According to the S?o Paulo Chamber of Commerce of the United States and economic experts from Spain, Italy and other countries, they have conducted a questionnaire survey on the advantages and disadvantages of the investment environment in Brazil on hundreds of Brazilian foreign-funded enterprises and concluded that:
favorable conditions
1. Brazil has a vast territory, rich resources, ranks first in Latin America in terms of economic scale and market size, and has huge development potential;
2. Rich in energy, the annual power generation capacity is 75 million kilowatts, of which hydropower accounts for 92%, the wind power generation potential is huge, and the oil reserves are rich, and the proven oil reserves are 17.8 billion barrels;
3. High return on capital, especially for investment in the financial system. According to the statistics of the 50 largest banks in Brazil in 2001, the average return on bank capital was as high as 20%;
4. Brazil applies national treatment to all wholly foreign-owned or joint ventures in Brazil. Investing foreign capital in Brazil does not require prior approval from the government. As long as the foreign exchange is remitted into Brazil through a bank authorized to operate foreign exchange business in Brazil, it is possible to invest in, build a factory in Brazil or acquire a Brazilian enterprise. Foreign-funded enterprises have fewer restrictions on profit control and remittance;
5. The political risk is relatively low, Brazil's economic foundation is solid, its economic policy is mature, and it has been recognized by the International Monetary Fund;
6. According to the estimation of the Brazilian government in 2000, the Brazilian economy will continue to develop in the next few years, and the demand for funds will be large. By 2007, at least 317 billion reais need to be invested;
7. Brazil has a large population, and has different levels of consumption levels and habits, and domestic demand is relatively large;
8. Each state has the right to formulate incentive policies that are conducive to local development and the introduction of foreign capital, and to provide certain local tax reduction policies for foreign-funded enterprises;
9. The public can accept foreigners with different customs, and can get along with each other in a friendly manner, with little xenophobia.
Adverse conditions
1. There are many types of taxes and high tax rates. Brazil has as many as 58 types of taxes, and its tax burden ranks first in Latin America. Corporate taxation accounts for about 38% of operating costs, and in 2001 Brazil’s taxation accounted for 34.36% of GDP;
2. The production cost is high, the transportation service is not perfect, and the charges are high. Brazil is the country that charges the highest highway construction fee in the world. Every passenger who travels an average of 66 kilometers will pay a highway construction fee of 3.7 reais. During the transportation process, the goods are damaged or stolen from time to time, which increases the production cost;
3. Low work efficiency has become one of the main obstacles for foreign capital to enter Brazil. For example, it takes up to 1 year to apply for the sanitation license for agricultural products, up to 7 months to apply for the registration of the origin packaging of imported food, and even longer to apply for the registration of medicines.??
4. The laws and regulations are numerous and complex, and some temporary measures are often promulgated. Make foreign enterprises difficult to cope with. The International Monetary Fund believes that Brazil has numerous regulations and temporary measures, which reduce the transparency of regulations and affect the enthusiasm of foreign companies to invest in Brazil;
5. The cost of capital is too high. Brazil is one of the four countries with the highest interest rates in the world. At present, the benchmark annual interest rate of Brazilian banks is 18%. After deducting inflation, the real interest rate is 10.3%. According to the statistics of the Central Bank of Brazil, the average annual interest rate of bank loans to enterprises in June was 59.6%, and the annual interest rate of loans to natural persons was 70.4%. Brazil's high interest rates increase financing costs for businesses;
6. The country risk index is high and financing is difficult;
7. The education level is not high and the quality of the labor force is low, especially in remote areas;
8. The infrastructure is not perfect, and the development of the port system is lagging behind. At present, Brazilian ports are saturated, with blocked passages, outdated equipment, serious bureaucracy in management, and corruption from time to time. The Brazilian Foreign Trade Commission pointed out that if the port management and port structure problems are no longer resolved, there will be a port crisis in Brazil in the next few years;
9. The customs bureaucracy is serious and corruption occurs from time to time. According to a poll of 882 Brazilian importing companies, the serious bureaucracy of Brazilian customs and excessive port fees are one of the biggest obstacles affecting Brazilian imports;
10. It is difficult for foreign company personnel to obtain work visas. The Brazilian government's work visa for foreign company personnel to Brazil has high requirements, strict review, and long delays, which affects the timely dispatch and rotation of foreign company personnel.??
