Opportunities & developments in Brazil
Date Added: 16th January 2013 from ExportNZ
By Catherine Bead
Tim King, a New Zealander, and Brendan Dennis, an Australian, are partners in a consultancy in Sao Paulo, Brazil (BRAANZ) which helps Kiwi companies develop business in Brazil and South America. Here Tim updates us on the latest developments and opportunities.
The Brazilian market has some great opportunities, but careful planning by New Zealand companies is needed to succeed.
“The Brazilian market can be quite protectionist, but if you can get the right business model to operate here it can be rewarding,” says Tim. “The large devaluation (about 50%) of the Brazilian Real against the New Zealand dollar over the last couple of years can make many straight exporting models difficult to operate i.e selling through a distributor/commercial rep.
“The flipside of the weaker Brazilian currency is that it's cheaper to invest here, but of course that's not for the faint-hearted, especially when most businesses have limited resources and sales here may take some considerable time to get underway. It might conservatively cost NZ$200,000 to operate a company here a year. We are able to support companies in the market for much less, and this is basically what we do for the NZ companies we represent.”
A recent change in the Brazilian Government’s position around taxing of products entering the country is helping Brazilian companies export more products. Some companies from New Zealand may be able to take advantage, as the buyer of their products may be able to apply to receive tax exemption (by way of a payment back from the Government after paying the tax).
“The Brazilian Government approved the Provisional Measure 584/2012, which abolishes taxes and contributions from many operations related to the 2016 Olympic and Paralympic Games, to be held in Rio de Janeiro,” says Tim.
“Tax exemptions cover products and services purchased abroad and in the domestic market. The main condition for the benefit is that these products or services are dedicated to the use or consumption of the organization or the holding of the events. So this can potentially help Auckland business Structurflex that we work with to bid for projects. Perhaps there are other companies that are seeking to sell goods and services for the Olympic event?
“Also, the Brazilian Government has approved Export Processing Zones (ZPE in Portuguese) which are currently being set up throughout the country, an industrial district where businesses can operate with the localized suspension of taxes of import tax, IPI (manufacturing tax), PIS / COFINS (social taxes), ICMS (sales tax), even the IRS (tax on profits reduced in some cases), freedom of exchange (companies will not be forced to convert to Brazilian currency income obtained from exports), and shall enjoy more streamlined customs clearance procedures.”
If you are exporting to Brazil or thinking about it and would like to know more, you can contact Tim at BRAANZ via the following: