Brazil-Business Environment

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Published: 06 Oct 2008 17:35:49 PST

Standards

Domestic framework and international association: Member of the International Organization for Standardization (ISO), of theInternational Electrotechnical Commission (IEC), of the Global Ecolabelling Network (GEN), of the Pan-American Standards Commission (COPANT) and of the MERCOSUL Association for Standardization (AMN) and of the Uniform Commercial Code (UCC), which has become the GSI after merging with a European group (an organization concerning chains of logistics and bar codes).

Independence of justice: Although judicial power is to a great extent independent of the executive branch, it is quite powerless faced with the organized crime which is rife in the country. Legal reforms advance very slowly and the public does not trust the system. Each Brazilian province has its own legal system. The country also has a system of courts to settle disputes between provinces. Brazil has not accepted the obligatory jurisdiction of the ICJ. The level of corruption is very high, particularly as regards justice. Judicial power belongs to judges, important people, and there is no jury in any lawcourt.
Equal treatment of nationals and foreigners: Although it is partially a constitutional State, there is a climate of anarchy. However, the judicial power guarantees a fair trial to foreign nationals.
The language of justice: Portuguese.
Having recourse to an interpreter: It is often necessary to resort to an interpreter if you do not speak Portuguese.
Sources of the law and legal similarities: The main source of the law is the constitution of 1998. The legal system is based on Roman codes. The civil code, inspired previously by the Napoleonic code, is nowadays closer to the Italian code. Judicial power belongs to judges and important people.

Domestic network and international agreements: The organization in charge of the protection of patents and trademarks in Brazil is the INPI (Instituto Nacional de la Propiedad Industrial).
Brazil subscribes to the Paris convention on the protection of industrial property and the convention set up by the World Intellectual Property Organization.

Type	Text	Date entered into law	Period of validity	Remarks
Design	Industrial Design and Model Law	1983	5 years renewable once	-

Tax rate: The ICMS is 17%:
transactions: 17% (18% in Sao Paolo);
inter-state transactions: between 7% and 12%;
imports are subject to: between 18% and 25%;
communication services: from 13% to 35%.
Reduced tax rate: Hundreds, each State can alter them.
Other consumption taxes: A tax on industrialized products (IPI) is also collected: an excise duty levied at the federal level. It applies to almost all sales and transfers of goods manufactured or imported in Brazil. The IPI rate can vary between 0% and 365.6%. The least taxed products are: basic foodstuffs, and the most taxed: alcohol and cigarettes.

Tax rate for resident companies: 15%
Tax rate on long-term capital gains: The tax rate on long term capital gains is the same as for corporate tax. Non-resident investors are subject to an obligatory deduction of 15%, rising to 25% for residents of tax havens.
System governing groups of companies and dividends paid by subsidiaries to their parent companies: Dividends paid to residents or non-residents are not subjected to a payment at the source,
Tax rate on branches: The corporate tax is levied on branches at a rate of 14%.

Tax rate: 0 to 27.5%
Allowable deductions and tax credit: Social security contributions, voluntary contributions to a private pension scheme (up to 12% of salary), professional travel expenses, pensions paid by order of a court, a deduction of 123 BRL per dependant per month, as well as 2 374 BRL in annual educational expenses. Some donations are also allowable for deductions or tax credit.

Countries with whom a double taxation treaty have been signed: Fiscal agreements signed

Tax year: From 1 January, finishing 31 December of the same year.
Accounting standards: According to the American model, the financial statements must include at least: a table of variation of equity capital apart from the reserve account, a table of cash flow, notes to the accounts.
Accounting reports: Commercial companies are obliged to publish annually a balance sheet, a profit and loss account and all the information necessary to understand the financial health of the company. The documents are controlled within the 60 days preceding the shareholders' Annual General Meeting.
Accountancy profession: There are no real differences compared with other countries. Qualified chartered accountants, working independently or for an accounting practice, must certify the company accounts.
Certification and auditing: Independent auditors and international firms registered with the Instituto Brasileiro de Contadores.
The financial statements are controlled by an independent auditor registered with the "Securities and Exchange Commission" or the "Instituto Brasileiro de Contadores". Approximately half of the audits in Brazil are carried out by international audit firms.
The present trend is towards an increase in the number of companies audited, including those which are not obliged to be audited. The guarantee of quality arising from a certification represents a not inconsiderable advantage for Brazilian companies.