Executive Summary

Brazil is the second largest economy in the hemisphere behind the United States, and the ninth largest economy in the world. The United Nations Conference on Trade and Development (UNCTAD) named Brazil the eighth largest destination for global Foreign Direct Investment (FDI) flows in 2015. In recent years Brazil received more than half of South America’s total incoming FDI and the United States is a major foreign investor in Brazil. The Brazilian Central Bank (BCB) indicated that the United States had the largest single-country stock of FDI (USD 112 billion) in Brazil in 2014, the latest year with available data. The Government of Brazil (GOB) made attracting private investment in infrastructure a top priority for 2017.

Brazil’s recession has been longer and deeper than most economists anticipated. The country’s Gross Domestic Product (GDP) contracted by 3.6 percent in 2016 and is projected to grow only 0.4 percent in 2017. Per capita GDP decreased 4.4 percent in 2016 for a combined drop of almost 10 percent over two years. While unemployment stood at just 6.5 percent as recently as 2014, it ended 2016 at 12 percent and is projected to end 2017 above 13 percent. Brazil was the world’s eighth largest destination for FDI in 2015, with inflows of USD 64.6 billion, according to UNCTAD. The nominal budget deficit stood at nine percent of GDP (USD 161.7 billion) in 2016 and is projected to end 2017 at around 10 percent of GDP (USD 180.1 billion). Brazil’s debt-to-GDP ratio reached 70 percent in 2016 and is projected to reach 77 percent this year. In part due to the slower than anticipated return to growth, annual inflation fell to 6.3 percent by the end of 2016 – inside the Brazilian Central Bank’s (BCB) target range of 4.5 percent +/- two percentage points – for the first time in two years. This allowed the BCB to cut its benchmark interest rate to 11.25 percent (from a high of 14.25 percent in 2016) in April 2017.

President Temer, who took over as president after the impeachment of former President Dilma Rousseff in May 2016, is pursuing corrective macroeconomic policies to stabilize the economy. Congress approved a landmark federal spending cap in December 2016 and is now debating a complementary reform to curb social security spending. If a robust social security reform is approved, financial analysts assert investor confidence in debt sustainability will strengthen. Additional reforms to increase labor market flexibility and to rationalize Brazil’s complex tax system are also on the agenda. International capital markets have recognized Temer administration efforts, lowering risk premiums significantly from 2015 peak levels and boosting the value of the real. 2016 and early 2017 foreign direct investment inflows have been strong. Both portfolio and direct investors, however, remain sensitive to political uncertainties linked to ongoing corruption scandal investigations (please see corruption section) and Brazilian risk premiums fluctuate accordingly.

Notwithstanding the current macroeconomic context, Brazil’s large economy and vast middle class continue to make the country a destination for long-term investment, particularly in consumer products, albeit not without challenges.

With a USD 1.8 trillion economy, a population of over 200 million, and a large middle-class consumer base, Brazil is a top 10 destination for global FDI. The GOB investment promotion strategy prioritizes the automobile, renewable energy, life sciences, oil and gas, and infrastructure sectors. Foreign investors in Brazil receive the same legal treatment as local investors in most economic sectors; however, foreign investment is restricted in the health, mass media, telecommunications, aerospace, rural property, maritime, and air transport sectors. The Brazilian Congress is currently considering legislation to liberalize restrictions on foreign ownership of rural property and airline companies.

In addition to current economic difficulties, since 2014, Brazil’s anti-corruption oversight bodies are investigating allegations of widespread corruption involving state-owned energy firm Petrobras and a number of private construction companies. Analysts contend that high transportation and labor costs, low domestic productivity, and ongoing political uncertainties hamper investment in Brazil. Foreign investors also cite concerns over poor existing infrastructure, rigid labor laws, and complex tax, local content, and regulatory requirements; the so-called “Custo Brasil” (Brazil Cost).

Table 1

Measure Year Index/Rank Website Address
TI Corruption Perceptions Index 2016 79 of 175
World Bank’s Doing Business Report “Ease of Doing Business” 2017 123 of 190
Global Innovation Index 2016 69 of 128
U.S. FDI in Partner Country ($M USD, stock positions) 2015 USD 111,715
World Bank GNI Per Capita 2015 USD 9,850

1. Openness To, and Restrictions Upon, Foreign Investment

Policies Towards Foreign Direct Investment

Brazil was the world’s eighth largest destination for Foreign Direct Investment (FDI) in 2015, with inflows of USD 64.6 billion, according to UNCTAD. The GOB actively encourages FDI – particularly in the automobile, renewable energy, life sciences, oil and gas, and transportation infrastructure sectors – to introduce greater innovation into Brazil’s economy and to generate economic growth. GOB investment incentives include tax exemptions and low-cost financing with no distinction made between domestic and foreign investors. Foreign investment is restricted in the health, mass media, telecommunications, aerospace, rural property, maritime, and air transport sectors.

Limits on Foreign Control and Right to Private Ownership and Establishment

A 1995 constitutional amendment (EC 6/1995) eliminated distinctions between foreign and local capital, ending favorable treatment (e.g. tax incentives, preference for winning bids) for companies using only local capital. However, foreign investment is restricted by Constitutional law in the health (Law 13097/2015), mass media (Law 10610/2002), telecommunications (Law 12485/2011), aerospace (Law 7565/1986, updated by MP 714), rural property (Law 5709/1971), maritime (Law 9432/1997 and Decree 2256/1997), insurance (Law 11371/2006), and air transport sectors (MP 714/2016).

Screening of FDI

Foreigners investing in Brazil must register their investment with the BCB within 30 days of the inflow of resources to Brazil. Registration is done electronically. Investments involving royalties and technology transfer must be registered with Brazil’s patent office, the National Institute of Industrial Property (INPI). Investors must also have a local representative in Brazil. Portfolio investors must have a Brazilian financial administrator and register with the Brazilian Securities Exchange Commission (CVM).

