Brazil: Investing

FDI in Figures

Foreign direct investment into Brazil boomed between 2009-2011, but had been slowing down ever since. However, according to the World Investment Report 2022 published by UNCTAD, FDI inflows increased to USD 50.3 billion in 2021. Still, FDI inflows to the country have yet to return to pre-pandemic levels. Although Brazil saw a significant decrease in FDI during the pandemic, there were still some significant investments made in the country even amid the COVID-19 crisis. In January 2021, U.S-based New Fortress Energy announced that it would buy Hygo Energy Transition and Golar LNG, in a combined USD 5 billion deal that marks the group's entry into the Brazilian natural gas sector and making the company the leading gas-to-power company in Brazil. Additionally, with Brazil opening its natural gas industry to private investors, other major oil companies, including BP PLC and EIG Global Partners, are also looking into multibillion-dollar investments in the country. On the other hand, Ford Motor Co. also announced in January 2021, that it would close all three plants in Brazil and stop producing automobiles in the country, where it had been operating since 1919, as the pandemic amplified persistent industry idle capacity and slowed sales, resulting in significant losses. The stock of FDI has remained stable and reached USD 592 billion at the end of 2021. That same year, the number of Greenfield Investments in the country decreased to 182. However, the value of those investments increased from USD 17.2 million in 2020 to 23.2 billion in 2022. Brazil is the 11th largest recipient of FDI in the world in terms of inflows (6th the previous year), and the largest in Latin America and the Caribbean. The main investing countries in Brazil are the Netherlands, the United States, France, Spain, and Canada. Investments are mainly oriented towards commerce, non-metallic mineral products, chemical products, financial and auxiliary services, and motor vehicles.

According to the Economist Business Environment, Brazil ranks 51 out of the 82 countries reviewed for their investment climate. The country is an attractive market for international investors due to several factors: a domestic market of over 210 million inhabitants, availability of easily exploitable raw materials, a diversified economy that is less vulnerable to international crises, and a strategic geographic position that allows easy access to other South American countries. However, investment in Brazil remains risky because of some negative factors including cumbersome and complex taxation, bureaucratic delays and heavy and rigid labour legislation. As part of the country’s ongoing effort to strengthen its business environment, Brazil introduced electronic certificates of origin which reduced  the time required for import documentary compliance, facilitating and simplifying the whole process. The country also made several infrastructure concessions which have helped foster investment. The current president has plans for further improving the business environment in the country, implementing reforms such as decreasing the number of days needed to create a company in Brazil from 79.5 days down to the regional average of 30 days. Easing of regulation in some sectors and potential amendments to the tax system should help as well.

What to consider if you invest in Brazil

Protection of Foreign Investment

Procedures Relative to Foreign Investment

Freedom of Establishment

Guaranteed

Acquisition of Holdings

The investment regime in Brazil is liberal, allowing foreign investors to have a majority share in the creation of their company.

Obligation to Declare

The Agency for the Promotion of Foreign Investment gives information about the authorisations necessary for setting up. All foreign investors are obliged to appoint a representative in Brazil who, together with the representative of the company receiving the foreign direct investment, will be in charge of registering the operation with the Central Bank of Brazil's Foreign Direct Investment module (RDE-IED) in accordance with the instructions set out on the Central Bank's website.

Competent Organisation For the Declaration

Central Bank of Brazil

Requests For Specific Authorisations

Foreign investment is restricted and requires special authorisation in the following activities: mineral resource prospecting and mining in border areas, telecommunications, broadcasting companies and healthcare.

Office Real Estate and Land Ownership

Possible Temporary Solutions

There are plenty of offices to rent.

The Possibility of Buying Land and Industrial and Commercial Buildings

Foreign individuals residing in Brazil and foreign companies authorised to operate in Brazil can acquire or lease rural properties within certain limits. For legal entities or their equivalent, acquisition of any area considered rural is subject to prior approval by the INCRA and fulfilment of essential requirements.
According to the constitution, the border area is the area up to 150 kilometres (km) wide and runs along the country's land borders. Any foreign legal entity authorised to operate in Brazil or foreign citizen who, directly or indirectly, acquires an in rem right to any rural property situated in the frontier zone, will be subject to the prior approval of the Brazilian Defence Council (Conselho de Defesa Nacional) (CDN).

