terça-feira, 1 de agosto de 2017

DOUBLE TAXATION AGREEMENT - BRAZIL AND RUSSIA

Today, the decree that describes the DTA with Russia has been published.

As of today, Brazil has DTAs with all the BRICS countries.

The original text, in Portuguese, can be found in this link

segunda-feira, 31 de julho de 2017

Right Timing for Port Infrastructure Investments in Brazil

A very timely and insightul report by L.E.K. consultants. Link below.





Port infrastructure: Economic recovery, regulatory
updates and the need to upgrade Brazil’s
existing terminals are turning port terminals into
attractive opportunities for investors.




 Two years into its greatest recession, the Brazilian economy
is slowly resuming growth (see Figure 1). Despite short-term
political instability, structural economic measures will most likely
be implemented to put the country on a growth track.
Economists believe that investment is the engine of growth for
emerging economies. 




That’s especially true for Brazil, which, after
two years of increasing unemployment, will not see recovery come
from a new wave of consumer activity but rather from investments
— most likely in infrastructure, which supports other activities and
contributes to higher productivity for the economy as a whole.
Leading economists and financial institutions operating in Brazil
expect GDP to grow approximately 0.5% in 2017 and 3% in
2018, which will positively drive demand after a strong recession.




Read the full report at: 

http://www.lek.com/sites/default/files/1938_Port_Infrastructure_LEK_Executive_Insights.pdf



'via Blog this'

segunda-feira, 10 de julho de 2017

INVESTMENT VISA IN BRAZIL - 2017

As of 2017, the standard investiment visa requires the investor to incorporate a company in Brazil, or to join any existing company in Brazil, and invest at least 500,000.00 BRL (about 150,000.00 USD). 

In this case, to invest means to transfer money. The government does not require that the money be used specifically for the purchase of machinery or for any other purpose. In general,  they will evaluate the project`s potential to generate jobs and to pay for services provided by Brazilians


There is an exception for tech companies. 

Investments in technology may be as low as 60,000.00 USD, depending on the relevance of the technology. In this case, the company receiving the investment and asking for the visa must:

a)  be located in one of Brazil`s tech parks, or connected to a Brazilian official startup program; or

b) prove that the technology will be relevant for the development of the Brazilian technology ecosystem. For example, that it will improve Brazilian manufacturing capabilities or have a positive impact in the consumer market.



domingo, 9 de julho de 2017

EUROPEAN BILLS OF EXCHANGE AND THE BRAZILIAN BANKS


The use of negotiable instruments in Brazil is very different from it use in Europe.

I have a case that illustrates that in an informative and funny fashion.

One of my clients, a European company, performed sales of electronic equipment worth several million dollars to a Brazilian buyer.

We drafter a very good sales contract, according to Brazilian law. It was dully signed and executed. Things were looking good.

However, the bank financing the production of the good (my client`s bank) demanded a very specific kind of security linked to the agreement. It wished for a Bill of Exchange.

That is when the problems began.

Brazilian businessmen are used to 3 kinds of negotiable instruments: CHEQUES, PROMISSORY NOTES and, in case of import/export, LETTERS OF CREDIT.

This is pretty much it. In some specific markets, especially in agribusiness, people may use a special note called Warrant. But, apart from that, one would be hard-pressed to find a template of a Bill of Exchange. Let alone use one.

We tried to explain this to the client`s bank and suggested that it replaced the BoE for a promissory note. But the bank was inflexible.

At the end of the day, the solution was to use a Bill of Exchange in which the drawer drew on himself, payable to his own order. That is to say, we have used the Bill of Exchange as if it were, effectively, a promissory note (since there was no third-party acting as a payee).

This solved the crisis, in theory. However, the template used by my client had a blank field that should be filled in with the information of a Brazilian bank, who would, under ideal conditions, be the payee of the BoE.

The field was filled in with the name of the buyer’s bank, but without many specific details about the account. Most importantly, it didn`t contain the banks written acceptance.

This is a curious fact. Obtaining the acceptance of a Brazilian bank to a Bill of Exchange is almost impossible. It is only practicable in large transaction (such as the construction of a stadium). And, to achieve that, the bank will ask for a great deal of counter guarantees from the drawer. Lawyers will review it for weeks, etc.

This is not something that is available to a regular wholesaler or small-business owner.  “Normal” people, so to speak, will use cheques.

This specific aspect of the Brazilian bank system will play a part in the story soon.

Well, after the BoEs have been signed, the client wished us to mail it to Europe, so that it could keep it in his safe.

But then another aspect of the infamous “Brazilian Cost” (the overall name for the small but persistent setbacks that haunt people who do business here) presented itself: the postal service and the courier services working in Brazil (DHL, FedEx, etc.) refused to transport the bill, unless we hired insurance. The cost of the insurance was about 15 thousand dollars.

