DOING BUSINESS IN BRAZIL

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Would you like to do business in Brazil? Send your questions to:    

Contact: fernandopieri@hll.com.br.  Website: http://www.hll.com.br

 ONE TAXATION FOR INVESTMENTS ABROAD

 By Ingrid Coifman  

In the midst of recovering from a global economic  crisis, Canadian entrepreneurs are strengthening their relationship with Brazil; with the intention of finding a new place for their financial  resources, without sacrificing legal certainties, profitability and favourable tax treatment. This issue celebrates Discover Brazil’s launch of a new section, designed to explain in simple terms, how to develop a business in Brazil.

Fernando Pieri Leonardo, Professor of Tax and Customs Law and President of the  Brazilian Association of Customs Studies (ABEAD), is featured in our inaugural article in this new section. We welcome your questions and comments as we find out what it takes to be successful in a new business venture in Brazil.

 

 

 

 

 

 

Discover Brazil – Describe the business relationship between Canada and Brazil?

Fernando – Brazil is Canada’s largest trading partner in Latin America and the tenth on
a global scale, being the third largest exporter of goods to Canada.

DB – Are there any favourable tax incentives for investing in Brazil?

Fernando – Since 1985, Brazil and Canada have maintained an agreement that avoids  double taxation on income and earnings, which demonstrates the consolidation  between them. In general, the agreement allows a Canadian who invests in Brazil, but maintains his or her residence and domicile in Canada, to pay tax  only in Canada, thus avoiding taxes accrued on  earned income that is taxable in Brazil.

It is the same for Canadian companies operating in Brazil: a company may conduct business in Brazil, keeping its property in the country of origin, and pay tax only to Canada on the income from the international transaction. If the company chooses to open a branch or  subsidiary in Brazil, the tax will be determined as if they are two separate entities: the parent company will pay tax to Canada and the subsidiary will pay tax to Brazil.

 DB – What has the Brazilian government done to promote  the economy and attract Canadian investments to Brazil?

Fernando – Besides maintaining an agreement to avoid double taxation, the Brazilian government allows the Canadian branch operating in Brazil to write off moving expenses or expenses related to their establishment in Brazil, including expenses and charges for general administration. In addition, on April 3, 2012, the Brazilian Minister of Finance announced a package of measures aimed at promoting the growth of Brazilian industries, such as: an exemption from social security charges for employers in several sectors; and reduced (this may even reach exemption) taxation for exporting companies of products and services. Such benefits may be extended to taxes calculated on the exporting inputs purchased by exporters.

 DB - What are the benefits for a Canadian firm that opens a branch in Brazil?

Fernando - By choosing to open a branch in Brazil, the Canadian entrepreneur can experience unparalleled profitability if compared to other countries: no double taxation, being able to export products produced at a lower cost in Brazil back to Canada with a reduction or even exemption from exporting taxes and the purchase of inputs for export production, reduced social security charges on payroll, among others. On top of that, the investor will face the possibility of expanding their consumer market through their subsidiary opened in Brazil, because: firstly, the products of Brazilian companies or ownership structures that are considered to be national, receive a preference, allowing them to acquire up to 25% over the imported equivalent; and secondly, the branch can be a gateway to Mercosur, considering that Brazil is the leader of the block.

 Service:

Fernando Pieri Leonardo, lawyer and consultant with 16 years experience, is a partner at HLL Lawyers, specialising in International Trade, Customs Law, Tax  and Business.

Would you like to do business in Brazil? Send your questions to:    

Contact: fernandopieri@hll.com.br.  Website: http://www.hll.com.br

“Fernando Pieri is the Senior Partner of HLL Advogados. You can follow his company on Twitter (https://twitter.com/HLLAdvogados) or ‘Like’ it on Facebook (http://www.facebook.com/pages/HLL-Advogados/371217862949053).”