For the first time in more than 20 years, a liberalist candidate won the elections in Brazil. The economic team, led by Paulo Guedes, has the opportunity to make important changes in the basis of Brazilian economy and the moment is really appropriate.
The interest rates are low (6,5% per year) and some important indicators shows that the Brazilian economic scenario is heating.
Two steps are fundamental to the growth of the country: the war against corruption and the tax reform.
After the “Lava Jato” operation, politicians and businessmen were arrested accused of corruption and money laundering. Billions of dollars were recovered, and some companies were prohibited to make new contracts with the government. Corruption is one of the most important issues to be fought by the new president, because it destroys competition and brakes the development of the country.
The nomination of Mr. Sérgio Moro, known as the judge that convicted the former president Lula, as Minister of Justice is an important movement to show the market that the combat against corruption will be a priority.
On the other hand, the new government has also the opportunity to make changes in the confusing Brazilian tax system and make it simpler for national and international investors.
In Brazil there are more than 80 different types of taxes and a company spends more than 2,000 hours per year dealing with these obligations. Just to pay these taxes!
On the other hand, new technologies are being created, like streaming and sharing economy and there is a necessity do adapt the legislation for this new reality, because the technology companies must also pay taxes.
As you can see, the new president has big challenges and a lot of job to do to make the Brazilian market attractive to foreign investors.
The information provided in this article is for general information purposes only. The information is not intended to be comprehensive or to include advice on which you may rely. You should always consult a suitably qualified professional on any specific matter.
Gabriel Quintanilha is based in Rio de Janeiro. Gabriel has been an attorney at law since 2006. He is also Professor of Tax Law at Fundação Getulio Vargas – FGV and IBMEC. Author of books and articles published in Brazil.
EUCED - European Network for Economic Cooperation and Development is a European Economic Interest Grouping (EEIG), as per EU Council Regulation # 2137/85, established for European and worldwide economic and development operations. As well as, the status of an European Business Association.Read more