This information is derived from the State Department's Office of Investment Affairs, Investment Climate Statement. Any questions on the ICS can be directed to
Last Published: 7/31/2017

Investment Incentives

The GOB extends tax benefits for investment in less developed parts of the country, including the Northeast and the Amazon regions, with equal application to foreign and domestic investors. These incentives are successful in attracting major foreign plants to areas like the Manaus Free Trade Zone in Amazonas State, but most foreign investment remains concentrated in the more industrialized southern part of Brazil.

Individual states seek to attract private investment by offering ad hoc tax benefits and infrastructure support to companies, negotiated on a case by case basis. Competition among states to attract employment generating investment leads some states to challenge such tax benefits as beggar-thy-neighbor fiscal competition.

While local private sector banks are beginning to offer longer credit terms, state-owned development bank BNDES is the traditional Brazilian source of long-term credit, and also provides export credits. BNDES provides foreign- and domestically-owned companies operating in Brazil financing for the manufacturing and marketing of capital goods and primary infrastructure projects. Much of this financing is provided at subsidized interest rates. As part of its package of fiscal tightening, in December 2014, the GOB announced its intention to scale back the expansionary activities of BNDES and ended direct Treasury support to the bank. In March 2017, Brazil’s National Monetary Council (CMN) lowered BNDES’ long-term subsidized reference interest rate (the TJLP) from 7.5 percent to seven percent. The CMN also announced the creation of a new Long-Term Lending Rate (TLP) which will apply to new loans starting Jan 1, 2018. The TLP will initially be set at the same level as the TJLP and over time be reduced to equal Brazil’s five-year bond yield (a rate which incorporates inflation and is called the NTN-B). The GOB plans to reduce BNDES’s role further as efforts to promote long-term private capital market are made.

In January 2015, the GOB eliminated industrial products tax (IPI) exemptions on vehicles, while keeping all other tax incentives provided by the October 2012 Inovar-Auto program. Through Inovar-Auto, auto manufacturers are able to apply for tax credits based on their ability to meet certain criteria, including manufacturing processes performed in Brazil, enhancing fuel efficiency, committing to investing in research and development in Brazil or using Brazilian engineering services, and agreeing to participate in a fuel-efficiency labeling scheme. The Inovar-Auto program will end on December 31, 2017.

In 2014, the GOB issued Decree 8304 to reinstate the Special Regime for the Reinstatement of Taxes for Exporters, dubbed the Reintegra Program. Under the program, exporters of products covering 8,630 tariff codes receive a subsidy of three percent of the value of their exports. To qualify, the imported content of the exported goods cannot exceed 40 percent, except in the case of high-tech goods, such as pharmaceuticals, electronics, and aircraft and parts, which are permitted to have up to 65 percent of inputs imported. In addition, Reintegra exempts exporters from so-called indirect taxes on capital expenditures, including the PIS/Cofins social contribution taxes and the tax on financial transactions (IOF). On February 27, 2015, Decree 8415 revoked Decree 8304 and determined new regulations for the program. The three percent subsidy on the value of the exports was reduced to one percent for 2015, to 0.1 percent for 2016 ,

In May 2010, the GOB launched a National Broadband Plan, which featured fiscal incentives, private sector participation, and regulatory reform to build out Internet infrastructure under the leadership of state-owned firm Telebras. While the plan provided commercial opportunities for foreign investors, it also sought to boost Brazilian technology by granting domestic IT equipment tax exemptions, favorable BNDES financing, and preference in the procurement process.

Industrial Promotion

In October 2012, via Decree 7819/2012 Inovar-Auto, the GOB approved a program that offers a variety of incentives to encourage vehicle manufacturers to expand investment and production in Brazil. The European Union (EU) and Japan filed separate World Trade Organization (WTO) complaints in 2013 and 2015 that argue that some Inovar-auto tax benefits discriminate against foreign product imports and restricts trade. A final WTO decision on these programs is expected this year. The program will expire in December 2017 and expectations are that it will not be renewed. Meanwhile, the InovAtiva Brasil and Startup Brasil programs support start-ups in the country. The GOB also uses free trade zones to incentivize industrial production. A complete description of the scope and scale of Brazil’s investment promotion programs and regimes can be found at:

Foreign Trade Zones/Free Ports/Trade Facilitation

The federal government grants tax benefits for certain free trade zones. Most of these free trade zones aim to attract investment to the country’s relatively underdeveloped North and Northeast regions. The most prominent of these is the Manaus Free Trade Zone, in Amazonas State, which has attracted significant foreign investment, including from U.S. companies. In October 2011, then President Rousseff signed a constitutional amendment that extends Manaus’s status as an industrial zone for another 50 years. Constitutional amendment 83/2014 came into force in August 2014 and extended the status of Manaus Free Trade Zone until the year 2073.

Performance and Data Localization Requirements

Investors in certain sectors in Brazil must adhere to the country’s regulated prices, which fall into one of two groups: those regulated at the federal level, or by a federal company or agency, and those set by sub-national governments (states or municipalities). Regulated prices managed at the federal level include telephone services, oil products (gasoline and bottled cooking gas), electricity, and healthcare plans. Regulated prices controlled by sub-national governments include water and sewage fees, vehicle registration fees, and most fees for public transportation, such as local bus and rail services. As part of its fiscal adjustment strategy, the GOB sharply increased administered prices in January 2015.

In firms employing three or more persons, Brazilian nationals must constitute at least two-thirds of all employees and receive at least two-thirds of total payroll, according to Brazilian Labor Law Articles 352 to 354. Foreign specialists in fields where Brazilians are unavailable are not counted in calculating the one-third permitted for non-Brazilians.

Decree 7174 from 2010, which regulates the procurement of information technology goods and services, requires federal agencies and parastatal entities to give preferential treatment to domestically produced computer products and goods or services with technology developed in Brazil based on a complicated price/technology matrix.

Brazil’s Marco Civil, an Internet law that determines user rights and company responsibilities, states that data collected or processed in Brazil must respect Brazilian law, even if the data is subsequently stored outside the country. Penalties for non-compliance could include fines of up to 10 percent of gross Brazilian revenues and/or suspension or prohibition of related operations. Under the law, Internet connection and application providers must retain access logs for specified periods or face sanctions. While the Marco Civil does not require data to be stored in Brazil, its provisions – as well provisions of other proposed legislation, including a data privacy bill – should be closely tracked by Internet and other data-related companies investing in Brazil operations.

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Brazil Economic Development and Investment