• COVID-19
  • Insights
  • Who We Help
    •   Industrial Automation
    •   Manufacturing & Distribution
    •   A&E Professional Services
    •   International Businesses
      • ◦   Expanding Outside the U.S.
      • ◦   Expanding to the U.S.
  • Services
    •   COVID-19
      • ◦   Cash Flow Confidence Assessment
      • ◦   Maximize Your Loan Forgiveness
      • ◦   5 Key Focus Areas
      • ◦   COVID-19 Resource Center
    •   Client Accounting
      • ◦   Software Solutions
      • ◦   Accounting Support
      • ◦   Reporting
    •   Tax
      • ◦   R&D Tax Credit
      • ◦   Tax Credits & Incentives
      • ◦   Tax Structure
      • ◦   Federal Tax
      • ◦   State & Local Tax
      • ◦   Personal Tax
      • ◦   Other Tax Filings
    •   Advisory & Assurance
      • ◦   Assurance Levels
      • ◦   Reporting
      • ◦   Employee Benefit Plan Audits
      • ◦   Technical Accounting & Reporting
    •   Consulting
      • ◦   Data Analytics
      • ◦   Transaction Services
      • ◦   Business Planning
      • ◦   Succession & Exit Strategies
    •   International
      • ◦   International Tax
      • ◦   Foreign Direct Investment
      • ◦   Global Expansion
      • ◦   International Accounting
  • Events
  • Careers
    •   Why C&M
    •   Students
      • ◦   Campus Events
      • ◦   Internships
      • ◦   Reach Beyond Program
    •   Experienced Professionals
      • ◦   Team member profile videos
    •   Opportunities
    •   Employee Journals
    •   Office Tour
  • About Us
    •   How We Help
      • ◦   Service Approach
      • ◦   Affiliations
      • ◦   Communications & Technology
    •   Meet Our Team
    •   Testimonials
    •   Our Videos
    •   Our Story
  • Contact Us
  • Subscribe
CHANGE COUNTRY:
  • United States
  • 中国
  • Client Login
Clayton & McKervey Logo
  • COVID-19
  • Insights
  • Who We Help
  • Services
  • Events
  • Careers
  • About Us
  • Contact Us
  • Subscribe
    • Most Recent Insights
  1. Home
  2. Insights
  3. Expanding to Brazil – What You Should Know

Expanding to Brazil – What You Should Know

Posted by Tim Finerty on January 8, 2013

Tim Finerty Tim Finerty

As small to mid-size enterprises shift gears to accelerate growth, they are taking a closer look at new opportunities in foreign countries. One of those countries is Brazil. As the fifth largest population in the world and with the upcoming exposure of international sports events like the 2014 World Cup and 2016 Olympics, Brazil needs service, manufacturing, construction, and distribution businesses.

What we are seeing?

The move of advanced manufacturing processes. Automotive is ramping up manufacturing in Brazil with state-of-the-art facilities that house all suppliers in the same plant. In additon, service and franchises have seen their growth spurred by the demands of a fast-expanding middle class. IT hardware, software, and services have also experienced significant growth. This is in part due to the influx of foreign companies into the country who require such support, as well as entrepreneurial sector growth and demand.

Despite these bright prospects, Brazil remains a complicated place to do business.

Planning

Before expanding globally, it is critical to create a business plan and budget for the new enterprise that addresses the issues of taxation, business structure, and financing. Owners need to know how to get money into the country, how to take it out, and how long the process takes. A rough budget of anticipated expenses, even if only a starting point, can help determine how to fund the effort.

Business owners and company executives don’t need to be pioneers to establish a global presence. While they can follow the lead of large multi-national organizations, small to mid-sized privately held companies can be better served by benchmarking against companies of comparable size and engaging a business advisor with experience and connections in foreign markets.

