http://www.brasilglobalnet.gov.br/frmprincipal.aspx) and the Ministry of External Relations website in Brazil and Ubifrance website.

It is also recommended to read blogs of people who have already invested in Brazil and their experiences can make for valuable and sound advice. You can also check our blog as a resource for any information you may need.

Another way to get in touch with the ‘Brazilian way’ of doing business is participating in fairs dedicated to foreign investors; to learn more about such events please click on the following link: http://www.brasilglobalnet.gov.br/arquivos/Publicacoes/CalendarioFeiras2013p.pdf

Step 2:

Taxes Feasibility Study and Analysis

This is a very important step to any foreign business to become successful, but many investors do not consider a tax feasibility study before investing or exporting to Brazil, because of their experiences in their native countries, where only the VAT applies. The average of the tax burden in Brazil with its three levels of taxation (Federal, State and Municipal) plus the customs duties and other fees, can add up to 60% over the product value (the taxes can be quite variable since the percentages applied may differ according to the product/service).

Step 3:

Trademark and Patent Registration

It is strongly recommended to register the trademark and patent at INPI (National Institute of Industrial Property) http://www.inpi.gov.br/portal/) since there are no means or mechanism for auto recognition of those trademarks and patents.

Large international companies have already faced lawsuits and exhaustive negotiations in order to be able to use their trademarks in Brazil. The most recent case involves Apple and the trademark “Iphone” which a Brazilian company claims to have registered in Brazil long before Apple did. The same thing applies for patents.

Before joining in any partnership with a Brazilian company, the investors must ensure their patent has been registered, in order to prevent future issues or even lawsuits, once the procedure applied in Brazil is to grant rights to whoever files with the system first.

Step 4, final!

Commercial Representative

Companies who have worked with Representatives and Agents in their countries, shall be aware of the specific legislation for this activity in Brazil (Law 4,886/65 (Brazilian Commercial Representation Law ─ Lei de Representação Comercial Brasileira – “LRC”). Thus, before signing any contract it is highly recommended to get a legal analysis and approval to prevent investors from paying the an indemnity of 1/12 of the total commission earned during the term of the contract, once it is time to terminate the agreement.

Certainly, there are many other matters to be considered before investing in Brazil. However, if you follow these four important steps you will be half way there.

Welcome

Welcome to our blog.

INBrazil is a Consulting Firm located in Rio de Janeiro, Brazil and we assist foreign small and mid-sized companies during the legalization process of setting up a business/investment in Brazil. We offer a personalized service of coordination of all the steps in the process of internationalization (commercial, strategic, operational, legal and administrative). Besides offering an outstanding commitment, combining a cost-effective and  innovative solutions, INBrazil also coordinates all the immigration and relocation services involved in the process for the expatriate (international moving, visas, house and school search etc) giving all support for the Expat and to their family during and after the transferring process, anywhere within Brazil. If you have any doubt or suggestion or even if there is any  specific subject that you would like to know more about, please leave us a message and we will be pleased to send you further information .

We will keep you posted about several updated information for your professional and personal life during our weekly posts and daily publication of useful links.

Our goal is to clarify the most frequent doubts and questions, and to interact with our followers to make this blog the most visited page on the internet.  Also, we believe the relationship with our blog users will be one of the most important things to be considered to be a successful company.