Foreign investors in Brazil receive the same legal treatment as local investors in most economic sectors. Constitutional amendments passed in 1995 prohibit all forms of discrimination against foreign capital not explicitly set out under law.

To enter Brazil’s insurance and reinsurance market, U.S. companies must establish a subsidiary, enter into a joint venture, or acquire or partner with a local company. Applications for banking licenses are reviewed by the BCB on a case-by-case basis. Of the top 50 banks in Brazil, 20 are owned or controlled by foreign interests. Citibank, the only U.S. retail banking operation in Brazil, sold its Brazilian retail banking assets to Brazilian bank Itau in October 2016. On June 8, 2016, Brazil’s anti-trust authorities approved Bradesco bank’s August 2015 purchase of HSBC’s Brazilian retail banking operation.

Foreign ownership of airlines is limited to 20 percent, although the Brazilian Congress is considering legislation to eliminate the restriction. On March 19, 2011, the United States and Brazil signed an Air Transport Agreement as a step towards an Open Skies relationship that would eliminate numerical limits on passenger and cargo flights between the two countries. The GOB advanced the agreement to Congress in June 2016 for ratification. It was approved by the three requisite lower house committees and is pending lower house plenary approval before moving on to the Senate.

The Brazilian reinsurance market opened to competition in 2007. In December 2010 and March 2011, however, the Brazilian National Council on Private Insurance (CNSP) rolled back market liberalization through the issuance of Resolutions 225 and 232, which disproportionately affects foreign insurers operating in the Brazilian market. Resolution 225 requires that 40 percent of all reinsurance risk be placed with Brazilian companies. Resolution 232 allows insurance companies to place only 20 percent of risk with affiliated reinsurance companies. In December 2011, the CNSP issued Resolution 241, which walked back some of the restrictions of Resolution 225 by allowing the 40 percent requirement to be waived if local reinsurance capacity does not exist. Despite these limitations, Brazil accounts for more than 40 percent of Latin America’s reinsurance market, and the volume of business written in Brazil is expected to grow as the government invests in energy projects and infrastructure upgrades.

In September 2011, Law 12485/2011 removed a 49 percent limit on foreign ownership of cable TV companies and allowed telecom companies to offer television packages with their service. Content quotas require every channel to air at least three and a half hours per week of Brazilian programming during primetime. Additionally, one-third of all channels included in any TV package have to be Brazilian.

The National Land Reform and Settlement Institute (INCRA) administers the purchase and lease of Brazilian agricultural land by foreigners. Under the applicable rules, set by guidelines published in 2013, the area of agricultural land bought or leased by foreigners cannot account for more than 25 percent of the overall land area in a given municipal district. Additionally, no more than 10 percent of agricultural land in any given municipal district may be owned or leased by foreign nationals from the same country. The rules also make it necessary to obtain congressional approval before large plots of agricultural land can be purchased by foreign nationals, foreign companies, or Brazilian companies with majority foreign shareholding. Draft Law 4059/2012, which would lift the limits on foreign ownership of agricultural land, is expected to be voted on by the Brazilian Congress in 2017. The National Land Reform and Settlement Institute (INCRA) administers the purchase and lease of Brazilian agricultural land by foreigners. Under the applicable rules, the area of agricultural land bought or leased by foreigners cannot account for more than 25 percent of the overall land area in a given municipal district. Additionally, no more than 10 percent of agricultural land in any given municipal district may be owned or leased by foreign nationals from the same country. The rules also make it necessary to obtain congressional approval before large plots of agricultural land can be purchased by foreign nationals, foreign companies, or Brazilian companies with majority foreign shareholding. Draft Law 4059/2012, which would lift the limits on foreign ownership of agricultural land, will be up for vote in the Brazilian Congress in 2017.

Brazil is not a signatory to the World Trade Organization (WTO) Agreement on Government Procurement (GPA). U.S. companies seeking to participate in Brazil’s public sector procurement need to partner with a local firm or have operations in Brazil in order to be eligible for “margins of preference” offered to domestic firms to help these firms win government tenders. Foreign companies are often successful in obtaining subcontracting opportunities with large Brazilian firms that win government contracts. Under trade bloc Mercosul’s Government Procurement Protocol, member nations Brazil, Argentina, Paraguay and Uruguay are entitled to non-discriminatory treatment of government-procured goods, services and public works originating from each other’s’ suppliers and providers. The Protocol has only been ratified by Argentina and thus is not yet in force.

Other Investment Policy Reviews

Brazil rose to become one of the world’s top ten economic powers, and its growth and social welfare policies lifted millions out of poverty, notwithstanding some regression during the current economic downturn. The November 2016 the Organization for Economic Co-operation and Development (OECD) Brazil Economic Forecast Summary noted “The economy is emerging from a severe and protracted recession. Political uncertainty has diminished, consumer and business confidence are rising and investment has strengthened…Inflation will gradually return into the target range.” The OECD projects growth to resume progressively during 2017 due to improvements in confidence and investment. OECD highlights that “a new fiscal rule is being implemented and, in combination with a planned reform of pensions and social benefits, it should strengthen fiscal sustainability.” Additionally, the OECD states that a “credible commitment to containing public expenditures will allow further monetary easing going forward, which should give rise to stronger investment.” The OECD forecast can be found at: .

