

Brazil Startup Report, a 15-min guide by World Startup Report - edge17
http://www.slideshare.net/WorldStartupReport/brazil-startup-report-36443505

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lmzmendes
As a friend likes to say: starting up in Brazil is entrepreneurship "Level:
Hard".

This means huge challenges, but the market is huge, there's REAL problems to
be solved and there's the opportunity of building significant entry barriers.

Plus, even if rules are absurd, all players in the market are subject to the
same constraints. Meaning that they're a problem if you're debating between
tackling Brazil or another market, but they're a given if you're set on
setting foot there.

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telecuda
As I understand it, the business tax structure in Brazil is one of the most
complex in the world [1], resulting in iPhones for example costing as much as
$1,200 [2]. A good friend in Rio is working on a solar startup and said on
some products they face 88% tax on revenue. Correct me if I'm off-base, but
what impact is that having on attracting and fostering startups?

[http://www.forbes.com/sites/joeharpaz/2013/12/17/brazil-
rank...](http://www.forbes.com/sites/joeharpaz/2013/12/17/brazil-ranked-most-
time-consuming-tax-regime-in-the-world/)

[http://www.bloomberg.com/visual-data/best-and-worst/most-
exp...](http://www.bloomberg.com/visual-data/best-and-worst/most-expensive-
iphones-in-the-world-countries)

~~~
ramonlima
The maximum tax quota is 60% by the Correios, which is simple Taxing, the
other quotas are from 1% - 50% depending on the product type.

What happens a lot of times is that the business guys want to say that it's
"too hard" to do business here where it actually is pretty easy, not too much
taxes and a great market. There's the employee taxes which are the most
expensive but some of the taxes you can get back if you're smart enough with
your accounting.

It's a great place to live and to have a business, the best part is that
Brazilians like new things, when you open your business everyone is coming in
to see what's it about.

Best,

~~~
piva00
Nope, I'm brazilian and have worked with company taxes while launching a
startup. You're talking mostly about natural persons import taxes based on
Correios importation.

What you are not seeing is: we have a pretty complex tax structure based on
the kind of product/service you are providing. Also, we have a pretty
bureaucratic import process, have you ever tried to deal with Port Customs
over here? You have a 7 step process, each one involving some tax or payment
to be made to one or other agency.

It's very hard too when the rules are always changing, when I opened the
juridical person for my startup I had to contact a lawyer and an accountant to
get the best deal on taxes for the service that I was providing, some months
later the rules had changed and I'd to pay around 8% more on taxes than if I
went as another type of company.

So yes, it's pretty hard to do business over here, you need to have a
competent lawyer and accountant just to get your company out of the ground,
like, reaaally in the beginning.

~~~
bonobo
And this complexity doesn't end there because, in order to deal with these
heavy employee taxes, it's not uncommon for IT companies to ask employees to
open their own one-man companies to avoid these taxes. Now having a B2B
relation, the company is free from these taxes and mandatory benefits, and the
employee now deals with it declaring himself as the only employee and paying
himself minimum wage on paper, receiving the rest of his salary as company's
profit. Or the scheme they call flex, which is to pay a great deal of the
salary as extras (even up to 80%) because these do not get taxed. The
employee, in turn, needs to declare expenditures to his contractor in order to
receive this extra share.

The real meaning of "being smart enough with your accounting" seems to me
mostly finding these loopholes in the tax structure to avoid leaking money to
the government.

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ldec
Good paper, thanks Bowei. It is a great place to be an entrepreneur - despite
some of the problems you point out it is also a world of opportunity where you
can help solve real problems if you have the right attitude. Also, its a great
place to live!

~~~
wsr
Absolutely agree. I especially enjoyed my short stay at Belo Horizonte, go
check it out if you have a chance!

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kintamanimatt
"Foreign entrepreneurs should expect to spend about 70 days and around $3,000
in legal fees to incorporate."

That's absolutely shocking! How in the world can incorporation take more than
two months?!

~~~
wsr
Incorporation is the easy part. Paying taxes is the much tougher thing to do
in Brazil.

But! Brazil it's the land of opportunity in Latam, so that's why foreigners
like to go to Brazil.

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hcarvalhoalves
I've worked at one of the first B2B SaaS to launch here in Brazil, back in
2008. Get in touch and I'll be glad to answer questions regarding the
challenges you're expected to face here.

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wsr
Bowei from the World Startup Report team here. Thanks for reading the report.

If anyone has any question regarding Brazil startup ecosystem, I'd be happy to
help answer it!

~~~
emp_
2 years ago I was looking into the VC culture here in Brazil but all I kept
hearing was that investors were looking for "Local Innovation" which is a
pretty way of saying "Just clone sucessful US startups" and that the only risk
they would take would be that making sure something like Groupon worked in our
local market.

Did that change at all? If I'm looking to create the next crazy idea my only
option is to either rellocate or bootstrap.

~~~
diegottg
Not that much, but the landscape looks a little better now in that sense,
since a lot of local copycats failed.

