Including the federal, state and municipal areas, the Brazilian government procures the equivalent of USD 170 billion per year in goods and services. In addition, the 2014 World Cup has a budget initially estimated at USD 56.8 billion, while the 2016 Olympics have a budget initially estimated at USD 19.3 billion and there are other large projects that also require investments in infrastructure, such as the 2013 Confederations Cup and the 2016 Paralympic Games.
Yes, provided they meet the requirements through equivalent documents duly consularised and translated. But it is important to determine at the strategic level the best ways to explore the market for government tenders, which has some differences in opportunities between national and international tenders. In this context, consortia and other forms of joint ventures with Brazilian companies can maximise the chances of success and expand opportunities.
Brazilian law stipulates that bids must be adapted to the specifications of the products or services tendered and that the price must be compatible with the market price. In terms of qualification, documentation is required as to the legal aspects (memorandum of association and related documents), technical aspects (certificates of technical capacity and related documents), economic and financial aspects (balance sheet and other accounting documents) and aspects of tax compliance (certificates of regularity).
Yes, it is possible to map, for example, the competitors, products offered, brands, prices and names of public bodies purchasing products or contracting for services or public works. In addition, as well as monitoring new tenders that are published, it is possible to assemble a report on market behaviour, for example, for the last year or even longer, if necessary.
In principle, there are the general federal standards and the specific rules of the states and municipalities, but they are all very similar. For example, all public entities prefer the principle of open tender (reverse auction) because of the greater competitiveness and economy in price, but also have standards to ensure safe and reliable procurement. In the case of bids made by public companies and joint stock companies, such as Petrobras and Third Parties, as well as in regulated industries such as telecommunications and transport, there are different regulations. In all cases, companies have legal instruments to defend their rights in the courts or accounting tribunals, whether in issues regarding participation in bids or in matters of government contracts.
There are three modes of import in Brazil, "Import on Own Account", "Import to Order" and "Import on Behalf of Third Parties".
Each of these methods provides a different tax treatment, affecting the final price of the product to be marketed in Brazil.
The choice of mode that can best suit a particular importer depends on economic aspects associated with use of the goods to be imported (for example, import of raw materials for manufacture, import and use of material for consumption or import of equipment for fixed assets, finished products ready for resale, etc.).
Also the choice of the right mode varies due to financial aspects of the operation (there are cases where the importer pays for the operation with its own resources and others in which the importer receives advances for handling the import of goods acquired by a third party, etc.).
The regimes and import rules in force in Brazil are:
RADAR, the Performance Tracking System for Customs Stakeholders, is an internal system of the Tax Authority, which allows it to grant access to qualified entities to import/export goods. Enabling of legal entities in RADAR must take place in accordance with the provisions of Instruction No. 650/06 of the Tax Authority, by completing specific forms and submission of the documents required for each type of licence, among which we highlight the Ordinary and Simplified conditions.
On enabling in RADAR, the legal responsibility of legal persons must be registered in SISCOMEX (Integrated Foreign Trade System), and the company can then usually perform foreign trade operations (import and export).
The need or not for prior registration for imports of a particular product will depend on the type of product. There are some goods that require prior registration with the competent bodies in order to be imported. This is the situation, for example, in the case of petroleum products, which can be imported only after registration with the ANP (National Petroleum Agency), or indeed in the case of import of drugs, which can only enter the country when properly registered with ANVISA (National Health Surveillance Agency). In this regard, each authorising agency has previously determined rules for the registration of products.
How is it appropriate to calculate the final sales price in the Brazilian market? Are there specific requirements for each sector? If so what? It is possible to get an idea of the overall average costs per sector for a specific amount, depending on the means of transport used.
To be able to assess the costs related to the processes of export/import in Brazil, it is necessary to bear in mind that there are common cost components to these operations regardless of the country where they occur. There are other components attributable to particular aspects of Brazil.
It is necessary to give a quote for transport services (in the country of origin, the international segment and country of destination) and a quote on insurance, allowing for the necessary coverage.
Fairly often, it is necessary to consider possible costs of storage in customs facilities in the country of export and the country of destination. Customs clearance on imports for consumption is a procedure initiated by recording the Import Declaration (DI) and completed with the customs clearance, which corresponds to the issue of the Import Certificate (IC).
This procedure should preferably be performed in the tax jurisdiction where the importer is domiciled. Not infrequently, however, the imported goods will have entered the country by a port, airport or border point different from that where the importer is located. In this case, the costs of removal (usually performed by the Customs Regime and called "Customs transit") must be considered as well as they storage periods incurred in the unloading site and the site where the customs clearance is handled.
It is necessary to consider the costs of customs clearance, the costs of port and wharfage fees, among other itemised in the attached spreadsheet. It should be noted that some products are included in a report, governed by the appropriate provision, for which the procurement of a Import Licence (LI) prior to shipment is required, while for other products such a licence must be obtained prior to the record date of the DI. Most often, the LI is automatic. Depending on the situation, it is necessary to calculate the cost of obtaining the LI. With the registration of the DI and after the tax classification applicable to the product, the collection of taxes takes place. The tax classification can determine a more or less onerous position, with varying rates for taxes on Import (II) and on Industrialized Products (IPI).
