Brazilian (and Chinese) Business Law Trends for 2013.

This post, as many others, has been inspired by Dan Harris' China Law Blog.  The link to the original post is also at the bottom.

Interestingly, some China trends he mentioned are the opposite of the Brazilian legal trends on the same subjects. It invites comparison:

1. China will step up even further its crackdown on foreigners in China violating its visa/immigration laws. 

1. Brazil is set to make immigration easier, specially for specialized workers. Legal changes are expected to take place in March, 2013.

2. China will increase its efforts to root out and shut down illegal and unregistered foreign businesses. 

2. Brazil is not seeing any special movement on this area.

3. China will increase its tax collection efforts.

3. Brazil is already super effective in tax collection. What we are about to see, though, is an increase in the control and taxation of international service and software sales. The Brazilian Revenue Service has just put the "Siscoserv" in place. This system controls every international service transaction in the country. Personally, I see it as a harbinger of tax increase. After all, the government does not have much left to tax.

4. China: Litigation is increasing.

4. Brazil: Arbitration is increasing. The Brazilian courts are broken, and everybody knows that. Arbitration is the only safe harbor for international investors. 

Other trends that were not mentioned for China, but are relevant for Brazil:

5. Infrastructure regulation will remain uncertain, as the government sorts out how to fix the legal mess it made in 2012.

6. Regulatory compliance for consumer goods (toys, medicines, electronics) will soar. 
  As more and more imported products flow to the Brazilian economy, the pressure from the Brazilian industries will generate more and more non-tariff barriers to imports. It has just begun. 

What do you think?

China's Business Law Trends for 2013. Booorrring. | China Law Blog

Proud about tax planning: Google and me

Google's boss has just said that he is proud of Google's tax avoidance strategy (see below)

I'm also proud of Google's strategy to dodge taxes. That is what I do for a living and I must say that Google's lawyers have created a beautiful work of art when doing the company's tax planning. It is all there: offshore companies, subsidiaries, Dutch sandwich, money centers, tax havens. Bravo!

But Google must take UK and America's threats of taxing them seriously. They may look at Brazil and find out that the Brazilian government has seriously limited the use of offshore companies and tax havens by automatically taxing any gains from foreign subsidiaries the moment they are put on the books, and not when they are transferred to the controlling company (this last option would be the most usual in the civilized world).

Vale, the mining company, is waiting for a judgment on the legality of the Brazilian awkward (by awkward I mean unjust and crazy) tax regime. Some 15 billion US dollars are being claimed by the government. (By the way, check the development of a similar case here)

In order to avoid this kind of taxation, Brazilian companies are now making heavy use of the few Non double taxation agreements that Brazil has signed. Austria is a personal favorite, but the Netherlands are very popular.

Google, don't let the government be evil! Dodge the dogs and lions.

By the way, if you are a Brazilian individual with more than 40k USD on a bank, I'd recommend you to move your money abroad. Brazilian government has too much control over it, and the online system for money seizure is a real letdown for any businessman.

NOTE: For the pro government intervention readers (which should be none), here is the opposite view: http://treasureislands.org/google-boss-eric-schmidt-takes-a-dim-view-of-capitalism/.

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Google boss: I'm very proud of our tax avoidance scheme

Google's Chairman Eric Schmidt said £2.5 billion tax avoidance 'is called capitalism'

From:http://www.independent.co.uk/news/uk/home-news/google-boss-im-very-proud-of-our-tax-avoidance-scheme-8411974.html

The head of the internet giant Google has defiantly defended his company’s tax avoidance strategy claiming he was “proud” of the steps it had taken to cut its tax bill which were just “capitalism”.

In an interview in New York Eric Schmidt, Google’s Chairman, confirmed the company had no intention of paying more to the UK exchequer. Documents filed last month show that Google generated around £2.5 billion in UK sales last year but paid just £6m in corporation tax.

The Californian based search giant has also been revealed to have sheltered nearly $10bn of its revenues in Bermuda allowing it to avoid some $2bn in worldwide income taxes in 2011.

But Mr Schmidt said such schemes were legitimate and the company paid taxes “in the legally prescribed ways”.

“I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate,” he said.

The Silicon Valley boss went on to suggest that Google would not turn down the opportunity to draw on the big savings allowed under the law in the countries it operates in: “It’s called capitalism. We are proudly capitalistic. I’m not confused about this.”

He also ruled out following Starbucks in voluntarily handing more money over to the UK Government.

“There are lots of benefits to [being in Britain],” he said.

“It's very good for us, but to go back to shareholders and say, 'We looked at 200 countries but felt sorry for those British people so we want to [pay them more]', there is probably some law against doing that.”

Mr Schmidt’s defiant stance is unlikely to find favour on either side of the Atlantic with both the American and European Governments searching to find ways of forcing “stateless” internet companies such as Google to pay more tax.

The issue will be raised by George Osborne when Britain takes over the chairmanship of the G8 and will also be investigated by the Organisation for Economic Co-operation and Development (OECD).

Last week the Chancellor said he was committed to “leading the international effort” to prevent international companies transferring profits away from major economies, including Britain, to tax havens.

“We will put more resources into ensuring multi-national companies pay their proper share of taxes,” he said. “With Germany and now France, we have asked the OECD to take this work forward and we will make it an important priority of our G8 Presidency next year.”

Tonight Margaret Hodge, chairman of the powerful House of Commons Public Accounts Committee, which recently cross examined Google UK on its tax affairs said Mr Schmidt should be ashamed rather than proud of his company’s tax bill

“For Eric Schmidt to say that he is ‘proud’ of his company’s approach to paying tax is arrogant, out of touch and an insult to his customers here in the UK,” she said.

“Ordinary people who pay their taxes unquestioningly are sick and tired of seeing hugely profitable global companies like Google use every trick in the book to get out of contributing their fair share.

Google should recognise its obligations to countries like the UK from which it derives such huge benefits, and pay proper corporation tax on the profits it makes from economic activity here. It should be ashamed, not proud, to do anything less.
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Taxation of software importation by end users in Brazil

Update from July, 2014: Rules have changed. Please read    Reduction in the Brazilian taxation of imported services - if you are from the right country

ORIGINAL POST

One of the questions I have been receiving a lot lately is how to sell/import software to Brazil.

I have published an article about that at Alternative Latin Investor, an excellent magazine.

I hope it helps you to understand at least part of the regulations. You will find a link to download the article at the end of the post.

NOTE: After I wrote the article, the government has granted a partial exemption on the PIS/COFINS tax for some kinds of software licensing agreements. If you need a more updated information, please write me at adler@adler.net. br.

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Adler Martins has teamed up with Alternative Latin Investor (ALI) to contribute to their cutting edge coverage of Latin America .  ALI’s newest issue, August/ September 2012, takes a look at the retail sector in Latin America.

Click here to read Adler’s article “Software Importation by End Users in Brasil” in Alternative Latin Investor:  

About Alternative Latin Investor: ALI is the first digital and print publication to offer highly coveted information and actionable analysis regarding alternative investments in Latin America. Topics include Wealth Advisory, Commodities, Forex, Private Equity, Wine, Art, Regulation, Philanthropy, Hedge Funds, Agribusiness, Renewable Energy, Emerging Markets and Real Estate.

For more information, contact – Tiffany Swenson – tiffany@alternativelatininvestor.com or visit Http://www.alternativelatininvestor.com