Business Facilitation

A company must register with the Board of Trade to obtain the National Registry of Legal Entities (CNPJ). Brazil’s Export Promotion and Investment Agency (APEX) has a mandate to facilitate foreign investment. The agency’s services are available to all investors, foreign and domestic. Foreign companies interested in investing in Brazil have access to many benefits and tax incentives granted by the Brazilian government at the municipal, state, and federal levels. Most incentives are granted based on project sector, amount to be invested, and potential job generation. Brazil’s business registration website can be found at:

Outward Investment

Brazil does not restrict domestic investors from investing abroad. In fact, Brazil’s Investment Promotion Agency, Apex-Brasil supports Brazilian companies’ efforts to invest abroad. Apex-Brasil frequently highlights the United States as an excellent destination for outbound investment, and Apex-Brasil and SelectUSA. SelectUSA (the U.S. Government’s investment promotion office at the U.S. Department of Commerce) signed a memorandum of cooperation to promote bilateral investment in February 2014. Apex-Brasil has an “internationalization program” to help companies invest abroad: 

2. Bilateral Investment Agreements and Taxation Treaties

Brazil does not have a Bilateral Investment Treaty (BIT) with the United States. In the 1990s Brazil signed BITs with Belgium and Luxembourg, Chile, Cuba, Denmark, Finland, France, Germany, Italy, the Republic of Korea, the Netherlands, Portugal, Switzerland, the United Kingdom and Venezuela. None of these were ratified by Brazil’s Congress. In 2002, an inter-ministerial working group withdrew the agreements from Congress after determining that treaty provisions on international investor state dispute resolution was unconstitutional and thus the agreements could not be ratified.

The GOB signed seven Cooperation and Facilitation Investment Agreements (CFIAs) since 2015 ( ), which are pending Congressional ratification: Mozambique (April, 2015), Angola (May 2015), Mexico (June 2015) Malawi (October 2015), Colombia (October 2015), Chile (November 2015), and Peru (2016).

The signed CFIAs outline progressive steps for the settlement of any “issue of interest to an investor” including 1) an ombudsmen and a Joint Committee appointed by the two governments will act as mediators to amicably settle any dispute; 2) if amicable settlement fails, any of the two governments may bring the dispute to the attention of the Joint Committee; 3) if the dispute is not settled within the Joint Committee, the two governments may resort to interstate arbitration mechanisms.”

Brazil does not have a double taxation treaty with the United States, but it does have such treaties with 36 other countries, including, Japan, France, Italy, the Netherlands, Canada, Spain, Portugal, and Argentina. Brazil signed a Tax Information Exchange Agreement (TIEA) with the United States in March 2007, which entered into force on May 15, 2013 when President Rousseff signed Decree 8003/2013. In September 2014, Brazil and the United States signed an intergovernmental agreement (IGA) to improve international tax compliance and to implement the Foreign Account Tax Compliance Act (FATCA). This agreement went into effect in September 2015.

3. Legal Regime

Transparency of the Regulatory System

In the 2017 World Bank Doing Business report, Brazil ranked 123th out of 190 countries in terms of overall ease of doing business in 2016, a decline of eight positions compared to the 2015 report. According to the World Bank, it takes approximately 101.5 days to start a business in Sao Paulo. Rio de Janeiro was also profiled in the report. The GOB is seeking to streamline the process and decrease the amount to time it takes to open a business to five days through its RedeSimples Program. Similarly, the GOB reduced red-tape through the implementation of the SIMPLES program, which was designed to simplify the collection of up to eight federal, state, and municipal-level taxes into one single payment.

The 2017 World Bank study noted that the annual administrative burden of tax payments to a medium-size business in Brazil is an average of 2,038 hours versus 163.4 hours in the OECD high-income economies, which marks an improvement for Brazil that corresponded with improvements in other OECD high-income economies over recent years. The total tax rate for a medium-sized business in Rio de Janeiro is 69 percent of profits, compared to the average of 40.9 percent in the OECD high-income economies. Business managers often complain of not understanding tax regulations, despite their investments in creating large local tax and accounting departments in their companies.

Tax regulations, while burdensome and numerous, do not generally differentiate between foreign and domestic firms. However, there are instances of complaints that the value-added tax collected by individual states (ICMS) favors local companies. Although the tax is designed to be refunded when goods are exported abroad, exporters in many states had difficulty receiving their ICMS rebates. Taxes on commercial and financial transactions are particularly burdensome, and businesses complain that these taxes hinder the international competitiveness of Brazilian-made products. In addition, the U.S. government has been evaluating and continues to monitor the impact of PIS/Cofins tax rates on imported goods after the passage of Law 13137/2015.

Of Brazil’s ten federal regulatory agencies, the most prominent include: ANVISA, the Brazilian counterpart to the U.S. Food and Drug Administration, which regulatory authority over the production and marketing of food, drugs, and medical devices; ANATEL, the country’s telecommunications agency, which handles licensing and assigning of bandwidth; ANP, the National Petroleum Agency, which regulates oil and gas contracts and oversees the bidding process for oil blocks, including for pre-salt oil; ANAC, the agency that oversees the civil aviation industry; and ANEEL, the country’s electric energy agency. In addition to these federal regulatory agencies, Brazil has at least 27 state-level agencies and 17 municipal-level agencies.

The Office of the Presidency’s Program for the Strengthening of Institutional Capacity for Management in Regulation (PRO-REG), created in 2007 by Decree 6062, has introduced a broad program for improving Brazil’s regulatory framework, including via an ongoing Work Plan launched in 2014 with the U.S. White House Office of Information and Regulatory Affairs (OIRA) to exchange best practices in developing high quality regulations that mandate the least burdensome approach to address policy implementation. Ex-ante Regulatory Impact Analyses (RIAs) are completed on a voluntary basis by regulatory agencies. A bill on Governance and Accountability for Federal Regulatory Agencies (PL 6621/2016) has been approved by the lower house of Congress and presently awaits Senate approval. Among other provisions, the bill would make RIAs mandatory for regulations which affect “the general interest”. Pro-Reg is drafting enabling legislation for implementing this provision.

The general public has online access to both approved and proposed federal legislation via websites for the Chamber of Deputies, Federal Senate, and the Office of the Presidency. Brazil is seeking to improve its public comment and stakeholder input process. In 2004 the GOB instituted a Transparency Portal, a website in which data is available on funds transferred to and from the federal, state and city governments, as well as to and from foreign countries. It also includes information on civil servants’ salaries.

International Regulatory Considerations

Brazil is a member of Mercosul, and routinely implements Mercosul common regulations.

Brazil is a member of the WTO; the government regularly notifies draft technical regulations, such as on agricultural potential barriers, to the WTO Committee on Technical Barriers to Trade (TBT).

Legal System and Judicial Independence

Brazil has a civil legal system structured around courts at the state and federal level. Contract enforcement can be accomplished either through the court system or via mediation, although both processes can be lengthy. Foreign contract enforcement judgments must be accepted by the Brazilian Superior Court of Justice (STJ) to be considered valid in Brazil, and among other considerations must not contradict any prior decisions by a Brazilian court in the same dispute. Commercial disputes are regulated under the Brazilian Civil Code, enacted in 2002, although an older, largely superseded Commercial Code remains applicable solely for commercial cases involving maritime law. Federal judges hear most disputes in which one of the parties is the Brazilian State, and also rule on lawsuits between a foreign state or international organization and a municipality or a person residing in Brazil.

The judicial system is generally independent and frequently rules on politically sensitive issues. Judges at both the state and federal level are largely career officials selected through a meritocratic examination process. The judicial system is extremely backlogged, however, and disputes or trials of any sort frequently require years to arrive at a final resolution, including all available appeals. Regulations and enforcement actions can be litigated in the court system, which contains mechanisms for appeal depending upon the level at which the case is filed. The Supreme Federal Court (STF) is the ultimate court of appeal on constitutional grounds; the STJ is the ultimate court of appeal for cases not involving constitutional issues.

Laws and Regulations on Foreign Direct Investment

Foreigners investing in Brazil must register their investment with the BCB within 30 days of the inflow of resources to Brazil. Registration is done electronically. Investments involving royalties and technology transfer must be registered with Brazil’s patent office, the National Institute of Industrial Property (INPI). Investors must also have a local representative in Brazil. Portfolio investors must have a Brazilian financial administrator and register with the Brazilian Securities Exchange Commission (CVM).

Competition and Anti-Trust Laws

Regulatory review of mergers and acquisitions are carried out by the Administrative Council for Economic Defense (CADE). In October 2012, Brazil performed its first review of a pending merger, bringing Brazil in line with U.S. and European practices. This shift to pre-merger review was a result of 2011 legislation (Law 12529) adopted to modernize Brazil’s antitrust review process and to combine the antitrust functions of the Ministry of Justice and the Ministry of Finance into CADE. This government body is responsible for enforcement of competition laws and consumer defense.

Expropriation and Compensation

Article 5 of the Brazilian constitution assures the property rights of both Brazilians and foreigners that live in Brazil. The Constitution does not address nationalization or expropriation. Brazilian Law does allow the government to exercise eminent domain under certain criteria which include, but are not limited to, national security, public transportation, safety, health, and urbanization projects. Owners are compensated in cash. The rules for eminent domain are laid out in Decree-Law 3365 from 1941, as amended.

There are no known expropriation actions in Brazil against foreign interests in the recent past, nor have there been any signs that the current government is contemplating such actions. Some claims regarding land expropriations by state agencies were judged by Brazilian courts in U.S. citizens’ favor; however, compensation has not always been paid, as states have filed appeals to these decisions.

Dispute Settlement

ICSID Convention and New York Convention

Brazil ratified the 1958 Convention on the Recognition and Enforcement of Foreign Arbitration Awards. Brazil is not a member of the World Bank’s International Center for the Settlement of Investment Disputes (ICSID). Brazil joined the United Nations Commission on International Trade Law (UNCITRAL) in 2010, and its membership will expire in 2022.

Investor-State Dispute Settlement

Article 34 the 1996 Brazilian Arbitration Act (Law 9307) defines a foreign arbitration judgment as any judgment rendered outside the national territory. The law established that the Brazilian Federal Supreme Court must ratify foreign arbitration awards. Law 9307 also stipulates that the foreign arbitration award is to be recognized or executed in Brazil in conformity with the international agreements ratified by the country and, in their absence, with domestic law. A 2001 Brazilian Federal Supreme Court ruling established that the 1996 Brazilian Arbitration Act, permitting international arbitration subject to Federal Supreme Court ratification of arbitration decisions, does not violate the Federal Constitution’s provision that “the law shall not exclude any injury or threat to a right from the consideration of the Judicial Power.”

Contract disputes in Brazil can be lengthy and complex. Brazil has both a federal and a state court system, and jurisprudence is based on civil law. Federal judges hear most disputes in which one of the parties is the State, and rule on lawsuits between a foreign State or international organization and a municipality or a person residing in Brazil. Five regional federal courts hear appeals of federal judges’ decisions. The 2017 World Bank Doing Business report found that on average it takes 11 procedures and 731 days to litigate a contract breach.

