In 2024, Brazil attracted an impressive amount of foreign direct investment, reaching US$71.07 billion. This amount is 13.8% higher than the $62.442 billion received in 2023, consolidating Brazil as a leading destination for FDI globally.
Brazil has demonstrated exceptional performance thanks to several factors that make it an attractive destination for investors worldwide. With more than 210 million inhabitants, the country offers a vast domestic market. In addition, its diverse economy and strategic location facilitate access to other South American markets.
The Brazilian government has implemented initiatives to foster a favorable environment for foreign investment. In October 2024, a platform to attract investment in sustainable development projects was launched, highlighting private initiatives valued at US$8 billion to triple this portfolio in one year. This platform, coordinated by the National Bank for Economic and Social Development (BNDES), certifies sustainable aviation fuels, green hydrogen, and reforestation projects, seeking to mobilize international private and multilateral capital.
Investing in Brazil presents challenges that investors must consider. A complicated tax system, red tape, and strict labor laws can pose difficulties. Fortunately, the government is working to address these problems. For example, they have introduced electronic certificates of origin to streamline import paperwork, making the process easier and faster.
In addition, the government has launched initiatives to improve the business climate and attract investment. These include simplifying business start-ups, protecting minority investors, and facilitating trade with other countries. A National Credit Guarantee System for small and medium-sized companies has been announced, as has a new industrial policy called Nova Industrial Brasil, with targets until 2033 to boost competitiveness. It also seeks to reduce red tape in the tourism sector. Investing in infrastructure and technology is key to supporting business growth.
Labor force
The Brazilian labor force is a valuable asset that is very attractive to foreign investors due to its qualifications in key sectors, competitive cost compared to developed countries, strategic location for expansion in Latin America, and capacity for innovation.
Attractive sectors for FDI
The most attractive sectors for foreign investment in Brazil are financial services (especially fintech), oil and gas (for its vast resources), the automotive industry (key economic pillar), renewable energy (energy transition), agriculture and agribusiness (world leader), technology (dynamic, especially fintech), tourism (growing with government support) and infrastructure (roads, ports, airports, railroads).
Brazil has implemented a series of tax incentives designed to attract foreign investors. First, those operating in less developed regions can benefit from up to 75% tax reductions, in addition to other federal, state, and municipal benefits. For small businesses, there is the Simples Nacional, a system that simplifies tax management by allowing almost all taxes to be unified in a single monthly payment, reducing the tax burden.
Tax Incentives
Foreign capital entering the country as foreign direct investment is not taxed, although inter-company loans may be subject to a specific tax. The Ex Tariff regime facilitates the importation of capital goods and technology with reduced or zero tariffs, thus promoting innovation and competitiveness in particular sectors.
On the other hand, the Reintegra Program encourages the export of products manufactured in Brazil, benefiting companies seeking to expand their presence in the international market. Finally, Provisional Measure 1,137/2022 expands tax benefits for non-resident investors, including a zero tax rate for certain financial investments, thus facilitating access to investment in the country. All these incentives aim to improve the business environment and attract a greater flow of foreign investment to Brazil.
If you are considering investing in Brazil, Englobally has the experience and the necessary team to advise you on incorporating the type of company that best suits your needs. In addition, we accompany you in everything important, from paying your taxes to accounting and payroll administration, giving you full support for your business.