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Accounting & Bureaucracy in Brazil

Accounting & Bureaucracy in Brazil. Country Overview. Territory: 8.5 million km2 Population: of 200 million (2013) GDP: USD 2.25 trillion (2013) GDP per capita: USD 11.208 (2013) Currency: Brazilian Real (BRL) Capital City: Brasília Main Business Cities: São Paulo, Rio de Janeiro

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Accounting & Bureaucracy in Brazil

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  1. Accounting & Bureaucracy in Brazil

  2. Country Overview • Territory: 8.5 million km2 • Population: of 200 million (2013) • GDP: USD 2.25 trillion (2013) • GDP per capita: USD 11.208 (2013) • Currency: Brazilian Real (BRL) • Capital City: Brasília • Main Business Cities: São Paulo, Rio de Janeiro • 26 states, 1 Federal District and over 5500 Municipalities • . Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise

  3. Business in Brazil • Why Invest in Brazil? • High Profit Margins • Largest Market in South America • Growing Middle Class • No Tax on Dividends • Dealing with Bureaucracy • Ease of doing business: Brazil ranks 120th of 189 vs. Hungary who ranks 54th (World Bank Data) • Time to open a company: In Brazil it takes 84 days vs. 5 days in Hungary. (World Bank Data) - *Brazil is down from 122 days in 2012. • Time to prepare and pay taxes: Brazil 2.600 hours vs. Hungary 277 hours (World Bank Data) • . Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise

  4. Entry Options • Setting up a Company • Limited Liability Company • SA / Coorporation • Eireli • Permanent Visas • As a Person (BRL 150.000) • As a Company (BRL 600.000) • Buying a Company • Joint Venture Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise • .

  5. Requirements for Entry Options • Proper Planning • Legal Representative of Shareholders • Legal Representative of Company / Administrator • Commercial and Tax Residence • Accountant • Support from a Local Expert • Patience Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise • .

  6. Tax System • Why such a Complex Tax System? • A complex organization: the Federal Government, 26 Federal States (+DF), and thousands of municipalities, each with legislative powers • There are exceptions to all rules: according to territory, products and recipients • Constant changes to legislations: Federal, state & municipalities can make change one or the other tax (ex IPI, IOF, INSS, ICMS, II, PIS, COFINS) Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise • .

  7. Taxes Municipal, State & Federal Contributions and Taxes ISS (Service Tax) ICMS (VAT - Interstate & municipal Tax) PIS(Social Integration Program Contribution) COFINS(Social Contribution for Social Security Funding) IPI(Industrialized Goods Tax) II (Import Tax) IE (Export Tax) IRPJ (Corporate Income Tax) IRRF (Withholding Income Tax) CSLL (Corporate Social Contribution) IOF (Financial Operations Tax) CIDE (Contribution at the Economical Domain) FGTS (Workers Fund) INSS (National Social Security) Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise • .

  8. TAX Regimes DIRECT TAXATION Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise LUCRO REAL (Real Profit) Revenue > 78M BRL Net Margin < 20% LUCRO PRESUMIDO (Presumed Profit) Products> 8% of Rev.Services > 32% of Rev. Net Margin > 20% • . IRPJ (Cooperate Income Tax) = 15% upto BRL 20.000 Or 25% above BRL 20.000 CSLL (SOCIAL CONTRIBUTION) = 9% THE DISTRIBUITION OF DIVIDENDS IS NOT TAXED

  9. General Guide Lines CLT - ConsolidatedLabour Laws • CLT - Standard rights and obligations: • 13.3 monthly wages a year • Maximum of 44h work week • 30 days holidays after a year of work • Right to protection against arbitrary dismissal • Transport to and from work • Maternity (4 months) and paternity leave (5 days) • Occupational insurance • Union membership • No particular agreements can suppress employee’s rights guaranteed by law. However, increasing these rights is accepted, and occurs depending on the union. Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise • .

  10. Wage Simulation Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise Difference between employees net wage and total expense of employer is over 100% • .

  11. Benefits Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise • .

  12. Experience / Cases • Not successful endeavors: • Impatient / Restless • No previous planning • Adventurers • Does not seek assistance • Successful endeavors: • Previous planning • Previous established clients and contacts • Resources • Adaptation • Persistence • Patience • Reach out for local experts Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise • .

  13. Our Expertise • Entry Strategy • Business model, HR Planning, Import&Export Study, Global Study, Tax optimization, Accounting regime advice, Joint venture, Tax Audit and Accounting • Administrative and Financial Management • Banking, Monthly Reporting, Controlling, Revenue management • Accounting and HR • Bookkeeping, issuance and calculations of tax notes, income statements, annual reports, HR obligations • Legal Representation, Domiciliation Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise • .

  14. Our References Country Profile Entry Options Tax & Simulation HR & Simulation Case Expertise • .

  15. Thank You & Welcome to Brazil! Eduardo.cruz@europartner.com.br www.europartner.com.br

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