International Commercial Arbitration and Foreign Courts

Brazil ratified the 1975 Inter-American Convention on International Commercial Arbitration (Panama Convention) and the 1979 Inter-American Convention on Extraterritorial Validity of Foreign Judgments and Arbitration Awards (Montevideo Convention). Law 9307/1996 pertains to advanced legislation on arbitration and anchored in what is most modern about the principles and guarantees of litigants. The GOB developed a new Cooperation and Facilitation Investment Agreement (CFIA) model in 2015 ( internacionais/bilaterais/2015 ) that does not include investor state dispute settlement mechanisms. (See section 13)

Bankruptcy Regulations

Brazil has a commercial code that governs most aspects of commercial association, except for corporations formed for the provision of professional services, which are governed by the civil code. In 2005, bankruptcy legislation (Law 11101) went into effect creating a system modeled on Chapter 11 of the U.S. bankruptcy code, which allows a company in financial trouble to negotiate a restructuring with its creditors outside of the courts. In the event a company does fail despite restructuring efforts, the reforms improved creditors’ ability to recover their debts. In the World Bank’s 2017 Doing Business Report, Brazil is ranked 67th out of 190 countries for ease of “resolving insolvency.”

4. Industrial Policies

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.

5. Protection of Property Rights

Real Property

Brazil has a system in place for mortgage registration, but implementation is uneven and there is no standardized contract. Foreign individuals or foreign-owned companies can purchase real property in Brazil. These buyers frequently arrange alternative financing in their own countries, where rates may be more attractive. Law 9514 from 1997 helped spur the mortgage industry by establishing a legal framework for a secondary market in mortgages and streamlining the foreclosure process, but the mortgage market in Brazil is still underdeveloped, and foreigners may have difficulty obtaining mortgage financing. Large U.S. real estate firms, nonetheless, are expanding their portfolios in Brazil.

Intellectual Property Rights

Rights holders in Brazil continue to face intellectual property rights (IPR) challenges. Brazil has remained on the “Watch List” of the U.S. Trade Representative’s Special 301 report since 2007. For more information, please see: 

For additional information about treaty obligations and points of contact at local IP offices, please see WIPO’s country profiles at: 

Resources for Rights Holders

Shannon Brink
U.S. Embassy Brasilia Economic Officer
+55 61 3312-7000

Laura Hammel
U.S. Mission Brazil IP Attache
+55 21 3823-2000

6. Financial Sector

Capital Markets and Portfolio Investment

The Central Bank of Brazil (BCB) embarked in October 2016 on what appears to be a sustained monetary easing cycle, lowering the Selic baseline reference rate from a high of 14.25 percent in October 2016 to 11.25 percent in April 2017. Inflation fell to 6.3 percent by year-end 2016 and is now on course to undershoot the 4.5 percent inflation central target set for 2017-2018, allowing for further monetary policy easing. Financial analysts assert a reduction in the BCB’s target for inflation to four percent in 2019-21 is a growing probability. Because of a heavy public debt burden and other structural factors, the neutral real policy rate will remain higher than those of Brazil’s emerging-market peers (around five percent) over the forecast period.

After a boom in 2004-2012 that more than doubled the lending/GDP ratio (to 55 percent of GDP), the financial services sector was hit hard by the recession and higher interest rates. In real terms, lending turned negative, declining by nearly three percent in December 2016, a slide that would have been worse had it not been for lending by the public banks. This reduced the lending/GDP ratio to 49.3 percent at end-2016. Financial analysts contend that credit will pick up again in the medium term, owing to interest-rate easing and economic recovery.

The role of the state in credit markets grew since 2008, with public banks now accounting for over 55 percent of total loans to the private sector (up from 35 percent). Directed lending (that is, to meet mandated sectoral targets) as a share of the total also rose and accounts for almost half of the total. The GOB is paring back lending by public banks and trying to develop more of a market for long-term private capital.

While local private sector banks are beginning to offer longer credit terms, state-owned development bank BNDES is a traditional Brazilian source of long-term credit, and also provides export credits. BNDES’ lending in 2016 reached its lowest level in 20 years. While some of this reflected a reduction in disbursements due to the Car Wash corruption scandal, at least half reflects a new limited focus in BNDES lending. (For more information on BNDES’ lending programs please see investment incentives section.)

All stock trading is performed on the Sao Paulo Stock Exchange (BOVESPA), while trading of public securities is conducted on the Rio de Janeiro market. In 2008, the Brazilian Mercantile & Futures Exchange (BM&F) merged with the BOVESPA to form what is now the fourth largest exchange in the Western Hemisphere, after the NYSE, NASDAQ, and Canadian TSX Group exchanges. BOVESPA launched in 2000 a “New Market” in which the listed companies comply with stricter corporate governance requirements. A majority of initial public offerings (IPOs) are listed on the New Market. At year-end 2016, there were 129 companies listed under the “New Market” program. Their market value reached USD 185 billion in 2016. At year-end, there were 338 companies traded on the BM&F/BOVESPA. Total daily trading average volume increased from R 6.1 billion (USD 1.8 billion) in 2015 to R 6.6 billion (USD 1.9 billion) in 2016.

Foreign investors, both institutions and individuals, can directly invest in equities, securities and derivatives. Foreign investors are limited to trading derivatives and stocks of publicly held companies on established markets. At year-end 2016, foreign investors accounted for 52 percent of the total turnover on the BOVESPA. Domestic institutional investors were the second most active market participants, accounting for 25 percent of activity. Individual investors comprised 17 percent of activity, followed by financial institutions (five percent), and public and private companies (one percent).

Wholly owned subsidiaries of multinational accounting firms, including the major U.S. firms, are present in Brazil. Auditors are personally liable for the accuracy of accounting statements prepared for banks.

Money and Banking System

The Brazilian financial sector is large and sophisticated. Banks lend at Brazilian market rates, which remain high. Reasons cited by industry observers include high taxation, repayment risk, and concern over inconsistent judicial enforcement of contracts, high mandatory reserve requirements, and administrative overhead, as well as persistently high real (net of inflation) interest rates.

