Brazil is geographically the fifth largest country in the world with a predominantly tropical climate. It is the only Portuguese-speaking country in the Americas and the largest Portuguese-speaking country in the world, in addition to being one of the most multicultural and ethnically diverse nations on the planet.
Possessing the largest economy in South America, Brazil offers a variety of benefits for companies looking to expand their business. Foremost among them is a market with a massive potential for growth.
Brazil is also one of the most complicated jurisdictions for doing business. Brazil, a developing economic powerhouse, is one of the world’s fastest-growing nations. The successful staging of the 2014 World Cup reinforced its reputation as a global player.
Some of the procedures involved around payroll in Brazil, particularly those around cash payments and banking, may seem unusual to businesses used to operating in fully developed markets. But this should not deter you from expanding into Brazil. The benefits and opportunities for doing so far outweigh any administrative complexities. To ensure companies get off on the right foot and maintain full compliance with Brazilian regulations, HSP Group, a global payroll provider can give you the benefit of local expertise, along with unified standards for every country you operate in.
Legal System
An important aspect of the Brazilian regulatory system is that any individual or legal entity intending to carry out commercial activities, i.e., Industries, General Commerce, and Service Providers must obtain a series of registrations and licenses to legally operate.
Business Establishment
Foreigners considering the Brazilian business setup have two options to enter the Brazilian market. They may enter Brazil directly (subsidiary or branch) or through third parties such as distributors or sales representatives. Foreign entrepreneurs commonly utilize the Limited Liability Company (LLC) entity.
Foreign Investment
Brazil welcomes foreign investment, which is an important source of capital for the development of strategic sectors of the Brazilian economy, including, but not limited to, infrastructure.
Accounting Principal
The Accounting Practices adopted in Brazil (BR GAAP) are founded upon Brazilian corporate law. At the end of 2007, Law 11,638 modified Brazilian corporate law, effective from 2008.
Corporate Income Tax (Imposto sobre a Renda da Pessoa Jurdica)
Companies with total annual gross revenue of more than BRL 78,000,000.00 and others required by law must calculate real profits based on quarterly or annual balance sheets. They are not allowed to calculate this tax based on presumed profits. If taxation is based on a quarterly balance sheet, payment of taxes will be definitive, and all rules for calculating annual profits will apply to such quarterly profits, such as rates, additions, provisions, offsetting losses, etc. The taxable profit is levied at the basic rate of 15% plus an additional rate of 10% on taxable profit that exceeds BRL 20,000.00 per month.
New Employees
When an employee is hired, the Labor Ministry must be informed following the specific procedure (CAGED) in the following month. This procedure requires registering with the authorities until the 7th working day of the next month and within the 24 hours of contracting.
Want a 360° understanding of local regulations and how to make your market entry efficient and cost-saving? HSP has the answer. Specialist in Brazilian and global legislation, our team offers the following integrated statutory compliance services covering accounting, corporate law, VAT, and corporate income tax. Advantages include one point of contact, multiple competencies, and a proven standardized process guaranteeing high quality and timely delivery, as well as access to key information for compliance, reporting, and planning purposes. Additional benefits are control of cost-fixed fees, flexibility, and a large and well-balanced team.