Social contributions to PIS and COFINS are also collected in the course of customs clearance. Like the IPI, the social contributions concerned follow a system of noncumulative calculation. For this reason, an adequate cost plan should consider the amounts to be levied as a credit by the importer to reduce the amount owed by the same importer, when it handles the subsequent operation on output (sales).
As a general rule, there will also be a liability to ICMS, the tax on movement of goods, levied by States and to be paid by the importer prior to finalisation of the customs clearance. This is also a tax subject to the noncumulative system. In some states, the marketing rules, for purposes of calculating the GST, are regulated differently. As an example, in the State of Espírito Santo, there is a rule stating the need to determine the GST payable on a subsequent operation to be applied by the buyer to the importer. This is the ICMS-ST (ICMS due for tax substitution), which in this case assumes a hypothetical margin of 64% (regardless of whether this margin is applied or not).
The rules of allocation of noncumulative tax credits and their use for the relevant tax rebate due in a subsequent operation may vary depending on the taxation system elected by the taxpayer. Importers opting for the system of taxable income must submit to the separate treatment appropriate to those taxpayers subject to the presumed income system. For the case of social contributions, we must also observe those taxpayers who are covered by the cumulative system, in whose case cascading contributions are levied. We must also consider the imports made to supplement the fixed assets of the acquirer, for which noncumulative taxes are not recovered at once. Finally, in determining the sale price, it is necessary to observe the legal cases in which the buyer is qualified as industrial (even if performing a pure marketing activity), because in this situation the IPI is reflected in the price.
On this basis, the calculation of the sale price of a particular product should be determined case-by-case by noting the specific features of the product itself and the characteristics of the importer and buyer. It is not possible, except with an immense margin of error, to determine a factor for fixing the average overall cost per product, by industry or activity. There are many variables to consider.
Any person wishing to export to the Brazilian market should make sure to sell and ship products in a suitable consolidated batches for loading.
The greater the value to be transported (exported/imported) to Brazil, the greater the expenses that the product could incur in its operation because some expenses in the import process are fixed, regardless of the quantity and value of the batch, like some charges of the port and customs broker. The consolidation of cargoes in suitable batches also allows the exporter to pay the lowest rates of storage and insurance premiums as well as to get the best freight rates.
For those with regular and large volumes to be exported to Brazil the best approach is to hire a company that offers an integrated solution in international trade, hiring and managing all the service providers involved in the chain.
Companies that are not regular exporters and/or cannot work with suitable volumes have difficulties in being competitive.
Despite the existence of other corporate forms, the legal types most frequently adopted by both national and foreign businesses are the limited company and the joint stock company. So, because of their economic importance, these are the only legal types covered by our publication.
The limited company has its capital divided into shares. The liability of each shareholder is limited to the value of the shares subscribed, but all partners are jointly liable for full payment of the share capital. The joint stock company also has its share capital divided into shares and the liability of shareholders is accordingly limited to the amount of shares subscribed.
A limited company is formed by at least two shareholders and changes to the Memorandum of Association require acceptance by shareholders representing at least 75% of the capital. In turn, the joint stock company may have only one shareholder, provided that the shareholder is a Brazilian company, when it is considered a wholly-owned subsidiary. In the joint stock company, as a rule, amendments to the Bylaws must be approved by an absolute majority (50% + 1) of the shares entitled to vote.
Investors should consider the type of relationship existing between the shareholders of the company to be formed, the value of the investment to be made and whether they have an interest in the issue of securities.
The limited company has some practical advantages over the joint stock company in terms of simplified corporate structure, reduced maintenance costs and fewer formalities. This is the most appropriate type of company for foreign partners belonging to the same economic group.
On the other hand, if the foreign partners belong to different economic groups and/or have an interest in the issue of debentures, commercial paper or any other type of security, the structure of the joint stock company would be the most appropriate. Moreover, it is noteworthy that, depending on the business activity to be carried out by the new company in Brazil, the use of the joint stock company may be mandatory.
Brazilian law does not require a minimum investment. In reality, the value of the investment will depend on the resources required to implement the activities to be undertaken by the company in Brazil. The investment can be made in cash or through the transfer of other assets susceptible of monetary evaluation and is subject to registration with the Central Bank of Brazil, is also its repatriation and the payment of dividends.
The procedure to be adopted for repatriation is the same as used for the inflow of funds. The investor must register the relevant memorandum of association with the competent Commercial Registry and ensure its registration in the System of the Central Bank of Brazil. Once it is successfully registered, the investor may remit the values by concluding an exchange contract.
In Brazil there are the Federal Police, Civil Police, Military Police and City Guard. All, within their respective spheres of action, may provide the necessary support for security companies seeking to prevent any criminal actions.
As a requirement of the federal police itself, as the entity responsible for monitoring the activity of Private Security, professionals working in the area must undergo a training course before being deployed to their jobs, as well as periodic professional refresher courses and a thorough criminal background search.
There are 10 essential items when choosing a security company. They are: