For many entrepreneurs, Brazil appears like an zone, in which it is profitable to run a business, optimizing the tax burden. At the same time, the country's fiscal system is rather complicated. Still, this jurisdiction may be attractive in certain cases. If you preliminary consider it as your target one, it is possible to establish a business presence in these major forms.
Major Forms of Legal and Business Presence
Establishing a business presence in this country can be arranged in one of the next forms where entrepreneurs would not be liable by personal property:
- Sociedade Anonima – a closed or open-type corporation in which 100% of shareholders can be foreigners (individuals and legal entities). The company can be established by two shareholders, the upper limit is not restricted. The liability of shareholders is limited to a shareholding. The amount of the authorized capital in the legislation is not strictly specified (only for financial and insurance companies), but there is a requirement to pay at least 10% of the capital announced upon registration. Publication of annual financial statements is mandatory.
- Sociedade por Quotas de Responsabilidade Limitada – a closed-type company that individuals and legal entities can own for 100%. The liability of the company members is limited by their shares. The requirements for payment of the declared capital are similar to those that are applied to Sociedade Anonima. There are no requirements for mandatory appointment of auditors and publication of copies of annual financial statements.
Registration Requirements and Steps
Company incorporation in Brazil preliminary requires passing these registration steps:
- Defining your commercial priorities.
- Choosing and verifying options for a business name for this future enterprise.
- Collecting data about the founders, beneficial owners, and managers of the future company.
- Obtaining a work permit and a permanent visa for the directors of companies that do not have Brazilian citizenship.
- Arranging the official address for an enterprise.
- Drafting the statutory documents for a future corporate entity.
- Preparing the set of registration documents:
- documents certifying the identity of business partners, and statements that testify to representations for legal entities, - certified copies are provided;
- residency certificates;
- taxpayer's certificate - for the director and partners (private and legal entities);
- a power of attorney in the name of the director, on the basis of which he is entrusted with powers, including a representation of the company in the Federal Revenue Department of the Ministry of Finance, the Central Bank of Brazil, the Ministry of Labor;
- statutory documents for the future enterprise.
This list can be extended and adjusted in each individual case. All documents are provided in English, notarized, legalized by a diplomatic mission, consulate, or embassy in Brazil.
- Submitting the package of required documents to the authorized registrar.
- Registration in the register of taxpayers of the jurisdiction, the state register of revenues, and municipal fees.
- Assigning CADEMP number from the country's Central Bank (RDE-IED system) and opening a bank account for a Brazilian entity.
- Obtaining licenses and special permits (required of certain types of regulatory activities).
The establishment of the company in Brazil is possible without a personal presence. For this purpose, a trusted person is appointed.
Legal and Regulatory Framework
The company's registration in Brazil takes on average from 1 to 3 months. The registered Brazilian enterprise may be used to:
- provide services;
- work in industry field;
- engage in trade;
- carry out export-import operations.
Some activities require licenses: RADAR (import, export), ANVISA (production and trade of consumer products), CETESB (ecology), and so on.
The major state bodies regulating the operation of local businesses are the National Companies Registry Office, the Federal Revenue Department of the Ministry of Finance, and the Brazilian Securities and Exchange Commission.
Advantages of the Jurisdiction
If you are considering an option of company registration in Brazil, this can be potentially beneficial in view of the advantages this jurisdiction has:
- easy and straightforward procedure for the entity incorporation;
- the opportunity of 100% foreign ownership of a Brazilian company;
- no requirements concerning the minimum statutory capital;
- zero currency control;
- double tax treaties with more than 20 countries.
Tax System of Brazil
There are many local taxes to consider while establishing a company in Brazil and working there. Here are the most important highlights of such:
- Corporate income tax (CIT) rate – 34%
- Personal income tax rate – 27.5%
- Value-added tax rate – (a) normal federate VAT rate is between 10% and 15%, (b) state sales and service taxes basically vary between around 18% to 20%
- Withholding tax (for non-residents) – (i) dividends - 0% (ii) interests - 15% (iii) royalties - 15 %
- Capital gains tax rates – (i) corporate – 34% for corporate entities (considered as part of basic income and subject to standard CIT rate), (ii) individual – 22.5%
How Prifinance Specialists May Help You
If you intend to establish a company in Brazil, all bureaucratic and organizational arrangements for the preparation and registration of the company can be easily undertaken by experts of Prifinance company. Our specialists are ready to draft all required documents and complete the registration procedure for a Brazilian company. Reach us shortly for more precise discussions and suggestions.