11. Brazil's labor laws are unreasonable, it is difficult to hire and fire employees, and labor disputes occur from time to time.
Introduction to Brazil's Investment Policy
1. National treatment is granted to foreign investors.
2. Further open the market. On the original basis, in 1995, the Brazilian government amended the constitution to gradually relax the state's monopoly on oil, natural gas and mineral exploration, and privatized the telecommunications and electric power industries Entering the Brazilian market, at least 6 years before divestment). In addition, Brazil has allowed foreign companies to participate in financing and services in the fields of news media, customs bonded warehouses, offshore shipping, and highways.
3. If the products produced by foreign-funded enterprises in Brazil are exported to a third country, they can apply to the Brazilian government for export credit and insurance. If the value of the product reaches a certain level, a certificate of origin can be obtained, so that when exporting, it can enjoy preferential trade treatment between Brazil and other countries. For example, if you are assembling in Brazil, if you want to export to the member countries of the Association for Latin American Integration (ALADI) and hope to enjoy tariff concessions, the CIF value of the imported components cannot exceed 50% of the FOB value of the exported parts after assembly. To export to MERCOSUR, 60% (in terms of price) of the components used in the assembled product must come from MERCOSUR member countries. However, there are stricter value-added regulations for obtaining certificates of origin for communication products, chemical products, metallurgical products and information industry products.
4. In order to attract foreign investment and increase employment opportunities, the central government may grant tax incentives to foreign investors, which vary according to the contribution of foreign investment to Brazil. In addition, each state and city in Brazil has different tax incentives. For example, providing infrastructure (land, workshops), water, electricity, and fuel required for production on preferential terms, reducing or exempting commodity circulation service taxes, and providing low-interest loans. In short, the poorer and more marginal states and cities offer more favorable conditions.
For example, the governments of Paraíba and Joao Bissoa provide the following fiscal and tax incentives for the assembly microscope projects that China intends to invest in:
State government offers:
a. Tax incentives: The state government should pay 17% Commodity Circulation Service Tax (ICMS) when repaying the products sold by the enterprise in the form of low-interest loans. The loan period is 1 year, and the interest is 6% per annum plus long-term loan interest rate. The state government gives 90% relief when repaying the principal and interest of the loan.
Imported raw materials for processing and other components are exempt from commodity circulation service tax, and imported investment machinery, equipment, instruments and other capital goods are also exempt from commodity circulation service tax. However, if you want to sell these capital goods in the future, you must still pay the commodity circulation service tax, but you can pay the tax after depreciation at a certain percentage.
The above tax incentives are valid for 14 years.
b. Land preferential policies:
The state development company sells the land below the market price, and the Paraíba state industrial zone sells for 1 reais per square meter. The company also grants low-interest loans for the construction of factories, generally for a period of three years. The first year only pays interest, and the monthly interest is 1%; 5% monthly interest calculation.
City government offers:
The municipal government receives the commodity circulation service tax used by the municipal government from the state government. The municipal government refers to the state government's method and repays the enterprise in the form of low-interest loans. The loan method and repayment method are basically the same. The preferential policy is valid for 12 years.
In addition, the municipal government is exempted from the factory tax, city real estate tax and real estate transfer tax for 12 years.
5. In order to encourage the development of the northern and northeastern regions of Brazil, the Brazilian federal government and local governments are exempt from corporate income tax for 10 years for foreign investment (must be in the form of joint ventures, and the Brazilian investment must occupy a large share), starting from the 11th year. 50% reduction within 5 years; exemption or reduction of import tax and industrial product tax; exemption or reduction of local taxes such as commodity circulation service tax.
6. In order to protect the interests of foreign investors, Brazil has signed agreements to avoid double taxation with 23 countries, including China. In addition, Brazil has signed bilateral investment and trade protection agreements with three countries. However, none of the above agreements have been approved by the Brazilian Congress.
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