Guidance

Overseas business risk: Brazil

Updated 2 June 2023

Information on key security and political risks which UK businesses may face when operating in Brazil.

The Department for Business and Trade’s (DBT) Exporting to Brazil is an essential read to help you avoid some of the common pitfalls businesses can face in Brazil.

1. Political and economic

The Federal Republic of Brazil is divided into 26 states and 1 federal district. The National Congress is made up of the Federal Senate and the Chamber of Deputies. Fifty years ago Brazil transitioned from a military dictatorship into a democracy which sought to restore civil rights. Brazil holds elections for 4-year terms by popular vote which is compulsory for those between 18 and 70 years of age, and voluntary between 16 and 18 and over 70. The current President Luiz Inácio Lula da Silva was elected for his third non-consecutive term in office on 1 January 2023.

The UK’s relationship with Brazil encompasses economic, trade, climate and security objectives. Our presence in Brazil consists of an Embassy in Brasilia and Consulates in Rio de Janeiro, Sao Paulo, Recife and Belo Horizonte.

1.1 Politics

President Luiz Inácio Lula da Silva, widely known as Lula, was elected for his third non-consecutive term in office on 1 January 2023. President Lula also led the country between 2003 and 2010. The President is both Head of State and Government. He holds executive power and appoints the Council of Ministers. The President and Vice-president are elected by universal suffrage for a four-year term, with the possibility of re-election for a second successive term.

The legislative power is bicameral. The National Congress is made up of two houses: the Senate (upper house) and the Chamber of Deputies (lower house). The Senate is comprised of 81 members (three members for each of the 26 states and the Federal District of Brasília), each elected on a majority basis for eight-year terms, with one-third and two-thirds of the membership elected alternatively every four years. The Chamber of Deputies is comprised of 513 members, with seats allocated according to proportional representation, elected every four years for a four-year term. There are also legislatures and administrations at the state level in each of Brazil’s 26 states and in the Federal District. About two dozen political parties are represented in the Brazilian National Congress. Parties typically group together to form coalition governments. However, politicians often change parties, which has led to weak party discipline.

1.2 Economic overview

Brazil’s economy is the 12th largest in the world and the biggest in Latin America, with a GDP (nominal) of US$1.9 trillion and a population of 213 million in 2022. The country is a founding member of the Mercosul trading bloc, alongside Argentina, Paraguay and Uruguay.

After suffering one of its worst recessions in history between 2015 and 2016, the country grew at a low rate (approx. 1.5% annually) before suffering another recession caused by the pandemic. Economic activity contracted by 3.3% in 2020. The economy came out of recession in 2021 after 5% growth in 2021 and 2.9% in 2022. Despite this, Brazil is still suffering from high unemployment and poverty rates, which have been exacerbated by inflation.

Inflation reached 10% in 2021 and 5.8% in 2022. The pandemic and supply chain constraints were key factors, with fuel and food & drink having the most prominent price spikes. Internal factors such as electricity prices and a depreciated exchange rate also played a role. In 2022, food & drink items were the main driver for inflation when fuel prices eased after government intervention. Inflation is forecasted at 6% for 2023. Because of this, the Central Bank of Brazil lifted its benchmark interest rate from a historical low of 2% in mid-2020 to 13.75% in 2022 and is expected to support higher rates for the next couple of years.

Among the underlying strengths of the economy are abundant natural resources, substantial external reserves, and a large middle class population. Brazil has an economy with a strong domestic services sector, representing 60% of GDP in 2021. Industry accounts for 19% of GDP and agricultural production about 7%.

The pre-pandemic economic agenda focused on controlling government spending and improving the business environment to boost private investment. Important reforms approved included the spending cap (2016), labour reform (2017), a social security overhaul (2019) and Central Bank autonomy (2021). The new government has promised to deliver a widely request tax reform before the end of 2023.

Brazilian goods exports reached US $334 billion in 2022. In order of value: soya beans, crude oil, iron ore, fuel, corn and beef. The top 4 purchasers of Brazilian exports were China (27%), the USA (11%), Argentina (5%), and the Netherlands (4%). Brazilian imports were US$ 272 billion in 2022, in order of value: fertilisers, fuel, transformation industry goods, thermionic valves and tubes, inorganic compounds, crude oil and medicines. The top 4 exporters to Brazil were China (22%), the USA (19%), Argentina (5%,) and Germany (4.7%).

Brazil was ranked 124th on the World Bank’s Ease of Doing Business Index for 2020 which noted that Brazil had made the process of starting a business and registering property easier, but still faces challenges on several indicators, especially in paying taxes and dealing with construction permits.

Brazil formally applied for membership of the OECD in 2017 under Temer’s administration. On 25 January 2022, Brazil received the formal invitation to start the accession process.

2. Human rights

Brazil has a strong legal framework that protects human rights. Nonetheless, the enforcement of this framework is inconsistent across the country.

Brazil is a constitutional, multiparty republic. Freedom House rates it as a free country. However, Brazil is still marked by deep economic and social inequalities and human rights abuses. Resources dedicated to human rights have been consistently cut. The proximity between public and private interests can hinder the effectiveness and reach of human rights policies.