The financial sector is concentrated, with BCB data indicating that the four largest commercial banks (excluding brokerages) account for approximately 72 percent of the commercial banking sector assets. Three of the five largest banks (in assets) in the country – Banco do Brasil, Caixa Economica Federal, and BNDES – are partially or completely federally owned. Lending by the large banking institutions is focused on the largest companies, while small- and medium-sized banks primarily serve small- and medium-sized companies.

The BCB strengthened bank audits, implemented more stringent internal control requirements, and tightened capital adequacy rules to better reflect risk. It also established loan classification and provisioning requirements. These measures are applied to private and publicly owned banks alike. The Brazilian Securities and Exchange Commission (CVM) independently regulates the stock exchanges, brokers, distributors, pension funds, mutual funds, and leasing companies with penalties against insider trading.

Foreign Exchange and Remittances

Foreign Exchange

Brazil’s foreign exchange market remains small, despite recent growth. The latest Triennial Survey by the Bank for International Settlements, conducted in April 2016, showed that the net daily turnover on Brazil’s market for OTC foreign exchange transactions (spot transactions, outright forwards, foreign-exchange swaps, currency swaps and currency options) was USD19.7 billion, up from USD17.2 billion in 2013. This was equivalent to around 0.3 percent of the global market in both years.

Brazil’s banking system is adequately capitalized and has traditionally been highly profitable, reflecting high interest rates and fees. In September 2016 all banks exceeded the solvency ratios of 4.5 percent of common equity capital, 6.5 percent of Tier 1 capital and 11 percent of total capital, a comfortable buffer.

There are few restrictions on converting or transferring funds associated with a foreign investment in Brazil. Foreign investors may freely convert Brazilian currency in the unified foreign exchange market where buy-sell rates are determined by market forces. All foreign exchange transactions, including identifying data, must be reported to the BCB. Foreign exchange transactions on the current account are fully liberalized.

All incoming foreign loans must be approved by the BCB. In most cases, loans are automatically approved unless loan costs are determined to be “not compatible with normal market conditions and practices.” In such cases, the BCB may request additional information regarding the transaction. Loans obtained abroad do not require advance approval by the BCB, provided the Brazilian recipient is not a government entity. Loans to government entities require prior approval from the Brazilian Senate as well as from the Finance Ministry’s Treasury Secretariat, and must be registered with the BCB.

Interest and amortization payments specified in a loan contract can be made without additional approval from the BCB. Early payments can also be made without additional approvals, if the contract includes a provision for them. Otherwise, early payment requires notification to the BCB to ensure accurate records of Brazil’s stock of debt.

In March 2014, the Federal Revenue Service of Brazil consolidated the regulations on withholding taxes (IRRF) applicable to earnings and capital gains realized by individuals and legal entities resident or domiciled outside Brazil. The regulation states that the cost of acquisition must be calculated in Brazilian reais. Also, the “technical services” definition was broadened to include administrative support and consulting services rendered by individuals (employees or not) or resulting from automated structures having clear technological content.

Upon registering their investments with the BCB, foreign investors are able to remit dividends, capital (including capital gains), and, if applicable, royalties. Remittances must also be registered with the BCB. Dividends cannot exceed corporate profits. The remittance transaction may be carried out at any bank by documenting the source of the transaction (evidence of profit or sale of assets) and showing that applicable taxes have been paid.

Remittance Policies

Under Law 13259/2016 passed in March 2016, capital gain remittances are subject to a 15-22.5 percent income withholding tax, with the exception of the capital gains and interest payments on tax-exempt domestically issued Brazilian bonds. The tax rate is determined by capital gains: up to USD 1.5 million is taxed at 15 percent; USD 1.5 million to USD 2.9 million is taxed at 17.5 percent; USD 2.9 million to USD 8.9 million is taxed at 20 percent; and more than USD 8.9 million is taxed at 22.5 percent.

Repatriation of a foreign investor’s initial investment is also exempt from income tax under Law 4131/1962. Lease payments are assessed a 15 percent withholding tax. Remittances related to technology transfers are not subject to the tax on credit, foreign exchange, and insurance, although they are subject to a 15 percent withholding tax and an extra 10 percent CIDE (Contribution for Intervening in Economic Domain) tax.

Sovereign Wealth Funds

The Sovereign Fund of Brazil (FSB) was established in 2008 under Law 11887. It is a non-commodity fund with a mandate to support national companies in their export activities and to offset counter-cyclical development, promoting investment in projects of strategic interest to Brazil both domestically and abroad. The GOB also has the authority to use money from this fund to help meet its fiscal targets when annual revenues are lower than expected, and to invest in state-owned companies. The FSB was worth USD 2.2 billion in 2016. FSB resources are derived from GOB financial revenues.

7. State-Owned Enterprises

The GOB maintains ownership interests in a variety of enterprises at both the federal and state levels. Typically, state-owned enterprise (SOE) corporate governance is led by a board comprised of directors elected by the state or federal government with additional directors elected by any non-government shareholders. Although Brazil, a non-OECD member, has participated in many OECD working groups, it does not follow the OECD Guidelines on Corporate Governance of SOEs. Brazilian SOEs are concentrated in the energy, electricity generation and distribution, transportation, and banking sectors. A number of these firms are also publically traded on the Brazilian and other stock exchanges.

In the 1990s and early 2000s, the GOB privatized state-owned enterprises across a broad spectrum of industries, including mining, steel, aeronautics, banking, energy, and electricity generation and distribution. While the GOB has divested itself from many of its state-owned companies, it maintains partial control (at both the federal and state level) of some previously wholly state-owned enterprises.

