Top Challenges Of Doing Business In Brazil

Author:TMF Group
Profession:TMF Group
 
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Brazil has moved on a lot since it was named a "BRIC", one of the world's best emerging economies, a decade ago. The Latin American powerhouse has been one of the most exciting growth stories of recent times.

Plenty of foreign companies came to do business in Brazil, buoyed by a commodities boom and increase in family consumption. Playing host to both the football World Cup (2014) and the Olympic Games (2016) did not hurt Brazil's attractiveness, either.

...But that was then. Government support may have lifted more than 30 million people out of poverty in this time, but the sporting stages generated controversy, especially around how much it actually cost. Government budget deficits are up to 10% of economic output, up from around 3% in 2013. That, in turn, impacts doing business in Brazil.

It's not all doom and gloom, though. Brazil's consumer confidence is climbing, with households more optimistic about inflation, unemployment, personal income, their own financial situation and debt. And, following the impeachment of then-president Dilma Rousseff in August 2016, President Michel Temer of the centrist Brazilian Democratic Movement Party set out to restructure the economy. His government has formally applied for membership of the OECD.

After almost three years of economic recession, the Brazilian economy is now slowly heading towards a recovery. IMF predictions had Brazil's economy growing by 0.5% in 2017, and interest rates are decreasing.

Will the air of optimism last? However, the economy twists and turns, doing business in Brazil remains notoriously complicated. In fact, Brazil was named the second-most complex jurisdiction for accounting and tax in TMF Group's 2017 Financial Complexity Index. Here's what to consider before making the leap to do business in Brazil.

Developing nation

Brazil is still considered a developing nation, and although that is often interpreted as a precursor for 'high growth levels', it also means that several areas of the economy remain underdeveloped. The consumer base, regulatory environment and sphere of investment are not as mature as those of developed nations, and considerations must be made to that effect.

Bureaucracy

The reform of the laws and regulations for opening and running a business in Brazil has not adapted at the rate with which the economy has grown, presenting many hurdles to overseas corporations.

Brazil ranked 125th out of 190 countries in the World Bank's latest annual global report...

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