In this article, we’ll explore the scale of Brazil, South America’s giant, and how its business environment makes Brazil the #1 country for startups in Latin America, despite having a different language from the rest of the region.
In addition to its size, we’ll look at relevant data on the Brazilian market and how business opportunities are influenced by internet adoption and trade with other countries. We’ll also explore the leading market data platforms for startups and potential ways to start operating in Brazil, as well as the responsibilities you’ll take on as a business owner toward employees and the government.
How big is Brazil?
One of Brazil’s most important characteristics to consider is its land area. Doing business in a country considered small is not the same as doing business in one considered large, based on its territorial extent.
- Brazil is the 5 largest country in the world by land area, with more than 8.5 million square kilometers.
- Depending on the geographic region where you are in the country, you should take the region’s cultural factors into account when doing business.
Market information in Brazil
As you could see in the image above, Brazil has a notable level of internet adoption for doing business. To summarize the 2018 chart above, we highlight:
- 70% of the Brazilian population used the internet.
- 97% of people had internet access on their cell phone
- 43% of people had internet access on their computer
- 32% of the population used a taxi app.
Doing business in Brazil
As we can see in the table below, Mexico does the most business with Brazil, followed by Puerto Rico and Colombia. On the other hand, contrary to what one might expect, Argentina is the country with which the least business is conducted.
This table reflects a combination of taxes, trade alliances, and culture.
Market sources for startups in Brazil
There are 3 leading platforms for obtaining information about the Brazilian market. Here they are:
- Sing Hub: A data intelligence platform and a platform for connecting with investors.
- ABStartups: The Brazilian Association of Startups, founded to promote and represent Brazil’s startup ecosystem.
- Siscori: A platform created by the Brazilian Foreign Trade Association to provide information about products imported into and exported from Brazil.
How do you start operating in Brazil?
If you’re interested in starting operations in Brazil, hiring staff, making sales, and beginning business activities in the country, here are the possible steps to take, along with potential variations:
- Open a branch of a foreign company in Brazil
- Federal Company Registration (CNPJ) and Federal Taxpayer Registry (CPF)
- Bank account
- Visa
Opening a foreign company in Brazil
Depending on your needs, resources, timeline, and budget, you can choose 2 ways to open your subsidiary in Brazil. We strongly recommend hiring a specialized service provider to guide you through the process and ensure that you’re doing what’s best for the company.
Taxes in Brazil
There are 3 types of taxes in Brazil: federal, state, and municipal. We recommend consulting tax and accounting experts to learn about best practices and the tax obligations you’ll take on when you start operating in the country.
Labor costs in Brazil
In addition to the taxes and considerations mentioned above, it’s important to keep the following employment costs and responsibilities in mind when hiring employees in the country:
- Bonus salary: Employees in Brazil are entitled to a bonus payment known as the 13th salary. This amount is equivalent to one month’s salary and is paid at the end of the year.
- Vacation: After an employee completes one year of work, they are entitled to 30 days of paid vacation.
- Length of Service Guarantee Fund (FGTS): This is a security deposit equal to 8% of the employee’s gross salary, set aside as a reserve for emergencies.
- National Social Security Institute (INSS): Employers must contribute 8% to 26.7% of the total salary.
- Transportation allowance: Payment intended to cover employees’ transportation expenses. The company may deduct up to 6% of the employee’s salary for this expense.
- Maternity leave: Workers are entitled to 120 days of paid leave after childbirth. The employer initially covers this cost, but is later reimbursed by National Social Security.