Marktchancen aus erster Hand - Interview
Herr Luiz Francisco Pandia Braconnot, stellvertretender Generalkonsul Brasiliens in Frankfurt am Main und Leiter der Handelsabteilung, beantwortete dem Global Success Club Fragen zu Investitionsförderungen und attraktiven Märkten in Brasilien.
GSC: What kind of economic incentives (tax, legal, fiscal incentives) are offered by the Brasilian government to attract the Foreign Direct Investments
Luiz Francisco Pandia Braconnot: First of all, I would like to mention some important issues and institutions concerning "how to get support and information about investments in Brazil" in order to provide a first orientation for foreign investors and representatives.
The System for Investment Promotion and Technology Transfer for Business (SIPRI) is a network of national and foreign operators, provided by the Ministry of Foreign Affairs (MFA). The SIPRI aims to stimulate the attraction of foreign direct investment to Brazil, as well as the establishment of partnerships between Brazilian and foreign companies in order to enable the transfer of technology to the country.
In Brazil, distributed throughout the national territory, institutions known as "Focal Points" work on the identification and dissemination of investment opportunities that arise in the country. Abroad, installed in Embassies and Consulates-General of Brazil, the Trade Promotion Departments (SECOMs) have competent staff to facilitate contact between Brazilian and local companies/representatives as well as to provide information about the economy and the business environment in Brazil. In this context, we are very proud to count on, here in Frankfurt am Main, the services of a Trade Promotion Department, installed in the Consulate-General of Brazil in Frankfurt. The section was re-opened in 2010 by the Ministry of Foreign Affairs. Some of the richest and most dynamic German Federal States (North Rhine-Westphalia, Hesse, Rhineland-Palatinate, Saarland and Thuringia) comprise the jurisdiction of the Consulate-General of Brazil in Frankfurt..
To answer your question, there are indeed a lot of incentives provided by the Brazilian government to attract foreign investments, differentiated by federal law, state law and by prioritized sectors.
In this context we have to mention the principal Brazilian programs to foster a continuous and sustainable development in our country, such like:
PAC - Growth Acceleration Program
"Plano Brasil Maior" - Plan for a Greater Brazil
Potential investors may obtain practical information and advice, through registering their companies and portfolios on the platform "BrasilGlobalNet", expressing their interest in investment opportunities. These data will be provided automatically to a "Focal Point" in Brazil, who will contact the investor for more information and investment opportunities.
BrasilGlobalNet was developed to provide support for Brazilian companies seeking to participate in the international market.
With inputs from a variety of sources both in Brazil and abroad, the portal provides access to numerous business opportunities, featuring the largest database on importing companies in Brazil and demands for the import of Brazilian products.
BrasilGlobalNet also provides access to investment and technology-transfer opportunities. The portal also expedites contacts between importers and exporters, who are invited to effect free registration on the website, and aims to enhance business skills by providing access to specialized international-trade publications, such as market surveys, economic indicators, and information on events in Brazil and abroad.
Another network to obtain important information about investment free of charge is RENAI.
RENAI is the National Investment Information Network that provides entrepreneurs with investment opportunities in Brazil. It is supported by the Ministry of Development, Industry and Foreign Trade and is networked with state departments of industry and trade as well as entrepreneurial trade associations.
RENAI operates a website that provides an extensive data bank of announced investment projects and investment opportunities across Brazil. It organizes workshops and seminars, and provides support for potential investors.
RENAI´s team can also forward an investment proposal to all state departments and entities in Brazil. Those offices can help foreign investors concerning investment opportunities, legal framework and local incentives.
Among important incentives, the following measures deserve special emphasis:
Reduction of IPI (tax on industrialized products) for machines and equipment. The rates of the IPI for a large share of industrial goods have been reduced to zero.
Reduction of IPI (tax on industrialized products) for construction materials. The rates of the IPI have been reduced to zero for selected products.
Special Regime of Acquisition of Capital Goods for Exporting Companies (RECAP). This measure allows companies to purchase in the domestic market or to import capital goods (new machines, instruments and equipment) with the suspension of the payment of the PIS and the COFINS. Beneficiaries are companies that export 70%, or more, of the annual value of its sales, and naval shipyards.
PAC) Special Regime of Incentives for the Development of Infrastructure – REIDI establishes the suspension of the PIS/PASEP and COFINS tax in the acquisition of machines and equipment for incorporation in infrastructure works aimed at its fixed assets. To apply for the benefit, as qualified or co-qualified, the companies should present to the Brazilian Ministry of Finance (RFB) a copy of the administrative order that approved the infrastructure works, published by the Ministry of the respective sector. Beneficiaries are companies and service provider of infrastructure works in the sectors of transport, ports, energy, basic sanitation and irrigation.
Reduction of the tax for machines not produced nationally ("Ex-Tarifários" Regime). The importation tax may be reduced from 14% to 2% of the importation rate in the acquisition of Capital Goods, IT and Telecommunications Goods, not produced nationally. Beneficiaries are industrial and service providing companies.