Brazil does not have a National Plan for Business and Human Rights yet. However, there are ongoing cross-government efforts, led by the Brazilian Ministry of Human Rights, to structure a plan. Brazil also has national guidelines for business and human rights that are not compulsory, but are suggestions for companies (public and private).

Brazil has a national contact point for the Organisation for Economic Cooperation and Development (OECD) guidelines for multinational enterprises that is responsible for increasing the effectiveness of the guidelines through contributing to the resolution of issues, the promotion of the guidelines in country and handling enquiries. The commitment from public and private companies to observe international human rights standards and promote diversity in corporations is increasing.

In the 2022 Freedom House assessment of Political Rights and Civil Liberties, Brazil scored 73 (0=worst; 100=Best). It ranked 110th out of 180 countries in the 2022 World Press Freedom Index. The World Economic Forum in 2019 ranked Brazil’s health system 75th and its primary education 77th out of 141 countries.

Brazil ranks 142nd out of 167 countries in the 2018 Modern Slavery Prevalence Index Rank. Concerns about working conditions analogous to slavery have increased in the past few years especially due to higher levels of immigration. This report estimates that 369,000 Brazilians are still subject to such conditions. In 2021, Brazil found 1,937 people in a situation of contemporary slavery, the highest number since the 2,808 workers rescued in 2013, according to information released by the Ministry of Labour and Welfare. In 2021, law enforcement performed 443 rescuing operations.

Brazil was ranked as a Tier 2 Country on the Trafficking in Persons ranking(PDF,21MB) in 2022 due to not fully meeting the minimum standards for the elimination of trafficking. They demonstrated significant efforts in areas such as investigating and prosecuting more traffickers and issuing regular updates to its public registry of slave labour offenders, but did not meet the minimum standard in other areas.

Brazil ranked 89th out of 189 countries on the 2018 United Nations (UN) Gender Inequality Index. Domestic violence is an area of particular concern. According to Amnesty International, lethal violence against women has increased by 24% since 2006, while the World Health Organization (WHO) states that in Brazil the femicide rate is of 4.8 for every 100 thousand women. While the ‘Maria da Penha’ Law (2006) helps protect women who suffer from violence at home, the number of women and children unassisted by the justice system is still high. Another recent development in the gender rights agenda in Brazil was the recognition of the crime of femicide under the Constitution. This established harsher sentences for homicides of women and girls. According to The World Bank, the probability of femicides more than doubled in Brazil during pandemic lockdowns. Throughout 2020, 1,350 cases of femicide were recorded in the country. In 2021, according to the Public Security Forum, the death rate from femicide was 1.22 deaths per 100,000 women.

Additionally, regarding protection of indigenous people and protection of the environment, Brazil has been making progress related to tackling illegal gold mining. Gold tracking is significant for the protection of indigenous peoples and for trade linked to the sector, and traceability is a mechanism to certify the origin of the metal and prevent illegal gold from entering the formal market. The Government will make a change to require digital proof of origin, ensuring greater security in the process.

3. Bribery and corruption

Bribery is illegal. It is an offence for British nationals or someone who is ordinarily resident in the UK, a body incorporated in the UK or a Scottish partnership, to bribe anywhere in the world. In addition, a commercial organisation with a business in the UK can be liable for the conduct of a person who is neither a UK national or resident in the UK or a body incorporated or formed in the UK. In this case it does not matter whether the acts or omissions which form part of the offence take place in the UK or elsewhere.

Brazil is among the world’s leading investment destinations. However, despite a formally well-functioning business environment, corruption and bribery are still serious obstacles to doing business in Brazil.

Brazil has a wide range of regulatory agencies due to the federal structure of the political system, which may increase the likelihood of demands for bribes by public officials. The Brazilian tax system is complex and reportedly prone to corruption.

In business dealings with the government at both federal and local levels, corruption represents a serious problem. In 2022, Brazil was scored 38 (out of 100 – 100 being very clean, 0 being very corrupt) in the Transparency International’s corruption perception index (CPI).

Despite the challenging scenario (and partly driven by it), there have been important signs of improvement in combating corruption in the past years. Brazil has passed 3 laws to improve combating corruption: the Brazilian Transparency Law (2009), the Brazilian Freedom of Information Law (2011) and the Brazilian Anti-Corruption Law (2013) – based on the UK Bribery Act. The laws are currently being implemented at federal, state and municipal level, and the UK has supported this movement.

However, in recent years, Congress has passed laws reducing accountability for federal budget decisions and increasing impunity for public improbity, according to Transparency International. In 2021, the OECD Working Group on Bribery created a monitoring subgroup to assess Brazil’s implementation of the OECD Anti-Bribery Convention.

The anti-corruption investigation known as Car Wash was one of the most high-profile efforts to counter corruption in Brazil. The operation resulted in the return of £8.8 billion to government accounts, with more than 207 people arrested including an incumbent Senator, former President, and the head of Brazil’s biggest construction company. However, the operation has been subject to controversy more recently following claims of biased investigations against President Lula, who was freed from jail after the Supreme Court decided he was sentenced at the wrong venue and his judge was biased, even though appeal courts endorsed the convictions.