So, the client bought a plane ticket and came here to pick them up. And that was it.

A couple months later, when the payment of the Bills was due, the Brazilian buyer asked to redeem the hard copies, so that he could make the payment.

At this point, my client told me not to worry. After all, the Bills of Exchange had been mailed (without insurance) to the client`s bank address in Brazil.

I was truly shocked to hear that.

It seems that someone in my client`s financial department just followed the standard procedure they used with other European clients and maild the Bills to the buyer`s bank, expecting the bank to pay it.

The problem is that this procedure is not even conceivable in Brazil. Mainly because Brazilian banks do not act as payees for Bills of Exchange. But also, because nobody in Brazil uses courier or mail to transfer negotiable instruments. They are always closely watched and transferred hand to hand, accompanied by a receipt of some sort.

Well, the person who signed for the delivery of the notes was a common employee of the bank, maybe a security guard or an intern, who used only his first name (which is usual). We couldn`t identify him.

After several phone calls and visits to the bank, I finally spoke to the person who handled the Bills. They ended up being directed to the foreign exchange desk, since they were written in English and “looked like an international thing”.

The person in the forex desk told me, plainly: “I kept it for a few days, then threw it in the trash bin”.

And, just like that, the BoEs were history.

Luckily, the agreement allowed us to receive payment even without the notes.  But the lawyers of the buyer demanded us to draft a series of documents, voiding the original Bill.  The payment was delayed for months, until we could formally prove that the Bill were destroyed.


The point is: Brazil is just like the rest of the world, but different. Try to adapt your business to the Brazilian system. Things will be easier this way.

sábado, 3 de junho de 2017

The fastest way to have a Brazilian company

Incorporating a company in Brazil takes time. In average, 3 months (for details about incorporation ,please see this post).

I have tried to speed up this process, but without much success. It depends on several independent things: availability of a translator, public hollidays, courier delivery, etc. 


Indeed, this is one of the aspects of Brazilian bureacracy and lack of competitivity. Each step of the task is slightly inneficient. Combined, they slow down the rythm of business. 


When the project includes a Brazilian partner, this hindrance does not matter much, because he will be expecting it and the plans would already have counted for the delay. 


But when the project is totally controlled by foreign parties, this kind of time is essentially counted as a waste. 


I have been experimenting with a system that is less safe, legally speaking, but that can be used to conduct business at a faster pace. Here it is: 


a) I will incorporate a service company in Brazil, with two nominee partners and one nominee director. The company will have the same name desired by the investor;


b) the nominee partners and directors will enter into a quota/shares sales agreement with the future investor. This agreement will allow for a 60-day period in which the buyer (the investor) will be allowed to participate in the company`s management/


c) the investor will prepare the documents required to take possession of the quotas/shares;


d) meanwhile, the Brazilian company may enter into agreements with local partner. The company will refrain from issuing invoices, however. The invoices will be issued only after the foreign investors formally acquire the quotas. 



In short, the procedure is an acquisition of shelf-company. But with some additional agreements that ensure that the foreign investor will have control over the company even before they are formally the owners. 


This strategy is more expensive than a regular incorporation. There will be extra costs with the nominee partners, with additional agreements, etc.


The advantage is that it could allow the foreign investors to conduct business in Brazil within 03 weeks, instead of 12 weeks. 


Business will be limited, of course, and this strategy will work better with service company. Also, import/export operations will not be possible at first, because any Brazilian company that is to engage in international trade must first obtain a license (the "Radar").  


Even so, this strategy will allow investors to have a legal presence in Brazil much faster than usual. 




terça-feira, 30 de maio de 2017

Ahead of the Train - Dubai is Leading the Way for Blockchain Implementation

Dubai is actively implementing blockchain technology - is it only cat talk or could the plans actually to come to life?
An interesting article about Blockchain. 

Bitcoin and Blockchain are still not very common in Brazil. But there is vibrant group of supporters of the technology here, and they have been publishing a lot of content. 




Dubai is actively implementing blockchain technology - is it only cat talk or could the 
plans actually to come to life?
The government of Dubai is actively backing the initiatives on implementation of blockchain
 technology in banking and other spheres of life. The strategy seems bright enough, however, it 
is mostly just plans for now.
Dubai authorities ambitiously state that they strive to make Dubai the first blockchain-backed
 government ever by 2020. Too good to be true?
More than Just Plans
The prospect seems real enough to believe it actually has a chance to be implemented. 
At least, many of the world leading experts think so.
According to J. Bradley Hall, Founder, Chairman and CEO at ICON CAPITAL Corp., 
a merchant bank with a portfolio of investments in digital currencies, payment systems, 
banking and gold trading in Dubai, “Dubai is an aspirational city, it is built on the vision of
 strong leadership.”