Risk of Expropriation

Risks of expropriation are very low today. Article 5 of the Constitution states that an individual may have rights and property restricted by law only if ordered by the judiciary after a full and solid defence. The public administration has the power to expropriate property when faced with public and/or social interests, or for reasons of public utility. Compensation is provided for in case of expropriation, especially for foreigners.

Investment Aid

Forms of Aid

The government encourages foreign investment in the form of tax exemption, aid, funding and agreements limiting double taxation. For more information, please visit the website of ApexBrasil and Invest&Export Brasil.

Privileged Domains

The special customs regime for export and import of goods for exploration and production of petroleum and natural gas (REPETRO) is a tax incentive allowing the import of certain goods  by suspending the import duty, federal excise duty, PIS import, COFINS import and freight surcharge for merchant vessels (AFRMM).
Furthermore, a special regime of incentives for the development of infrastructure (REIDI) exists and consists of suspending PIS and COFINS for the sale or import of new machinery, tools and equipment, construction materials and certain services, used or incorporated in infrastructure projects in the transport, ports, energy, basic hygiene and irrigation sectors.

Privileged Geographical Zones

A tax reduction or exemption is granted by the federal government for construction, expansion, modernisation or diversification projects in priority areas for regional development in the areas covered by the former Superintendence for Development of Amazônia (SUDAM) and Superintendence for Development of the Northeast (SUDENE).

Free-trade zones

Manaus Free Trade Zone (ZFM)

Public aid and funding organisations

The National Investment Bank (BNDES)
PROEX (in portugese)
 Instituto de Desenvolvimento de Minas Gerais (INDI)

Investment Opportunities

The Key Sectors of the National Economy

Agriculture (sugar cane, coffee, oranges, soya, bananas, walnuts, cashew nuts, corn, pineapples and peppers), beef, poultry, tobacco leaves; mineral ores, iron and aluminium.
The country is increasingly asserting itself in aeronautics, pharmacy, automobile, iron and steel and chemical sectors. Petrogas sector has a large potential and Brazil is the largest market in Latin America for renewable energies.

Moreover, the Brazilian government launched an investment program for infrastructure development. Opportunities exist, notably in the development of airports and more generally in the public-private partnership targeting infrastructure development. Thanks to the growth of the middle-class, the franchising sector is booming in Brazil.

High Potential Sectors

Numerous sectors in Brazil offer excellent short-term opportunities: agricultural biotechnology, agricultural commodities, crop and livestock, digital technologies, aerospace, chemical products, petrochemicals and clean energy, oil and gas extraction, metal extraction, electricity and gas, commerce, transportation, basic metallurgy, motor vehicles, trailers, semi-trailers and real estate activities.

Privatization Programmes

In July 2019 the economically liberal government of Brazil announced a privatisation programme, the largest in the world in terms of the number of companies to be privatised, which promises to reduce the number of state-owned companies from 134 to just 12, and by far the largest in terms of asset value, estimated at R$ 470 billion ($117 billion) by the investment bank Bradesco BBI. First, Petrobras' pipeline subsidiary, TAG, was sold to a group led by French company Engie SA and Canadian company Caisse De Depot Et Placement Du Quebec (CDPQ) for $8.7 billion. This transaction was Brazil's largest M&A operation to date in 2019. Shortly thereafter, Petrobras sold a 30% stake in its fuel distribution business, BR Distribuidora, reducing its position from 71% to 41% for a total of $2.27 billion.

Tenders, Projects and Public Procurement

Tenders Info, Tenders in Brazil
Comprasnet, Tenders
TendersOnTime, Tenders Worldwide

Sectors Where Investment Opportunities Are Fewer

Monopolistic Sectors

Foreign capital is prohibited in activities relating to nuclear power, mail and telegraph services, and the aerospace industry.
Under the provisions of the Constitution (Art. 21, XXIII), the Federal Government is legally liable for the operation of nuclear services and facilities of any kind and for the exercise of the state monopoly on research, extraction, enrichment and reprocessing, industrialisation and trade in nuclear ores and their derivatives.

Finding Assistance For Further Information

Investment Aid Agency

Apex-Brasil (Brazilian Trade and Investment Promotion Agency) 

Other Useful Resources

BNDES (Brazilian Development Bank)
Central Bank of Brazil

Doing Business Guides

The Lexmundi Guide on Doing Business in Brazil
Doing Business in Brazil (Consulate General of Brazil in Miami)

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