Financing a Business in Brazil
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Financing a Business in Brazil
Brazil has a sophisticated, modern banking and financial system providing a full range of services, however relatively few incentives are available throughout the country.
At the moment, a first port of call can be the Brazilian Trade and Investment Agency.
The following programmes, retrieved from the UK Trade and Investment website, offer general advantages for investors:
- Research & Development: tax incentives for investments in high technology are provided by Laws 8,248 of 23 October 1991 and 8,661 of 28 February 1993. The first allows firms that invest more than 5% of their earnings in Information Technology can deduct 50% of their investment from their taxable income and the second provides companies with total exemption from the Federal Value-added tax (IPI) on the acquisition of materials related to technological research, as well as an offset of their Federal income tax liabilities of up to 8% against expenditures for government approved R&D projects.
- Equipment Financing: BNDES, the national development bank offers a number of benefits to Brazil-based companies applying for subsidised financing. This financing is for buying new locally manufactured machinery and equipment. Up to 80% of the value of new equipment can be financed (90% in the case of micro and small enterprises). All the relevant information can be found here: www.bndes.gov.br (section Programs and Funds)
- Infrastructure Projects: More BNDES (see above) fundings are available for acquisition of vehicles for mass transport projects, environmental and social ventures, as well as projects in telecommunications, petroleum and electricity.
- Regional incentives: State and municipal governments offer tax incentives and concessional financing for investors although these can be subject to frequent changes and local politics.
- Manaus Free-Trade Zone: Manaus is Brazil's only functioning free-zone and the largest such zone in South America. Imports and fiscal incentives in this free-trade zone in the Amazon basin are guaranteed specifically by the constitution. The zone is managed by the Superintendency of the Manaus Free-Trade Zone and foreign imports entering the free-trade zone are exempt from customs duties, the state sales tax (ICMS) and the Federal Value added tax (IPI) if they are for consumption in the zone, stored in the zone for processing, re-export or transhipment to other parts of Brazil.