Three online solutions established by the Brazilian government to facilitate the easy formation of startups have contributed to the average time taken to register a company in Brazil being more than halved in the space of three years.
According to the Brazilian Ministry of Economy’s Special Secretariat for Debureaucratization, Management and Digital Government, on average it now takes less than two days to register a company in Brazil, compared to an average of five days at the beginning of 2019.
That is in part thanks to two projects known as One Stop Shop (Balcão Único) and Inova Simples, as well as an electronic signature, which allow entities to be formed online in one sitting, with Inova Simples specifically aimed at companies dedicated to innovative and disruptive technologies.
One Stop Shop brings together data held at federal, state, and municipal levels and makes company formation in Brazil more agile by eliminating the need for travel and allowing all documentation to be sent to one place. Users only need to fill out a single digital form (in Portuguese) to register the company and obtain a business identification number from the National Registry of Legal Entities (CNPJ).
The scheme is run through state Boards of Trade and was originally introduced in Sao Paulo, Brazil’s most populous state, before being taken up in Bahia, Para, Pernambuco and Rio Grande do Sul, as well as the Federal District. A further 11 states took up its use in January, so that it is now available in 17 of the country’s 26 states.
January also saw the introduction of Inova Simples, with state news agency Noticias Brasil reporting around 60 startups had been registered via the platform in the first month. According to that report, eligibility to register through Inova Simples is based on providing evidence of the innovative product or service being offered.
Registration via Inova Simples is based on the activity being “low-risk” and allows companies to initially commercialize products and function without licenses and permits, prior to a subsequent registration with the Board of Trade.
It also includes a streamlined process for trademark analysis and patent applications, which are handled by the National Institute of Industrial Property (Inpi).
Contracts for the One Stop Shop and Inova Simples business formation process can be signed using an electronic signature developed by the Brazilian government. The electronic signature, which has been introduced in 24 states, allows eligible users to electronically sign documents being submitted to public authorities without signature recognition or the acquisition of a digital certificate.
Eligibility is based on certain accreditation, with the holding of an account at one of the seven major banks being an essential part of the identification process.
Doing business in Brazil known for red tape
News that the time taken to register a company in Brazil has more than halved in the past three years will be welcomed by the business community, given the country’s reputation for sometimes convoluted layers of administration.
The fact that the scheme has managed to bring together and harmonize data from the various layers of Brazilian government is also particularly positive.
It is important to state that these three projects do not make it faster to register a business in Brazil to the point of providing goods or services in all instances – with some company formation processes still taking months to get from initial registration to launch, based on the location and nature of the business.
However, these online company registration projects do demonstrate serious institutional willingness to improve administrative processes, and they have already generated positive results.
The red tape involved in doing business in Brazil is one of the reasons that many foreign investors seek out a local partner with a firm understanding of the regulatory regime and proven experience of negotiating it efficiently.
Another key reason is the language barrier, with all official processes in Brazil carried out in Portuguese and overall levels of English proficiency rated as “low” in the most recent edition of the English Proficiency Index – although you will meet many professionals with a good level of English when doing business in the country.
How to register a company in Brazil: 7 steps to launch
When you register a company in Brazil, in most instances, you will need to complete the following seven steps before you can launch:
Step 1: Obtain a local Brazilian tax identification number for the foreign shareholders
Before you can register a company in Brazil, at least one foreign company shareholder will have to obtain a Brazilian tax identification number. For companies, that is the CNPJ which is provided by the Federal Revenue of Brazil when the foreign shareholder is registered at the Central Bank. In the case of foreign individuals, it is known as the CPF.
Step 2: Appoint a legal representative
You will need to appoint a legal representative in Brazil to represent your company, which will mean drafting and signing a Power of Attorney (POA) to provide them with the right to act on your behalf.
Step 3: Draft the company bylaws
To register a company in Brazil, you and your legal representative must draft your organization’s bylaws and include information regarding the nature and structure of the business, as well as information on internal procedures.
Step 4: Register your company’s bylaws
After drafting the bylaws, the business can be registered before the Board of Trade and other relevant local authorities. At this point, the Federal Revenue will provide a CNPJ number to the Brazilian entity.
Step 5: Open a corporate bank account
With the company’s bylaws registered, you will be able to open the company bank account.
Step 6: Register the paid capital
After opening the corporate bank account, you will be able to register the paid capital with the Central Bank.
Step 7: Register a company in Brazil by depositing the initial capital
The final step in the process is to make the initial deposit of capital into the corporate bank account, at which point you are ready to launch.
Biz Latin Hub can help you register a company in Brazil
At Biz Latin Hub, we help our clients bridge the cultural and linguistic barriers they encounter when launching and doing business in Latin America and the Caribbean.
We are a professional services company providing integrated market entry and back office services throughout the region, with offices in 16 major cities.
If you are looking to register a company in Brazil and could use some support with that process or ongoing operations, contact us for a quote or consultation.
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