Subchapters:
- Basic data
- Public finances and the state budget
- Banking system
- Tax System
Basic data
The year 2021 brought an economic growth of 4.8% in the BFR, which can be evaluated as a recovery of its economy.
The GDP growth forecasts for 2022 were drawn up before the outbreak of the conflict in Ukraine and before the onset of raw material and energy problems in Europe. The development of the global situation at the time of the closing of this STI shows that the BFR will benefit significantly from the loss of competitiveness of European countries and from investors’ concerns. For example, the American bank Goldman Sachs now recommends investing in Brazil, and the American company Franklin Templeton also now recommends Brazil as a very suitable destination for foreign investments. In the case of Brazil, especially its commodities are now attractive. Almost 35% of current foreign investments are directed to the mining industry, around 18% to agriculture and 12% to oil and gas extraction. Check ebizdir for economical facts of Brazil.
BFR mainly exports raw materials and foodstuffs: iron ore, petroleum products, cellulose, corn, soy, chicken, beef and sugar.
It mainly imports: industrial products, artificial fertilizers, chemical products, pipes and valves, telecommunications equipment, car parts and cars.
| Pointer | 2019 | 2020 | 2021 | 2022 | 2023 |
| GDP growth (%) | 1.4 | -4.4 | 4.8 | 2.5 | 1.6 |
| GDP/population (USD/PPP) | 15,683.40 | 14,925.70 | 16,030.00 | 16,630.00 | 17,200.0 |
| Inflation (%) | 3.7 | 3.2 | 10 | 7.6 | 4.4 |
| Unemployment (%) | 11.1 | 14.2 | 12.7 | 11.5 | 10.5 |
| Export of goods (billion USD) | 225.4 | 209.8 | 280.4 | 301.5 | 313.8 |
| Import of goods (billion USD) | 177.4 | 158.9 | 219.4 | 241.6 | 259 |
| Trade Balance (Billion USD) | 40.5 | 32.4 | 61 | 32.1 | 24.9 |
| Industrial production (% change) | -1.2 | -7 | 4.2 | 0.5 | 2 |
| Population (millions) | 210.2 | 211.8 | 214.4 | 214.8 | 216.3 |
| Competitiveness | 59/63 | 56/63 | 57/64 | ON | ON |
| OECD export risk | 05.VII | 05.VII | 05.VII | ON | ON |
Source: EIU, OECD, IMD
Public finance and state budget
| Public finance | 2021 |
| State budget balance (% of GDP) | -4.5 |
| Public debt (% of GDP) | 81.1 |
| Current account balance (billion USD) | -28.1 |
| Taxes | 2022 |
| AFTER | 15% |
| F.O | Progressive according to income from 7.5% up to 27.5% |
| VAT | Between 17% to 19%, luxury goods 25% |
The deficit of the BFR state budget for 2021 in the amount of 4.5% of GDP does not represent a threat to the stability of the Brazilian economy, and compared to the situation in the EU and the USA, it can be stated that this is a sustainable situation. The deficit in 2022 will be slightly higher due to the elections in late 2021 and associated populist spending. However, even in 2022, analysts do not expect an alarming development of the BFR state budget deficit.
According to the EIU, the BFR’s foreign debt was USD 136 billion in 2021.
Foreign exchange reserves: $326 billion
FDI 2021: USD 58 billion
Banking system
The banking system is regulated by Act No. 4595/1964. Among the main institutions that have a key influence on the functioning of the banking system are: The Central Bank of Brazil (Banco Central do Brasil), which is tied to the Ministry of Finance and is the executive body implementing the policies set by the Monetary Policy Committee. The Committee for Monetary Policy (Comitê de Política Monetária – COPOM) sets the so-called basic interest rate of the SELIC economy, is responsible for issuing currency, determines the conditions for the operation of the central bank, determines the basic characteristics of banknotes and coins, determines guidelines and norms regarding exchange rates and coordinates national monetary policy with the government’s investment policy; its president is the Minister of Finance. The Commission for Capital Values (Comissão de Valores Mobiliários) is subordinate to the Ministry of Finance and its basic task is the regulation and supervision of the capital market. The Bank of Brazil (Banco do Brasil) is a commercial bank in which the federation holds a majority stake. Apart from its commercial activities, it is also responsible for implementing the credit and monetary policy of the federal government under the supervision of the Monetary Policy Committee. The National Bank for Economic and Social Development (Banco Nacional de Desenvolvimento Econômico e Social – BNDES) is the main instrument for implementing the federal government’s investment policy. The federal state owns the following commercial banks: Banco do Brasil SA, Banco do Nordeste do Brasil SA, Banco do Amazônia SA, Banco Meridional do Brasil SA, Banco Regional de Brasilia. Individual states own their commercial banks, operating only in their territories. The main commercial banks according to the balance sheet amount are: Itaú Unibanco, Banco do Brasil, Caixa Econômica Federal (CEF), Banco Bradesco, Santander Banespa, ABN Amro and Safra. Important foreign banks operating in Brazil include Banco Santander, ABN Amro, HSBC, Citibank, Credit Suisse, JP Morgan Chase, BNP Paribas, Deutsche Bank and others. The main insurance companies include Porto Seguro, AGF Brasil Seguros, Braseg, Paulista Seguros, Itaú Seguros, Paglimar and Marítima Seguros.
As of the closing date of this STI, the Brazilian Central Bank set the base monetary policy rate (SELIC) at 11.75%.
Tax system
The tax system is divided between taxes, regulatory fees, administrative fees, fees from state contracts and social contributions. It is in constant flux and annually sees adjustments at all its levels.
We recommend that every Czech company that wants to export to the BFR or invest there seek professional tax advice. ZÚ Brasília and GK Sao Paulo can help in finding the advisor in question.
Basic taxes collected in Brazil according to the level of government: the tax is collected by the union: Import – Imposto de Importação (II), Export – Imposto de Exportação (IE), From income – Imposto de Renda (IR), From industrial products – Imposto sobre Produtos Industrializados (IPI), From financial operations – Imposto sobre Operações Financeiras (IOF), From the ownership of agricultural land – Imposto sobre Propriedade Territorial Rural (ITR) tax is collected by the states of the federation and the Federal District: Inheritance and donation – Imposto sobre Transmissão Causa Mortis e Doações (ITCD ), From the circulation of goods and services – Imposto Sobre Circulação de Mercadorias e Serviços (ICMS), From the ownership of motor vehicles – Imposto sobre a Propriedade de Veículos Automotores (IPVA) tax is collected by municipalities and the Federal District: Land – Imposto Predial Territorial Urbano (IPTU),From the transfer of immovable property – Imposto sobre Transmissão de Bens Imóveis (ITBI), From services (except those subject to ICMS) – Imposto sobre Serviços (ISS) Collection of contributions of a social nature at Union level the contribution is collected by the union: Contribution to the financing of social security (COFINS).Contribution from net profit (CSLL), Temporary contribution from the circulation of funds (CPMF), Social security contribution (collected from self-employed income).Contribution from net profit (CSLL), Temporary contribution from the circulation of funds (CPMF), Social security contribution (collected from self-employed income).
The current government has promised reform with the aim of simplifying the tax system and thereby opening up the market more. However, this reform has not yet been implemented.