Authorization / reduction of the tax for importation of used lines/units of production, that are not produced in the country, or cannot be substituted by others currently manufactured domestically, among other criteria. Beneficiaries are companies interested in transferring used units/production lines to the country.
Taxation regime of micro-companies and small companies (supersimple). Unified regime for verification and payment of the federal taxes and contributions (CSLL, PIS, COFINS, IPI, social security contribution on the payroll, of state tax (ICMS), federal district and municipal tax (ISS), including simplification of accessory fiscal obligations. Beneficiaries are micro-companies and small companies, which receive a differentiated, favored and simplified treatment.
Incentives to technological innovation. Tax incentives such as: deductions of CSLL from expenditures in R&D activities; IPI reduction in the purchase of machines and equipment for R&D; integral depreciation of these goods, in the year of acquisition; accelerated amortization of intangible goods; reduction of income tax withheld at source on remittances abroad resulting from technology transfer; exemption of income tax withheld at source in remittances abroad to pay for registration and maintenance of trademarks, patents and cultivars; or economic subventions granted for hiring of researchers, with master's or doctorate degrees, employed in companies to carry out research, development and technological innovation activities. Corporate entities that carry out technological research and development of technological innovation.
The list of incentives obviously is neither complete nor exhaustive and gives only a modest impression of (federal) governmental measures to incentive and attract foreign investments. Furthermore the incentive possibilities and conditions depend on the sectorial and regional context in Brazil.
GSC: Are there special incentives to support small and medium-sized business in Brasil?
Luiz Francisco Pandia Braconnot: As we have seen in my explanations to your first question, there are many incentives to support business in Brazil. Particulary to support small and medium-sized business we recommend the services of SEBRAE (The Brazilian Service of Support for Micro and Small Enterprises). As a private entity of public interest that has as its main source of revenue the contribution collected from enterprises, Sebrae has a clear and transparent mission of offering to micro and small enterprises the necessary conditions for their survival, prosperity and active contribution to the country's growth through the generation of jobs and income.
GSC: Why is Brasil a good place to invest for IT companies?
Luiz Francisco Pandia Braconnot: Referring to the important notes of Mrs. Aline Figlioli, Superintendent of Technology Development, Innovation and Promotion of IT, State Government of Goiás, in this edition we have indeed many initiatives and incentives in Brazil to enhance the IT-sector.
Besides the important creation of technology parks and cluster throughout the country, the sector counts on important measures to improve its performance, such as the "Strategic Program for Software and Information Technology Services", IT Major Program.
The federal program provides resources for improving vocational training, industrial infrastructure and to encourage the domestic software production.
The plan foresees investments of 500 million Reais in the technology sector until 2015. The funds will be provided by the National Bank for Economic and Social Development (BNDES) and the Financier of Studies and Projects (FINEP), linked to the Federal Ministry of Science, Technology and Innovation. Furthermore Brazil offers tax incentives and economic subventions granted for the hiring of researchers to enhance the IT-sector.
Furthermore companies of the IT-sector could be supported by the "Information Technology Law", valid until the year 2019, that allows IPI (tax for industrialized products) reduction for IT- goods, produced according to the "Basic Productive Process" described in the legislation (minimum set of operations in the manufacturing establishment that characterizes the effective industrialization of a certain product). Beneficiaries are companies of IT, automation, telecommunications, microelectronics, software and technical service industries.
Foreign investors will find in Brazil a very interesting and propitious field of activity which belongs to the "priority areas", identified by the federal government.
GSC: Which other industries/markets in Brasil are attractive for German Mittelstand?
Luiz Francisco Pandia Braconnot: German medium-sized companies are well-known as the propulsion machinery for one of the most powerful and successful economies of the world. Brazil`s prosperous economy offers various possibilities to any kind of german business.
Extraordinary attractive for german business may be the "priority areas", identified by the brazilian government, inasmuch as they enable short term participation in projects and investments, such like public tenders or projects linked to the mega- events. On the other hand, we have to line out, concerning the continuous prosperity of the brazilian economy, that investment possibilities and incentives in the prioritized areas do not depend only on the mega-events. It is Brazil`s aim to ensure sustainable growth beyond the World Cup 2014 and the Olympic Games in 2016 by the implementation of necessary measures.
In this context there are promising investment and participation opportunities, beyond the fundamental projects, linked to the mega-events, in the following areas:
Aeronautics, Agribusiness, Amazon, Waterways, Biotechnology, Energy, Space, Water, Information Technology, Infrastructure, Minerals, Oil and Natural Gas, Health, Transport, Telecommunication
Last but not least, it is important, in times in which the environment plays a crucial role for governmental decisions, to underline the arising business opportunities for providers of alternative energy solutions in Brazil.
The team of the Trade Promotion Department will be delighted to respond to any company or investor request.