If you want to start a business in Brazil, you need to know the basic tax, accounting, and compliance laws and regulations in the country. Below, we explain everything you need to know about how to comply with your accounting and taxes obligations in Brazil.
Accounting & Taxation Requirements: Know and Understand Brazilian Taxes
You will be subject to corporate income tax, value-added tax (VAT), and social security contributions in Brazil. Below is a list of things you should know when it comes to taxes in Brazil.
- Tax return extensions are not possible.
- Your company must file a paper annual tax return before the last working day of April every year.
- You are subject to paying an average corporate tax rate of 34% depending on turnover size.
- Expect to pay a federal tax levied on domestic and foreign manufactured products levied at a rate of 1.65%.
- Expect to pay a mandatory social security contribution levied at a rate of 7.6%.
- Understand federal VAT taxes on the production and importation of domestic or foreign manufactured products.
- Understand state VAT taxes on goods and certain services (ICMS), levied anywhere between 7% to 25% depending on the state.
Prepare Yourself for Accounting in Brazil
Below, you will find some of the general annual accounting obligations for a company set-up in Brazil:
- Documenting and implementing accounting procedures.
- Implementing financial accounting software.
- Preparation of financial accounting records.
- Preparing forecasts, budgets, and sensitivity analysis to better manage financial obligations and ease the process of reporting to Brazil accounting authorities.
It is important that you are aware of personal and corporate tax obligations in your country of residence as well. You must fulfil those obligations annually.
Prepare your Business for Brazilian Legal Compliance and Laws
There are several laws you need to understand before starting your business in Brazil. These include employee benefits, business laws, and your protection as a foreign investor.
Company Requirements in Brazil:
- Your company must have at least one director and two shareholders of any nationality.
- There is no minimum share capital requirement for Brazilian LLC.
- Your company is mandated to lodge annual returns verifying the names and addresses of all directors, address of the business, and the details of shareholders and their shareholdings.
- You must maintain a local registered address if your company is private.
- Each foreign company must appoint a Brazilian legal representative to act as a sponsor.
- Foreigner attempting to own a business in health services, postal services, aerospace, and nuclear energy industries is restricted.
Giving Employee Benefits
In Brazil, you must provide additional benefits for employees. Those benefits include:
- Providing meal allowance.
- Providing certain life, dental, and medical insurance.
- Offering employee loans.
- Giving pension funds.
- Offering prescription drug benefits.
Once you understand everything your company must comply with, you will need to know the laws about doing business in Brazil.
Know These Brazilian Business Laws
Adhering to the laws below is important to maintaining business success in Brazil:
- Public companies in Brazil must publish annual financial statements in a national newspaper.
- For the process of company deregistration, the company will be required to maintain a resident company secretary and a legal registered office in Brazil.
- You must have at least one individual representative who is ordinarily a resident in Brazil.
You are Protected as a Foreign Investor in Brazil
The specific organizations listed below are the ones that protect your business as a foreign investor. Foreign investors also have several outlets that protect their business:
- The Brazilian Export and Investment Promotion Agency (Apex),
- The National Financial and Capital Markets Association (Anbima)
- Market Information Organization Board (Codim)
- Brazilian Institute for Investor Relations (IBRI)
Learn More Here!
Once you understand the accounting process, laws, and legal requirements in Brazil, you are set and ready to do business in Brazil. For more tips on incorporating a business in Brazil, you can check out our resources or contact Bruno at [email protected].
Watch the following video to learn more!