The importance of structure

One of the biggest decisions a company can make when establishing a foreign presence is how to structure the organization. Small to mid-size enterprises should work with their business advisor to determine all options before making the decision to establish their own company. For example, in most instances, if you have one or more employees working in a foreign country for a total of 183 days in a rolling 12-month period, permanent establishment will be created, often unintentionally, and now you are subject subject to taxes.

Financing

Initial financing is typically done from retained earnings. Clients must be realistic about cash-flow projections, which can change significantly based on sales and collections. For currency issues, owners should understand how the fluctuation of the monetary system impacts equipment values and the financial statement. Banks look at how the foreign operation impacts a company’s profit and loss statement, as well as cash flow. Banks lend to companies based on how certain financial ratios look at a point in time. The financial statement can become devalued with higher currency valuation; in the case of deflation, a company will show a gain in assets.

Regulations

Business owners often need assistance working through the intricacies of transfer pricing principles, exchange rates, taxation, permits, and regulations. These factors all impact the price established for goods or services in other counties. Additionally, government dealings can be daunting. Having a business advisor who knows government policies and procedures is a good investment and can help cut through red tape. For small to mid-sized enterprises looking to capitalize on the Brazilian market via exports from their domestic operations, it is encouraged that they consider working with their business advisor to help structure the flow of goods, the associated manufacturing, and distribution value stream. Proper planning well in advance of market entry can reduce import duties and tariffs by double-digit percentages. This translates into significant market advantages in both price competitiveness and retained earnings.

Companies also need to establish transfer pricing agreements between related parties in foreign countries, such as Brazil, to help reduce the risk of adjustments on a federal tax audit. A CPA firm with international experience can advise clients about how to structure related-party transactions, such as technology, sales, and/or management fees to maximize profits and minimize taxes.

Words of Wisdom

One of the biggest learning curves about doing business in Brazil is the slower pace. What might take days to do in the United States could take weeks or months. Knowing how to complete the paperwork in a foreign market trumps a handshake and business deal sketched on a bar napkin.

Our team is always ready to help.

Please contact us for more information.

Tim Finerty

Tim Finerty

Shareholder, Industrial Automation

Contact Tim   |   Read Tim's bio

related news

Doing Business in Mexico: What to Expect this Year

Without a doubt, this year will be interesting for Mexico. To start, it’s an election year and we all know what that means…a lot of uncertainty. As the global pandemic…

Read full story

What Expenses Qualify for R&D Tax Credits?

The R&D tax credit is one of the most overlooked opportunities to boost your bottom line. Many business owners fail to claim it under the mistaken belief that they’re not…

Read full story

Clayton & McKervey Launches The Sound of Automation Podcast

Media Contact: Denise Asker, dasker@claytonmckervey.com; 248.936.9488 Southfield, Mich.—February 17, 2021—Clayton & McKervey, a certified public accounting and business advisory firm helping growth-driven companies compete in the global marketplace, is excited…

Read full story

Misconceptions About the Research & Experimentation Tax Credit

As companies put more emphasis on Industry 4.0 and business processes become more automated and accessible, the opportunities for Research & Experimentation tax credits increase. The Research and Experimentation (R&E)…

Read full story

Your Guide to R&D Tax Credits

If you haven’t looked into the R&D tax credit before, there’s a good chance that you’re missing a big opportunity to boost your cash position. Even if they’re aware of…

Read full story

Categories

Jump directly to the topics that matter to you most.

  • A&E Professional Services
  • About Us
  • Advisory & Assurance
  • Business Owners
  • C&M Press Releases
  • Careers
  • China Consulting
  • Clayton & McKervey
  • Client Accounting Services
  • Consulting
  • COVID-19
  • Data Analytics
  • Estate Planning
  • Expanding Outside the U.S.
  • Expanding to the U.S.
  • From the President
  • Industrial Automation
  • International
  • Manufacturing & Distribution
  • Mexico Consulting
  • Podcasts
  • Private Client Services
  • Tax & Tax Credits
  • Transaction Services
  • Videos

Authors

Read news direct from our managers and stakeholders.

