Navigating the Challenges—and Opportunities—of Doing Business in Brazil

Brazil presents significant commercial opportunities for international companies, drawing attention from businesses seeking to expand their global presence. However, entering the Brazilian market is not without its challenges, as it comes with a host of structural and regulatory complexities that can be daunting for newcomers. A key concept shaping the business environment in Brazil is the Custo Brasil (Brazil Cost), which encapsulates the various economic burdens that companies face, including high taxes, extensive bureaucracy, and pervasive legal uncertainty. These factors combine to create a unique landscape that requires careful navigation.  

Despite ongoing reforms aimed at improving the business climate—such as the 2021 Business Environment Law, which seeks to streamline processes, updated transfer pricing rules set to be implemented in 2024, and a significant tax overhaul anticipated from 2026 onward—Brazil continues to present a challenging terrain for foreign enterprises. Companies must contend with a fragmented tax system that varies widely across different states and municipalities, which can complicate compliance and financial planning. Additionally, non-tariff barriers such as mismatches in product standards can create obstacles for foreign goods entering the market. Logistical bottlenecks, particularly in transportation and customs, can further slow imports and inflate operational costs, making it essential for businesses to develop robust strategies to mitigate these issues. 

Public procurement in Brazil also presents high-value opportunities for international firms, particularly in sectors like infrastructure, healthcare, and technology. However, the procurement landscape often favors local companies, making it crucial for foreign entrants to establish strong local partnerships. Collaborating with Brazilian firms not only enhances credibility but also increases the chances of success in competitive bidding processes. Fortunately, foreign companies can still thrive in Brazil by adopting a strategic approach to market entry that emphasizes local engagement and adaptation:

1. Supply Chain Integration: Engaging Brazilian suppliers can help diversify sourcing strategies and enable companies to leverage various export incentives offered by the government. By building relationships with local suppliers, businesses can also gain insights into regional market dynamics and consumer preferences, which can be invaluable for tailoring products and services to meet local demands. 

2. Market Penetration through Local Partnerships: Collaborating with local distributors, agents, and forming joint ventures can significantly help foreign companies overcome regulatory barriers and access regional demand more effectively. These partnerships can facilitate a deeper understanding of the local market, enabling companies to navigate the complexities of Brazilian consumer behavior and regulatory requirements more adeptly. 

3. Selling to the Public Sector: By partnering with established local firms, foreign companies can enhance their eligibility in competitive public tenders. Local partners often possess the necessary knowledge and connections to navigate the public procurement landscape, increasing the likelihood of securing lucrative contracts in various sectors. 

How TA Consulting Can Help

At TA Consulting, we specialize in helping international companies enter the Brazilian market. Our team possesses in-depth knowledge of local regulatory environments, supplier networks, and public procurement dynamics, enabling us to help you mitigate risk and establish the right relationships essential for success. Whether your focus is on sourcing materials, selling products, or seeking public contracts, our experienced professionals will guide you through every step of the process—from partner identification and market analysis to ensuring regulatory compliance. We are dedicated to providing a smoother and more strategic market entry for your business, enabling you to capitalize on the vast opportunities that Brazil has to offer.