The market perception of corruption is changing as the risk of illegal activities is beginning to be seen to outweigh the potential benefits. The compliance sector, for example, remains underdeveloped and is expected to grow by 30% to 50% in coming years based on increased demand in the past 2 years. Implementation of anti-corruption standards will be considered as part of Brazil’s accession process to the OECD.

Although local labour law is complex and onerous and requires careful handling to avoid incurring potentially expensive liabilities, there is a well-developed system of HR managers and lawyers that can offer expert advice on how best to manage employment. This is again another area where UK businesses should consider, in most cases, engaging a local partner when establishing interests in Brazil.

Read the information provided on our bribery and corruption page.

4. Terrorism threat

Terrorism is not a significant threat in Brazil. The threat against any foreign interests in Brazil is still considered to be low.

The FCDO travel advice for Brazil is regularly updated and should be your primary source of information on the security situation and organised crime in Brazil.

5. Protective security advice

Robbery, mugging and street violence are not uncommon in Brazil. The risks vary widely between cities and between districts in each city. Care should be taken not to advertise wealth or vulnerability. Local advice should be sought on when and where it is safe to travel. Given these sensible precautions, most visitors do not encounter problems.

Brazil has introduced specific legislation for cybercrimes and has a National Cybersecurity Strategy. In 2021 they formally ascended to the Budapest Convention on Cybercrime in 2021. Despite these legal and legislative mechanisms, implementation still needs to be developed and Brazil continues to be an international hotspot for cybercrime, especially when it comes to ransomware attacks, banking trojans, and data theft.

The Government and its public access sites and the private sector, face increasing hacking activities. Investment in technology to tackle this risk is already being made – from legislation to law enforcement.

The Brazilian Congress is currently debating legislation aimed at regulating social media. Draft law 2630 aims to combat the spread of disinformation on social media and would require tech companies to take steps to identify and remove illegal content from their platforms. It would also impose fines on companies that fail to comply with the law.

Also more up to date information on protective security in Brazil is available in the FCDO travel advice for Brazil.

Read the information provided on our protective security advice page.

6. Intellectual property

Intellectual property (IP) rights are territorial which means they only give protection in the countries where they are granted or registered. If you are thinking about trading in Brazil, then you should consider registering your IP rights (where necessary) before you enter the market. The Intellectual Property Office (IPO) has an online guide to protecting your IP in Brazil.

If you are considering entering the market or if you have any questions or issues around IP in Brazil, the UK IPO has an attaché in Brazil, who will be able to advise you as to the working of the system and how best to protect your rights. As a UK government employee, the IP attaché cannot offer specific legal advice but is a useful first point of contact. Find out more about the IP attaché network.

Without adequate IP protection, a company trading in Brazil can very quickly lose its place in the market and find it very difficult to trade. Crucially important is that you protect new and existing technologies where necessary by having adequate patent protection and trademark registration. Both of these are dealt with by Indústria Nacional de Propriedade Industrial (INPI), the Brazilian IP Office based in Rio de Janeiro.

While Brazil’s trade mark, patent, industrial designs and copyright systems are compliant with the World Trade Organisation (WTO) treaty on IP (named TRIPS), and despite INPI´s efforts to tackle the backlogs, there are still significant delays in processing patents. Depending on the technology field, these can be up to 12 years. The legal system for dealing with IP claims can often be slow but experience is growing and courts are fair, but slow. The IP attaché can advise as to the current delays and help mitigate risks in the meantime.

It is advisable to ensure your IP rights are protected by engaging a local IP lawyer, and to contact the IP attaché for advice at the earliest possibility. It is far easier and cheaper to prevent problems by preparing correctly as opposed to dealing with legal issues that arise from a dispute.

Also, read the information provided on our intellectual property page.

7. Organised crime

Organised crime remains a significant problem in many parts of Brazil, particularly along the largely uncontrolled land border areas, in Brazil’s major cities and around the country’s numerous deep water international sea ports.

Organised crime groups are principally linked to drug trafficking and control of the flow of Andean cocaine into and from Brazil. The country has the world’s second largest domestic cocaine market after the United States and the world’s largest domestic crack cocaine market. This can lead to fierce competition for control between rival factions. Organised crime groups are often heavily armed, particularly in Rio de Janeiro and Sao Paulo.

Illegal organisations connected to drug trafficking are strongly linked to piracy and financing through counterfeit products.

Organised crime is also present in the society’s high-income strata. Illegal activities range from government procurement manipulation to cargo theft.

Read the information provided on our organised crime page.

8. UK Export Finance

The government can provide finance or credit insurance specifically to support UK exports through UK Export Finance – the UK’s export credit agency. The UKEF offer is available to both exporters and their customers in Brazil to help make the UK’s offer more attractive in both the public and private sector. For up to date country specific information on the support available see the UK Export Finance’s country cover policy and indicators.

9. Department for Trade contact

Contact the Department for Business and Trade team in Brazil for queries and see our guide on exporting to Brazil.

10. Useful Links

For more information about Brazil read the British Embassy or UK help and services in Brazilweb pages.

See also:

• Department for Business and Trade
• Business Exports