    • Ben Smith
    • Beth Butchart
    • Bryan Powrozek
    • Carlos Calderon
    • Casey Haggerty
    • Clayton & McKervey
    • Dave Van Damme
    • Denise Asker
    • Eric Lin
    • Jim Biehl
    • Julie Killian
    • Kevin Johns
    • Margaret Amsden
    • Miroslav Georgiev
    • Nina Wang
    • Rob Dutkiewicz
    • Ruben Ramirez
    • Sarah Russell
    • Sue Tuson
    • Tarah Ablett
    • Teresa Gordon
    • Tim Finerty
    • Tim Hilligoss
    • Wendy Reedy

Additional Resources

Additional news from Clayton & McKervey can be found below.

  • Subscribe to our email newsletter
  • View upcoming events
  • Contact us to let us know how we can help you
  • Main Content
  • Related Insights

Expanding to Brazil – What You Should Know

Posted by Tim Finerty on January 8, 2013

Tim Finerty

As small to mid-size enterprises shift gears to accelerate growth, they are taking a closer look at new opportunities in foreign countries. One of those countries is Brazil. As the fifth largest population in the world and with the upcoming exposure of international sports events like the 2014 World Cup and 2016 Olympics, Brazil needs service, manufacturing, construction, and distribution businesses.

What we are seeing?

The move of advanced manufacturing processes. Automotive is ramping up manufacturing in Brazil with state-of-the-art facilities that house all suppliers in the same plant. In additon, service and franchises have seen their growth spurred by the demands of a fast-expanding middle class. IT hardware, software, and services have also experienced significant growth. This is in part due to the influx of foreign companies into the country who require such support, as well as entrepreneurial sector growth and demand.

Despite these bright prospects, Brazil remains a complicated place to do business.

Planning

Before expanding globally, it is critical to create a business plan and budget for the new enterprise that addresses the issues of taxation, business structure, and financing. Owners need to know how to get money into the country, how to take it out, and how long the process takes. A rough budget of anticipated expenses, even if only a starting point, can help determine how to fund the effort.

Business owners and company executives don’t need to be pioneers to establish a global presence. While they can follow the lead of large multi-national organizations, small to mid-sized privately held companies can be better served by benchmarking against companies of comparable size and engaging a business advisor with experience and connections in foreign markets.

The importance of structure

One of the biggest decisions a company can make when establishing a foreign presence is how to structure the organization. Small to mid-size enterprises should work with their business advisor to determine all options before making the decision to establish their own company. For example, in most instances, if you have one or more employees working in a foreign country for a total of 183 days in a rolling 12-month period, permanent establishment will be created, often unintentionally, and now you are subject subject to taxes.

Financing

Initial financing is typically done from retained earnings. Clients must be realistic about cash-flow projections, which can change significantly based on sales and collections. For currency issues, owners should understand how the fluctuation of the monetary system impacts equipment values and the financial statement. Banks look at how the foreign operation impacts a company’s profit and loss statement, as well as cash flow. Banks lend to companies based on how certain financial ratios look at a point in time. The financial statement can become devalued with higher currency valuation; in the case of deflation, a company will show a gain in assets.

Regulations

Business owners often need assistance working through the intricacies of transfer pricing principles, exchange rates, taxation, permits, and regulations. These factors all impact the price established for goods or services in other counties. Additionally, government dealings can be daunting. Having a business advisor who knows government policies and procedures is a good investment and can help cut through red tape. For small to mid-sized enterprises looking to capitalize on the Brazilian market via exports from their domestic operations, it is encouraged that they consider working with their business advisor to help structure the flow of goods, the associated manufacturing, and distribution value stream. Proper planning well in advance of market entry can reduce import duties and tariffs by double-digit percentages. This translates into significant market advantages in both price competitiveness and retained earnings.

Companies also need to establish transfer pricing agreements between related parties in foreign countries, such as Brazil, to help reduce the risk of adjustments on a federal tax audit. A CPA firm with international experience can advise clients about how to structure related-party transactions, such as technology, sales, and/or management fees to maximize profits and minimize taxes.

