Compliance Issues to keep in Mind while Expanding your Business to Brazil

Brazil today is proving itself able to face turbulences and global financial crisis soundly and, as a result, is gaining increased attention from international media and global investors. After India, China, Indonesia and the U.S.A., Brazil represents the fifth largest market opportunity in the world. Recent International Monetary Fund (IMF) reports indicate that Brazil leads all other South American countries in terms of infrastructure and technological development.

In an international business expansion, people seeking to expand their global enterprise into Brazil encounter challenges while doing business within this rapidly evolving economy. There heavy business regulations accompanied by numerous bureaucratic hurdles spread out among various governmental agencies. Below are the top five corporate compliance concerns facing businesses looking to expand to Brazil:

• Brazil Lacks a “Place of Business” Concept

Brazil is one of the few countries that lack recognition of a “place of business”, from an organizational and logistical standpoint. Brazil’s strict requirements stifle the establishment of ground teams or pop-up operations. Foreign business entities must exercise a lease on premises from day one to initiate business dealings within Brazil. The setup of a branch office in Brazil requires presidential approval, with the only viable option to setup a subsidiary even if only to hire one employee. This requirement demands that businesses be very certain and very prepared for the expense of establishing a presence in Brazil before ever setting foot in the country.

• Fulfilling the LTDA Requirements

The most common business entity is the “Limitada.” While this is touted as the simplest office to establish in Brazil, it is by no means a simple and flexible process to create. Organizations must contend with a labyrinth of steps and these steps and time estimates may differ from state to state. One reason the process can take so long is that the filing requirements are spread out across various governmental agencies, both federal and state. Compliance issues surrounding the Limitada not only police the establishment of a business, but its closing as well.

• Corporate Tax Filings

Brazil has different categories of indirect taxes, both federal and state thus VAT, sales and taxes meet multiple filings requirements and making expert accounting help a key consideration for any organization setting up shop in Brazil. These filings do not occur in concurrence or in consideration of corporate calendars. For companies setting up cost centers in Brazil, the regulators do not recognize the generally accepted OECD “cost plus” model for intercompany agreements.

• Employment Law

Employment represents another myriad of regulations for foreign entities in Brazil. Organizations seeking to establish a presence in Brazil are wise to closely study employment laws in the country, as they will inevitably find themselves tethered to a number of complex national-to-foreign worker ratio requirements, unemployment insurance regulations, social security taxes, termination restrictions and payroll laws. When hiring in Brazil, it

pays to be very certain of the employees brought on board to a new company, as termination is very difficult.

• FCPA Regulations

Pay attention to the Foreign Corrupt Practices Act (FCPA). Last year legislation was introduced in Brazil designed to require Brazil to comply with international agreements for combating bribery. This legislation is designed to bring Brazil directly into the international mainstream regarding legislation to prevent bribery and corruption addresses civil and administrative liability for corporations for corrupt acts relating to Brazil’s national and foreign public administration.

Depending on the opportunity there are many doing business in Brazil. While Brazil offers a wealth of opportunities to prospective investors looking for international expansion, it is also a country beset with bureaucratic and cultural difficulties .It is imperative to do your homework in advance and take the help of a professional advisor, who can make your expansion easy by providing unlimited assistance in areas of significance like regulatory filing requirements, tax equalization expat, etc.

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A Look at the Change in VAT Rates and Corporate Tax in France

As part of a range of austerity cuts following the latest Euro currency rescue agreement, the government of France announced plans to impose a ‘temporary’ corporate tax surcharge of 5 percent for 2012 and 2013 for large companies. The French government also plans to increase the 'reduced' value-added tax (VAT) rate of 5.5 percent to 7 percent, with certain limited exceptions. The move is part of France’s second austerity package designed to increase corporate tax revenue and reduce government expenditure and debts. It is said that the extra cuts make the 2012 budget one of the toughest since 1945.

What are the New Corporate Tax Proposals?

The corporate tax proposal mainly focuses on two measures that would affect business taxpayers. A temporary 5percent surcharge on corporate income tax would be implemented in 2012 and 2013 for companies having an annual turnover of €250 million or more. The “reduced VAT rate” which is currently at 5.5 percent will be increased to 7percent for all goods and services (with an exception to food and certain goods/services provided to disabled persons).

Tax proposals for Individual Taxpayers

The French government also introduced an exceptional 4 percent individual income tax on taxpayers with income of €250,000 or more if single and €500,000 or more for qualifying couples which is currently being considered by the French Parliament. Some of the proposed measures concerning taxation of individuals, if enacted, would increase the individual income tax 'flat rate' that applies for dividends and savings income from 19 percent to 24 percent.

Take the help of an expert

When doing business overseas, the last thing any organization wants to do is to pay your hard-earned profits as unnecessary taxes, especially in the current economic climate. It is best to partner with an expert to help simplify the process and overcome any challenges in taxation. A business consultant will have a  complete up-to date information on how to keep up with the ever changing laws pertaining to expat tax, global transfer pricing, regulatory filing, to name a few. A dependable professional partner in an international expansion can help get rid of any concern regarding your overseas expansion project, thereby allowing you to focus on building your business.

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Pointers for International Business Expansion in Qatar

Malta has a booming industrial sector with more than 400 locally and 200 foreign owned manufacturing companies. The workforce is highly trained, flexible and multi-lingual and ensure that the country has competitive advantage owing to its high quality production at expenses that are extremely competitive. In addition to that, Malta provides transportation infrastructure, a state of the art telecommunication system and air links to North Africa, Europe and other Middle Eastern destinations. Furthermore, Malta has a strategic location, being at center of Mediterranean and has access to Freeport markets and harbors that makes it an excellent manufacturing base.

Why expand your business internationally to Ireland?

The primary reason for international business expansion in Malta is its advantageous location that places it in close proximity to the Middle East, Africa and Europe that renders it favorable fiscal conditions and a vast talent pool. The biggest advantage of setting up or expanding your business internationally in Malta comprises of specialized services that are cheaper than other parts of Europe. Furthermore, there are lesser delays for company registration processes and lucrative tax rates. Malta is highly appropriate for English speaking investors, as the language is official in the country and is spoken widely in the entire Maltese community.

What are the prospective business opportunities?

Prospective business expansion scopes in Malta include exports and manufacturing. All products that are manufactured in Malta are exported worldwide. They comprise of the electronic components, semi conductors, medicinal, plastics, rubber, pharmaceuticals, sub-assemblies, software, food products, garments, machinery and fabricated metal products.

Do you need the help of an expert?

Entrepreneurs who are looking forward to expand their business internationally to Malta have realized the importance of an expert consultant who would assist them to look into different aspects of business expansion that might be overlooked otherwise. For example, a consultant might point out the requirement for an internal audit compliance as an essential tool to manage efficiently worldwide risks that a business might witness. In the same way, other essential aspects to look into are the eu vat rules and transfer pricing audit. 

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