6 relevant topics for companies and entrepreneurs in Brazil in 2020
With the prospects of falling local interest rates and an improvement in the country’s business environment, it is natural to expect that 2020 will be marked by stronger signs of economic recovery in Brazil. Preparations for the country’s accession to the Organization for Economic Cooperation and Development (OECD) within the next 2 to 5 years also indicate a greater potential for long-term economic growth, with a series of legal and regulatory adjustments expected to take place during this period.
With these scenarios in mind, we have selected 6 themes that we believe to be relevant for companies and entrepreneurs in Brazil in 2020.
1 – Economic Freedom: with the conversion of the Provisional Measure No. 881 (Medida Provisória da Liberdade Econômica) into Law No. 13.874 at the end of September 2019, we expect to see throughout this year the emergence of trends in the interpretation of the courts in relation to the introduction of more restrictive criteria for disregarding legal entities and enforcing shareholders’ private assets due to company debts.
2 – Corporate Governance: the Brazilian Securities and Exchange Commission (Comissão de Valores Mobiliários – CVM) is expected to review the rules that determine the information presented in the Reference Form (Formulário de Referência) by publicly-held companies and other entities at least on an annual basis. The objective of this review is to streamline the documents involved, thus reducing the volume of information presented and simplifying the understanding of such information by investors and the general public.
3 – Risk Management: as of August 2020, individuals and companies that work with personal data that allow the identification of the people behind that data must comply with the General Data Protection Law (Lei Geral de Proteção de Dados – LGPD). The new law shall apply to individuals and companies that are domiciled in Brazil; that operate with personal data that belong to Brazilian citizens; and to foreign companies and individuals that want to operate with personal data in Brazil.
4 – Compliance: once the process of Brazil’s accession to the OECD is underway, we can expect the introduction of government measures to require, among others, stricter anti-money laundering controls by companies in compliance with the organization’s recommendations.
5 – Tax Reform: with a potential change in indirect and dividend taxation in Brazil, we expect that a number of organizations will need to review their business models and sources of funding for their operations and investment activities.
6 – Exporters: with the recent rise of the US dollar-Brazilian real exchange rate, and the resulting increase in export revenues and investment needs, revisiting business models in Brazil to reduce the accumulation of state value-added tax (ICMS) and federal welfare taxes (PIS / COFINS) credits on inputs is always in order.