Understanding Brazilian bureaucracy

In the literal sense of the word, as characterized by the German sociologist Max Weber, bureaucracy is not inherently bad. Classically, bureaucracy represents a particular way of organizing activities, in order to prevent prejudice or paternalism: the rules are clear and must be followed objectively. In other words, bureaucracy would simply represent an even playing field, defined by processes that are designed so that there is accountability and transparency in the relationship between private entities and public authorities. 

The reality, however, is that, for the vast majority of entrepreneurs, the term bureaucracy represents the image of an unstable, swampy terrain on which initiatives commonly bog down – and, with that, investments are put at risk. This leads us, in general, to something uncomfortable – such as, for example, the excess of paperwork that we need to provide when we want to start a business. Notoriously, Brazil is one of the most bureaucratic countries in the world, and this is directly reflected in the business environment.

Bureaucratic dysfunctions negatively impact the lives of companies and individuals. To learn more about Brazilian bureaucracy, read on.

Um desafio que vem sendo combatido

Há um dado que é emblemático para ilustrar o tamanho real do nó burocrático a que as empresas estão submetidas no brasil, que sua estimativa total de custo. Estudos recentes permitem estimar que, somente para empresas de pequeno e médio portes, a burocracia custa anualmente cerca de US $15 bilhões. Estima-se ainda, que se os procedimentos e atrasos fossem reduzidos à metade no Brasil, a renda per capita no longo prazo seria até 25% maior.

There are, however, important signs of improvement. New rules have enabled a significant reduction in opening times – between 2019 and 2021, this reduction was 46%, according to data from the Brazilian government. Today, the average time to open a new company is 2 days and 13 hours, a stark contrast to the scenario a few years ago, when it was common for the process of opening a new registration with the CNPJ to take up to two months.

The federal program SPED – Public Digital Bookkeeping System, for instance, allowed the reorganization of ancillary tax obligations. Currently, a single reporting format is used by all Brazilian states to report the calculation of ICMS, the value-added tax owed to state governments.

There is still a long way to go towards reducing bureaucracy. Brazilian companies still spend, on average, 1,500 hours a year to comply with tax obligations, according to data from the World Bank. It is expected that the tax reforms, which are currently underway in the Brazilian Congress, will provide a significant reduction in this indicator.

It is important to emphasize, however, that the Brazilian bureaucracy is not invincible. Every day, thousands of companies operate within this environment, providing good results for their stakeholders, and ensuring participation in one of the largest consumer markets in the world.

The secret of success in Brazil

The best way to circumnavigate the entire Brazilian bureaucracy, notably, is to have specialists who effectively know the intricacies of the regulatory frameworks and legislation currently in force in the country.

With about five new tax rules per day, this is not a trivial task. It is the continuous technical training and the attentive look to the movements of the federal and state legislative bodies, combined with the experience in the Brazilian market, that allow us to operate in the country with total compliance and security.

To guarantee a privileged position in the Brazilian oil and gas exploration and refining market, count on Gescon’s specialists. Our multidisciplinary team of executives is ready to meet all your needs, from prospecting for new business in Brazil, to the total administration of your operations in our country.

To ensure the viability of your operations in the Brazilian business environment, you need a local partner you can count on.

Gescon has high-performance human capital, with extensive experience in conducting business in Brazil. From prospecting for new investment opportunities to corporate structuring, going through all phases of legalizing the operations of international companies in Brazil, our professionals are in constant evolution and learning, and are ready to assist you in establishing and managing your business in our country. 

Access our website, and request the contact of one of our executives right now.