- Brazil free trade zones play an important role in the country’s economy and offer significant opportunities for business investment. The zones are designed to attract foreign investment and promote the development of specific industries, such as manufacturing, technology, and logistics.
- Brazil economy has been recovering from the COVID-19 pandemic, and the free trade zones have played a key role in this recovery. According to the Brazilian Ministry of Economy, the country’s free trade zones accounted for nearly 20% of Brazil’s exports in 2020, and exports from the zones grew by 22% compared to the previous year.
- The Brazilian government has been investing in infrastructure to support the growth of the free trade zones. This includes investments in transportation, energy, and communication infrastructure to facilitate the movement of goods and services. For example, the government is investing in the expansion of the Port of Santos, which is located near several of Brazil free trade zones.
- Brazil free trade zones are increasingly focused on technology and innovation, with a growing number of companies investing in research and development activities. For example, the São Paulo Technology Park, which is located in a free trade zone, is home to more than 150 technology-based companies and has become a hub for innovation in Brazil. In this article, Tetra Consultants’ team of business setup experts has outlined the 5 things to know about the free trade zone in Brazil so that you can make a more informed decision before jumpstarting your business expansion journey.
5 Things To Know About Free Trade Zone in Brazil
- Background of Brazil free trade zones: Brazil has several free trade zones (FTZs), which are designated areas within the country where certain tax and customs incentives are offered to promote economic growth and foreign investment. The FTZs aim to boost exports, encourage job creation, and attract new businesses to the region.
- The largest and most well-known free trade zone in Brazil is the Manaus Free Trade Zone, located in the state of Amazonas. Established in 1957, it covers an area of more than 10,000 square miles and includes the city of Manaus, which is the capital of Amazonas state. The Manaus FTZ is strategically located in the heart of the Amazon rainforest, providing easy access to markets in Brazil, the United States, Europe, and Asia.
- Companies that operate within the Manaus FTZ can benefit from a range of tax incentives, including exemption from federal taxes, reduced import duties on machinery and equipment, and access to low-cost financing. These incentives have helped to attract a wide range of businesses to the region, including electronics manufacturers, pharmaceutical companies, and automotive parts producers.\
- Other free trade zones in Brazil include the Suape Free Trade Zone in the state of Pernambuco, the Pecém Industrial and Port Complex in the state of Ceará, and the Itajaí-Açu Port Complex in the state of Santa Catarina. Each of these zones offers its own set of incentives and advantages, and businesses operating within them can benefit from reduced costs, streamlined processes, and improved access to markets both within Brazil and abroad.
2. Legislative framework of Brazil free trade zone: Brazil has several free trade zones, also known as free economic zones, which are areas where businesses can import and export goods with reduced or waived taxes and tariffs. The most notable free trade zones in Brazil are the Manaus Free Trade Zone and the Suape Free Trade Zone. The legal framework for free trade zones in Brazil is established by Law No. 8,387 of December 30, 1991, which provides for the creation and operation of free trade zones in the country. The law establishes the rules and procedures for setting up free trade zones, as well as the incentives and benefits that companies operating in these zones can enjoy. Some of the key provisions of the law include:
- Definition of a free trade zone: The law defines a free trade zone as a delimited area within the Brazilian territory where goods can be imported and exported with tax incentives and other benefits.
- Establishment of free trade zones: The law allows the creation of free trade zones by the federal government, state governments, or private companies, subject to certain conditions.
- Tax incentives and benefits: Companies operating in free trade zones are exempt from import and export taxes, as well as from taxes on sales and services related to their operations within the zone. They are also allowed to operate with reduced labor costs and have access to certain financing and investment incentives.
- Customs procedures: Goods entering and leaving free trade zones are subject to simplified customs procedures, aimed at reducing administrative burdens and increasing efficiency.
- In addition to the legal framework established by Law No. 8,387, free trade zones in Brazil are also subject to other laws and regulations, such as those related to labor, environmental protection, and intellectual property.
