In our latest Q&A, Biz Latin Hub’s Claudir Ambra Lizot, country manager in Brazil, discusses how to register a business in Brazil and what to expect when opening a business in Brazil in the coming year.
Claudir Ambra Lizot is a multilingual (Portuguese/English/Spanish/French) Brazilian and Portuguese national. He holds a law degree from Universidade Presbiteriana Mackenzie and is specialized in sports law from Escola Superior de Direito de São Paulo. He has worked as a legal representative in the automobile and tobacco sectors, as well as at the law firm De Vivo Whitaker & Castro Advogados.
In his recent roles, Claudir has implemented governance and risk management models based on civil and labour laws, and tax litigation. He has extensive experience working with foreign companies operating in Brazil.
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Biz Latin Hub: What is the current business climate like in Brazil?
Claudir Ambra Lizot: Brazil has had relatively slow growth despite its many opportunities and resources, and this trend is expected to continue in 2023. There are many federal, state, and local regulations affecting individuals and companies, especially when it comes to property rights. All these things need to be kept in mind when it comes to thinking of opening a business in the country. I advise getting help from local experts who can navigate the regulatory system in Brazil. The impact of the presidential election was not as substantial as many expected, although it has led to a devaluation of the Brazilian real in the past few weeks.
BLH: How has the business environment changed from pre-Covid to today?
CAL: Covid impacted Brazil’s economy just as it has impacted other countries, especially considering that it arrived when the country was starting to show signs of economic improvement. But 2022 began showing a much different scenario, with a belief that “the worst” had passed, leading to a modest economic recovery in 2022. However, the Brazilian economy has far from completely recovered from Covid. The relatively slow economic growth seen pre-Covid slowed down even more. But there are clear signs that the economy is on the way to rapid and healthy growth once again. Compensatory measures and strong economic policies strengthened the forecast of Brazil’s business environment – something to consider when opening a business in Brazil. We already observed a decrease in unemployment during 2021. The Brazilian economy is highly adaptable to these situations. We have also observed a rise in formal workers, which will be highly beneficial in the long run.
As there is a new government will take over in 2023, there is always some uncertainty about how political changes may impact the economy. But Brazil is expected to be more open to foreign direct investment, especially considering the currency value currently favours it.
BLH: How has the Brazilian market changed over the past few years?
CAL: Brazil was coming out of a period of recession, which even led to the impeachment of a president, and was expected to start improving its indexes when Covid hit. However, the country has always firmly structured its agricultural sector and managed to overcome the many recent crises it has faced. This is a continental-sized country with a large population, and this always offers many opportunities. It allows a lot of room for the services sector and industry, especially for foreign investors and those who wish to incorporate in Brazil. We have observed a contraction of consumer spending in Brazil, and that combined with the weakened real, has resulted in lower purchasing power. During the recession and Covid, online sales steadily increased and became a market worth keeping an eye on. This counts especially for the retail industry, which has experienced a great increase in sales. Retail is rising in the e-commerce sector and Brazilian customers primarily purchase in instalments using credit.
BLH: What does one need to do when opening a business in Brazil?
CAL: As the process for opening a business in Brazil is not complex and time-consuming (a new entity can expect to begin operations in about 30 days), it is important to have a clear strategy and the ability to start working quickly not to lose momentum. This is important, and the team always has in mind the need to help our clients by offering the best support to get the wheels turning. Hence, you need to plan very carefully what you want to do in Brazil and in the way you want to do it. With that said, you need to choose what kind of entity you want and be ready to provide all the required information. This includes providing details about foreign shareholders with the Central Bank of Brazil and Federal Revenue’s taxpayer’s registry. The process is relatively quick and easy, however.
BLH: When opening a business in Brazil in 2023, what advice would you give to those?
CAL: Do your homework. A company must do its financial assessment, preferably understanding the taxation applicable to its business, as this is usually the main difficulty for non-Brazilian companies (actually, also for Brazilian companies, but at least they are already aware of how this works). It is better to invest a little in getting a strategy in place and benefit later from the knowledge gathered than to be surprised. It is crucial that you study the Brazilian market and that you understand how it works structurally. Depending on your experiences, opening a business in Brazil might be very different from what you are used to. With that said, it is a huge market with many interesting sectors that can take your business to the next level. From my experience, great preparation often leads to success for foreign companies in Brazil.
Biz Latin Hub can help with opening a business in Brazil
At Biz Latin Hub, we provide integrated market entry and back-office services throughout Latin America and the Caribbean, with offices in São Paulo, as well as over a dozen other major cities in the region. We also have trusted partners in many other markets.
Our unrivalled reach means we are ideally placed to support multi-jurisdiction market entries and cross-border operations.
As well as knowledge about opening a business in Brazil, our portfolio of services includes hiring & PEO accounting & taxation, company formation, bank account opening, and corporate legal services.
Contact us today to find out more about how we can assist you in finding top talent or otherwise do business in Latin America and the Caribbean.