Notable examples of majority government owned and controlled firms include national oil and gas giant Petrobras and power conglomerate Eletrobras. Both Petrobras and Eletrobras include non-government shareholders, are listed on both the Brazilian and NYSE stock exchanges, and are subject to the same accounting and audit regulations as all publicly traded Brazilian companies. Brazil previously restricted foreign investment in offshore oil and gas development through 2010 legislation that obligated Petrobras to serve as the sole operator and minimum 30 percent investor in any oil and gas exploration and production in Brazil’s offshore “pre-salt” fields. As a result of the GOB’s desire to increase foreign investment in Brazil’s offshore “pre-salt” hydrocarbon sector, in October 2016 the Brazilian Congress passed a bill that gives Petrobras right-of-first refusal in developing “pre-salt” offshore fields, allows foreign companies to serve as sole operators in “pre-salt” exploration and production activities, and eliminates Petrobras’ obligation to serve as a minority equity holder in “pre-salt” oil and gas operations.

Privatization Program

Given limited public investment funding, the GOB focused on transferring billions of dollars in state –owned airport, road, railway, and port assets to private investors through long term (up to 30 year) infrastructure concession agreements(public-private partnership – PPPs). These privatizations are carried out through public tenders Both domestic and foreign private companies are invited to participate in the privatization auctions.

In June 2016, Brazil launched its newest version of these efforts to promote PPPs for primary infrastructure. The Crescer Investment Partnerships Project (PPI), based in the Presidency, brings together the broad inter-agency to ensure consistency in the request for tenders and the contract awards. PPI covers federal concessions in road, rail, ports, airports, municipal water treatment, electricity transmission and distribution, and oil and gas exploration and production contracts. The estimated value of the concessions is USD 44.2 billion (using minimal tender values). The full list of PPI projects is located here: .

While some subsidized financing through the Brazilian National Development Bank (BNDES) will be available, PPI emphasized that bidders should also use private financing and debentures on these projects. All federal and state-level infrastructure concessions are open to foreign companies with no requirement to work with Brazilian partners.

8. Responsible Business Conduct

Most state-owned and private sector corporations of any significant size in Brazil pursue corporate social responsibility (CSR) activities. Brazil’s new CFIAs (see section on bilateral investment agreements) contain CSR provisions. Some corporations use CSR programs to meet local content requirements, particularly in IT technology manufacturing. Many corporations support local education, health and other programs in the communities where they have a presence. Brazilian consumers, especially the local citizenry where a corporation has or is planning a local presence, expect CSR activity. It is not uncommon for corporate officials to meet with community members prior to building a new plant or factory to review what types of local services the corporation will commit to providing. Foreign and local enterprises in Brazil often advance United Nations Development Program (UNDP) Millennium Development Goals (MDGs) as part of their CSR activity, and will cite their local contributions to MDGs, such as universal primary education and environmental sustainability.

The U.S. diplomatic mission in Brazil supports U.S. business CSR activities through the +Unidos Group (Mais Unidos), a group of more than 100 U.S. companies established in Brazil. Additional information on how the partnership supports public and private alliances in Brazil can be found on its website: .

9. Corruption

Brazil has laws, regulations and penalties to combat corruption, but their effectiveness is inconsistent. Several bills to revise the country’s regulation of the lobbying/government relations industry are pending before Congress. Bribery is illegal, and a bribe by a local company to a foreign official can result in criminal penalties for individuals and administrative penalties, including fines and potential disqualification from government contracts, for companies. A company cannot deduct a bribe to a foreign official from its taxes. While federal government authorities generally investigate allegations of corruption, there are inconsistencies in the level of enforcement among individual states. Corruption is reported to be problematic in business dealings with some authorities, particularly at the municipal level. U.S. companies operating in Brazil are subject to the U.S. Foreign Corrupt Practices Act (FCPA).

In 2016, Brazil dropped from 76th (in 2015) to 79th out of 176 countries in Transparency International’s Corruption Perceptions Index. The full report can be found at: 

Since 2014, the criminal investigation, “Operation Carwash” (Lava Jato), uncovered a complex web of public sector corruption, contract fraud, money laundering, and tax evasion stemming from systematic overcharging for government contracts, particularly at parastatal oil company Petrobras. The ongoing investigation led to the arrests of Petrobras executives, oil industry suppliers including executives from Brazil’s largest construction companies, money launderers, former politicians, and political party operatives. Many sitting Brazilian politicians are currently under investigation.

In December 2016, Brazilian construction conglomerate Odebrecht and its chemical manufacturing arm Braskem agreed to pay a penalty and plead guilty to charges filed in the United States, Brazil, and Switzerland that alleged the companies paid hundreds of millions of dollars in bribes to government officials around the world. The U.S. Department of Justice case stemmed directly from the Lava Jato investigation and focused on violations of the anti-bribery provisions of the Foreign Corrupt Practices Act (FCPA). Details on the case can be found here: .

In 2015, GOB prosecutors also announced “Operation Zealots” (Operacao Zelotes), in which both domestic and foreign firms are alleged to have bribed tax officials to reduce their assessments.

UN Anticorruption Convention, OECD Convention on Combatting Bribery

Brazil is a signatory to the OECD Anti-Bribery Convention and a participating member of the OECD Working Group on bribery. It was one of the founders, along with the United States, of the intergovernmental Open Government Partnership, which seeks to help governments increase transparency.

Resources to Report Corruption

Georgia Diogo
International Affairs Advisor
Brazilian Federal Public Ministry

Transparencia Brasil
R. Bela Cintra, 409; Sao Paulo, Brasil
+55 (11) 3259-6986 

10. Political and Security Environment

Strikes and demonstrations occur occasionally in urban areas and may cause temporary disruption to public transportation. Occasional port strikes also impact commerce.

In 2016, over three million people demonstrated to call for President Dilma Rousseff’s impeachment and protest against corruption, among the largest public protests in Brazil’s history. At the same time, almost one million people demonstrated in support of the Rousseff administration. Non-violent pro- and anti-government demonstrations have occurred regularly over the past few years.