3. Stable regulatory body: In Brazil, the regulating body for the free trade zones is the Superintendence of the Manaus Free Zone (SUFRAMA), which is a federal agency under the Ministry of Economy. SUFRAMA is responsible for managing and supervising the Manaus Free Trade Zone, which is the largest and oldest free trade zone in Brazil.
- SUFRAMA is responsible for regulating the activities of companies operating in the free trade zone, as well as for monitoring compliance with the rules and procedures established for the zone. The agency also plays a key role in promoting investment and economic development in the region, through the provision of incentives and support for businesses operating in the free trade zone.
- Other free trade zones in Brazil may be regulated by different entities, depending on their location and the specific regulations governing them. However, SUFRAMA remains the most important and well-known regulatory body for free trade zones in Brazil.
4. Advantages of setting up a company in Brazil free trade zone: Setting up a company in Brazil free trade zones can provide several advantages for businesses, including tax incentives, access to markets, streamlined processes, access to a skilled workforce, and modern infrastructure. Here are some more reasons why businesses may choose to set up in Brazil’s free trade zones:
- Low-cost production: Brazil free trade zones can offer lower production costs compared to other locations due to the tax incentives and other benefits provided by the government. This can make it easier for businesses to operate profitably and competitively.
- Reduced bureaucracy: Free trade zones in Brazil can provide a more streamlined and efficient process for businesses to establish their operations, obtain licenses and permits, and comply with regulations.
- Strategic location: Brazil free trade zones are strategically located to provide easy access to key markets in Latin America, North America, Europe, and Asia. This can make it easier for businesses to expand their operations globally and access new markets.
- Industry clusters: Brazil free trade zones often attract businesses in similar industries, creating industry clusters that can provide a range of benefits such as shared infrastructure, expertise, and access to suppliers and customers.
- Innovation and research: Some free trade zones in Brazil have specific focus areas, such as technology and innovation, which can provide opportunities for businesses to collaborate and access cutting-edge research and development.
5. Governmental support to companies operating in Brazil free trade zone: The Brazilian government provides several support services for businesses setting up in the country’s free trade zones. These services are designed to help businesses navigate the process of establishing their operations and to facilitate their growth and development. Some of the government support services available for companies setting up in Brazil free trade zones include:
- Assistance with registration: The Brazilian government can provide assistance with registering a business, obtaining permits, and complying with regulations. This can include help with obtaining a tax ID number, registering with the appropriate authorities, and obtaining licenses and permits.
- Access to financing: The Brazilian government offers several financing programs that can help businesses access the capital they need to start and grow their operations. These programs can include low-interest loans, grants, and other forms of financial support.
- Training and education: The government provides training and education programs to help businesses develop the skills and knowledge they need to succeed in their industry. This can include access to training programs, workshops, and seminars on topics such as business management, marketing, and finance.
- Research and development support: The Brazilian government provides support for research and development activities, which can help businesses innovate and develop new products and services. This can include funding for research projects, access to research facilities, and collaboration with academic institutions.
- Infrastructure development: The government invests in infrastructure development to improve the competitiveness of the free trade zones. This can include improvements to transportation, energy, and communication infrastructure to facilitate the movement of goods and services.
- Navigating the country of Brazil’s complex business climate as an entrepreneur planning to register a company in the nation might be a challenging process – a hassle to say the least. As such, Tetra Consultants hopes that this article has provided you with a much better understanding of the business culture of the free trade zone in Brazil so that you can truly decide whether you should do so yourself. So, what are you waiting for?
- Contact us to find out more about the process of starting a business in the free trade zone in Brazil and the process to register company in Brazil. Our dedicated and experienced team will respond within the next 24 hours.
- Tetra Consultants will not only empower you by helping to navigate the different regulations of the free trade zone in Brazil but also aid in facilitating the registration of your company there while providing invaluable, nuanced insights into any potential challenges.