Brazil is the biggest economy in Latin America, with larger states such as São Paulo having a bigger economy than neighboring nationArgentina. Brazil is also the world’s seventh biggest economy with a Gross Domestic Product (GDP) of USD 2.3 trillion.
The UK and Brazil have a burgeoning trading relationship in place – UK goods exports to Brazil more than doubled in the decade between 2002 and 2012, and services exports increased by 59% in the five years between 2009 and 2014. And even though overall imports to Brazil dropped by 14.3% in 2015, the number of UK goods exported to the country only fell by 5%.
If you’re thinking of exporting to Brazil, the top UK exports include:
- Chemical products (mainly fungicides)
- Electrical appliances
If Brazil looks like a good opportunity for your business, here’s all you need to know about exporting there…
The pros and cons of exporting to Brazil
If you’re looking to do business in Brazil, there are several strengths of the market, such as:
- Strong and globally integrated business base
- Solid and modern banking system, with presence of world’s largest investment banks
- Growing labour force
And the benefits of exporting to Brazil include:
- European oriented culture and business practices
- Political stability
- Growing consumer market
There are several challenges you may encounter though, such as:
- Complex tax system with high taxes
- Complex regulatory system
- Local content laws in certain sectors
- Long journeys between cities and states, and cultures can vary significantly
- Ranked 76 in the Transparency International’s corruption perception index (CPI)
- Ranked poorly in World Bank’s ease of doing business index
- Organised crime is a significant problem in some parts of Brazil
It’s worth noting that a great deal of importance is put on personal contact so you may need to visit several times before securing a deal. But given that travelling between the UK and Brazil can be costly and time-consuming, it’s worth considering conference calling – here’s How to set up a conference call between the UK and Brazil.
And remember, you can now screen share and video conference, using Crankwheel.
Tax and customs in Brazil
The Brazilian tax year from January to December, as per the calendar year, and the tax system can be tricky to negotiate, not least because of the number of taxes you need to consider, including:
- COF, a social security tax
- STT, a state tax of 17 or 18%
- PIS, income tax
- ICMS, value added tax which varies between states
- IPI, excise tax
- ISS, service tax
- IOF, financial transactions tax
- import tax – value depends on product classification defined by WTO regulation (origin and specifications); 60% for less than £2,000 regardless of product classification
If you’re exporting capital goods (those used in the production of other goods), information technology (IT) or telecommunications goods to Brazil, you may be able to get a temporary reduction on import duty rates via the Brazilian Chamber of Foreign Trade (CAMEX) ex-tariff list is a special tax regime. Contact the DIT team in Brazil to find out more information.
Some goods attract prohibitively high import duties that make them too expensive for the Brazilian market, so you need to thoroughly do your homework before you put export plans in place.
And it’s worth looking into getting a Receita Federal, grants Authorized Economic Operator (AEO) certificate. Issued to trusted Brazilian companies, the certificate can see you given priority treatment for exporting and importing goods. Contact email@example.com for more information on the AEO programme.
Image from Pablo by Buffer.