Words of Wisdom

One of the biggest learning curves about doing business in Brazil is the slower pace. What might take days to do in the United States could take weeks or months. Knowing how to complete the paperwork in a foreign market trumps a handshake and business deal sketched on a bar napkin.

Our team is always ready to help.

Please contact us for more information.

Tim Finerty

Shareholder, Industrial Automation

Contact Tim   |   Read Tim's bio

related news

Doing Business in Mexico: What to Expect this Year

Without a doubt, this year will be interesting for Mexico. To start, it’s an election year and we all know what that means…a lot of uncertainty. As the global pandemic…

Read full story

What Expenses Qualify for R&D Tax Credits?

The R&D tax credit is one of the most overlooked opportunities to boost your bottom line. Many business owners fail to claim it under the mistaken belief that they’re not…

Read full story

Clayton & McKervey Launches The Sound of Automation Podcast

Media Contact: Denise Asker, dasker@claytonmckervey.com; 248.936.9488 Southfield, Mich.—February 17, 2021—Clayton & McKervey, a certified public accounting and business advisory firm helping growth-driven companies compete in the global marketplace, is excited…

Read full story

Misconceptions About the Research & Experimentation Tax Credit

As companies put more emphasis on Industry 4.0 and business processes become more automated and accessible, the opportunities for Research & Experimentation tax credits increase. The Research and Experimentation (R&E)…

Read full story

Your Guide to R&D Tax Credits

If you haven’t looked into the R&D tax credit before, there’s a good chance that you’re missing a big opportunity to boost your cash position. Even if they’re aware of…

Read full story

Categories

Jump directly to the topics that matter to you most.

  • A&E Professional Services
  • About Us
  • Advisory & Assurance
  • Business Owners
  • C&M Press Releases
  • Careers
  • China Consulting
  • Clayton & McKervey
  • Client Accounting Services
  • Consulting
  • COVID-19
  • Data Analytics
  • Estate Planning
  • Expanding Outside the U.S.
  • Expanding to the U.S.
  • From the President
  • Industrial Automation
  • International
  • Manufacturing & Distribution
  • Mexico Consulting
  • Podcasts
  • Private Client Services
  • Tax & Tax Credits
  • Transaction Services
  • Videos

Authors

Read news direct from our managers and stakeholders.

  • Ben Smith
  • Beth Butchart
  • Bryan Powrozek
  • Carlos Calderon
  • Casey Haggerty
  • Clayton & McKervey
  • Dave Van Damme
  • Denise Asker
  • Eric Lin
  • Jim Biehl
  • Julie Killian
  • Kevin Johns
  • Margaret Amsden
  • Miroslav Georgiev
  • Nina Wang
  • Rob Dutkiewicz
  • Ruben Ramirez
  • Sarah Russell
  • Sue Tuson
  • Tarah Ablett
  • Teresa Gordon
  • Tim Finerty
  • Tim Hilligoss
  • Wendy Reedy

Additional Resources

Additional news from Clayton & McKervey can be found below.

  • Subscribe to our email newsletter
  • View upcoming events
  • Contact us to let us know how we can help you

Website

  • COVID-19
  • Insights
  • Who We Help
  • Services
  • Events
  • Careers
  • About Us
  • Contact Us
  • Subscribe

Location

+1 248.208.8860
2000 Town Center
Suite 1800
Southfield, MI
48075 | USA

Connect

  • Events
  • Newsletter
  • Client Login

Social

  • LinkedIn
  • Facebook
  • Twitter
  • Glassdoor
  • YouTube
  • Instagram

Awards

DFP Top Work Places Best & Brightest
Prime Global

Tax | Accounting | Assurance | Consulting | Highly technical and accessible team of CPAs helping growth driven, closely held, middle market companies compete in the global marketplace. Michigan-based accountants and advisors focused on helping business owners in the United States and throughout Europe and China.

Privacy Policy Disclaimer

© 2021 Clayton & McKervey