sexta-feira, 3 de fevereiro de 2017

Regional court rules Uber drivers are not employees according to Brazilian law

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UPDATE on February 14th: Another ruling from the same court, on a separate case, has declared that Uber drivers are indeed employees. The matter is still highly controversial.

A Federal judge has ruled, in one specific case, that a Uber drives is not entitled to the benefits of Brazilian labour laws. The ruling was based on the fact that the driver enjoyed a high level of independence and autonomy, not being subject to strict schedules or to direct orders from a boss.

This does not create any enforceable precedent (Brazilian law does not work with court precedents, except on a handfew cases).

However, it is one of the first decisions on the matter and it certainly  will have an impact in future cases, specially in Minas Gerais state, where the court is located.

This has been a total surprise to me. I was betting that the Brazilian courts, which are always over protective of workers, would use this opportunity to extend its claws over Uber and other apps.

I`m glad for being wrong on this matter. Brazil needs a lot more freedom for entrepreneurs.

By the way: I`m not a big fan of Uber`s legal standing in Brazil, generally speaking. But I will leave this topic for another time. 

quarta-feira, 1 de fevereiro de 2017

Dropship models and Brazil

Bildergebnis für dropshippingA reader has written me, asking if his dropshipping operation in the US would be able to serve Brazilian costumers.

The products would be paid for by credit card, and delivered to Brazil through Fedex.

I have actually given a lecture about this topic in London, during the Ecommerce Expo, a few years ago.

Here is my short reply to this complicated topic:

This project will face a lot of trouble. The most difficult one is that, in theory, Brazilians cannot import products through mail or Fedex without paying taxes. 

Because of that, all such packages are inspected by the Brazilian customs,  usually at Viracopos airport.  This process is unpredictable and may take 30 to 180 days. 

On top of that, total taxation over the goods may reach 100% of the value, and sometimes more (the goods may be evaluated as having a higher value than what is stated in the invoice). This tax is either paid upfront by Fedex and then charged from the final customer at the time of delivery, or must be paid by the final customer before the goods reach his hands. 

This is always a stressful process. 

A more reliable way to work would be to send the goods to a Brazilian importing company (trading company), who would import them through the more formal channels and deliver them in Brazil. 

I do this kind of corporate structuring often. Let`s discuss this in more detail. 

segunda-feira, 30 de janeiro de 2017

Israeli defense company Elbit signs deal worth $100 with Brazilian military

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In a major defense industry deal it was recently announced that the Israeli company Elbit Systems has won a tender worth $100 million to supply the Brazilian military with state of the art remote-controlled weapon stations, also known as REMAX (Reparo de Metralhadora automatizada X).  The work will actually be carried out by a Brazilian subsidiary company owned by Elbit Systems called Ares. Apparently the work is already underway with a $7.5 million production order already delivered to the Brazilian military.

What is REMAX?

REMAX is an advanced type of remote controlled weapons station built for machine guns mounted on logistical and armored vehicles. The REMAX systems produced by Elbit and Ares were created to meet the exacting standards of the Brazilian military and to be compatible with the Brazlilain army’s Gurani 6x6 vehicles. When the new weapon stations are installed the vehicles that are equipped with REMAX systems will be used for a variety of purposed including troop transportation, peacekeeping, and border patrol.

Who are Elbit Systems?

Elbit Systems is one of the largest Israeli registered companies involved in the defense and aerospace industries. The company was established in 1966 and since that time has become a large publicly traded company with subsidiaries in Europe, North America, and South America. With over 12,000 employees the company is a leader in new military technologies, especially drones and unmanned aerial vehicles (UAV).

Elbit Systems in Brazil

In 2001 Elbit entered the Brazlian market by purchasing Aeroeletronica (AEL). Then in 2011 Elbit acquired two additional Brazilian companies: Periscopio Equipamentos Optronicos and Ares Aeroespecial e Defesa. However, the potentially biggest development in regards to Elbit’s activity with the Brazilain market was a strategic agreement signed in April 2011 with Embraer S.A., the large Brazilian headquartered aerospace conglomerate. This agreement has led Embrarer and Elbit to work jointly on developing new technologies for unmanned aerial vehicles for military applications. The Brazilian air force now has several Elbit Systems Hermes 450 UAVs in service and performing operational duties. This same model of drone has reportedly been used in Israel during its conflict with Hamas in the Gaza Strip. In other countries it has been used for border patrol and reconnaissance missions.

Brazilian Israel Relations

While it is certain that this $100 million dollar deal was carried out after an extensive due diligence process, it remains to be seen if it will lead to warmer Israel – Brazil relations in other areas of the government. For the past year and a half, Israel has had no ambassador in Brazil due to the fact that Israeli Prime Minister Benjamin Netanyahu appointed the controversial Israeli settler leader Dani Dayan to the post. Thankfully the impass was resolved a week ago when the Israeli government decided to appoint a different candidate to the ambassadorship, Yossi Shelly. However, he is also a controversial figure for having a checkered past with questionable ethical violations. He also has no experience as a diplomat. However, as he has now already been approved by the Brazilian government he can focus on getting to work on improving relations between the two countries.

Guest post by Aaron Huber, Founder of

quinta-feira, 26 de janeiro de 2017

Representatives of foreign investors in Brazil - Ultimate Beneficial Owner and management powers

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All foreigners who own companies in Brazil or that invest in the Brazilian Stock Market, or even that own real estate in Brazil, must have a local representative.

Starting July, 2017, this representative will be more subject to government scrutiny and, at the same time, will be required to have more managerial power over the investor`s assets.  On the other hand, it is expected that the representative will be at a higher risk of being liable for tax fraud or labour debts.

This comes along with a rule that requires that the ultimate beneficial owners of any company investing in Brazil be revealed to the Federal Government.

The result of these rules, I think, is that the cost of keeping local representatives will increase. Instead of using young professionals or junior accountants as representatives, the investors will have to select lawyers or executives. Costs with D&O insurance should also go up.

On the plus side, it looks like the new president is taking steps to speed up the registration of foreign investment. Let`s see if the policies even out one another. I sure hope so.