Although U.S. citizens have traditionally not been targeted during such events, U.S. citizens traveling or residing in Brazil are advised to take common-sense precautions and avoid any large gatherings or any other event where crowds have congregated to demonstrate or protest. For the latest U.S. State Department guidance on travel in Brazil, please consult

11. Labor Policies and Practices

Brazil ratified a number of International Labor Organization (ILO) conventions. Brazil is party to the UN Convention on the Rights of the Child and major ILO conventions concerning the prohibition of child labor, forced labor, and discrimination.

In Brazil’s labor code, formal sector workers are guaranteed 30 days of annual leave and severance pay in the case of dismissal without cause. Brazilian employers are required to pay a “thirteenth month” salary to employees at the end of the year. Brazil also has a system of labor courts that are charged with resolving routine cases involving unfair dismissal, working conditions, salary disputes, and other grievances. Labor courts have the power to impose an agreement on employers and unions if negotiations break down and either side appeals to the court system. As a result, labor courts are routinely called upon to determine wages and working conditions in industries across the country. The system is tantamount to compulsory arbitration and does not encourage collective bargaining. In recent years, however, both labor and management became more flexible, and collective bargaining assumed greater relevance.

The Ministry of Labor estimates there are nearly 11,000 labor unions in Brazil, but officials note these figures are inexact. Labor unions, especially in sectors such as metalworking and banking, tend to be well-organized and aggressive in advocating for wages and working conditions and account for approximately 19 percent of the official workforce according to a recent Brazilian Institute of Applied Economic Research (IBGE) release. Strikes occur periodically, particularly among public sector unions. Unions in various sectors engage in industry-wide collective bargaining negotiations mandated by federal regulation. While some labor organizations and their leadership operate independently of the government and of political parties, others are considered to be closely associated with political parties.

Employer federations, supported by mandatory fees based on payroll, play a significant role in both public policy and labor relations. Each state has its own federation, which reports to the National Confederation of Industry (CNI), headquartered in Brasilia, and the National Confederation of Commerce (CNC), headquartered in Rio de Janeiro.

12. OPIC and Other Investment Insurance Programs

Programs of the Overseas Private Investment Corporation (OPIC) are fully available. Brazil has been a member of the Multilateral Investment Guarantee Agency (MIGA) since 1992.

13. Foreign Direct Investment and Foreign Portfolio Investment Statistics

Table 2: Key Macroeconomic Data, U.S. FDI in Host Country/Economy

Host Country Statistical Source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
Economic Data Year Amount Year Amount
Host Country Gross Domestic Product (GDP) ($M USD) 2016 $1,799,436 2015 $1,774,700

Foreign Direct Investment Host Country Statistical source USG or International Statistical Source USG or International Source of Data:
BEA; IMF; Eurostat; UNCTAD, Other
U.S. FDI in partner country ($M USD, stock positions) 2014 $111,714* 2015 $65,272** BEA data available at
U.S. is Historical-Cost Basis
Host country’s FDI in the United States ($M USD, stock positions) 2015 $9,606* 2015 $23,660** BEA data available at
Total inbound stock of FDI as % host GDP 2015 26% N/A N/A IMF CDIS 2015 total inbound investment

*In this year’s report, we are using latest BCB “Historical-Cost Basis” statistics for this chart.

**There is a discrepancy between BCB and IMF calculations for U.S. FDI distribution in Brazil, as well as Brazilian FDI distribution in the United States. According to the BCB, the United States had the highest stock of FDI in Brazil as of 2014.
Table 3: Sources and Destination of FDI

Direct Investment from/in Counterpart Economy Data

(IMF Coordinated Direct Investment Survey, 2015)

From Top Five Sources/To Top Five Destinations (US Dollars, Millions)
Inward Direct Investment Outward Direct Investment
Total Inward 460,381 100% Total Outward 145,043 100%
Netherlands 110,210 24% Cayman Islands 52,456 36%
United States* 82,125 18% Austria 30,937 21%
Spain 57,426 12% Brit Virgin Islands 24,523 17%
Luxembourg 34,732 8% The Bahamas 20,730 14%
United Kingdom 23,213 5% Spain 11,403 8%
“0” reflects amounts rounded to +/- USD 500,000.

*There is a discrepancy between BCB and IMF calculations for U.S. FDI distribution in Brazil, as well as Brazilian FDI distribution in the United States. According to the BCB, the United States had the highest stock of FDI in Brazil as of 2014. The BCB calculates FDI distribution by ultimate investing country (for which the United States ranks number one), whereas the IMF calculates FDI distribution by immediate investing country (for which the Netherlands ranks number one). The differences between “immediate” and “ultimate investing country” measures of FDI likely reflect the use by both U.S. and Brazilian multinational corporations of 3rd country affiliates as investment vehicles in order to minimize their consolidated tax liabilities.
Table 4: Sources of Portfolio Investment

Portfolio Investment Assets (IMF Coordinated Portfolio Investment Survey, June 2016)
Top Five Partners (Millions, US Dollars)
Total Equity Securities Total Debt Securities
All Countries 23,595 100% All Countries 71,816 100% All Countries 5,779 100%
United States 10,316 44% United States 6,936 39% United States 3,380 58%
Cayman Islands 2,604 11% Cayman Islands 2,481 13% Spain 713 12%
Spain 1,685 7% Bermuda 1,502 8% Denmark 650 11%
Bermuda 1,503 6% Luxembourg 1,105 6% Republic of Korea 487 8%
Luxembourg 1,135 5% Spain 972 5% Cayman Islands 123 2%

14. Contact for More Information

Economic Section
U.S. Embassy Brasilia

Investment Climate Statements
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