Yes, you read that correctly. The process for forming a company in Brazil (at least in São Paulo) has changed. And according to authorities, the change is for the better. It is aimed at speeding up the formation and registration process of new companies.
Last Monday, lawyers, accountants and service companies were all taken by surprise when the commercial registry in São Paulo (JUCESP) issued this notice. In the past, companies would first file with the commercial registry to get their company registration number. Then, they would file for their tax identification number with the federal tax authorities. And finally, they would file for their state registration. But according to the news release, these three filings will now happen simultaneously and all registrations will be handled by JUCESP.
A process that generally takes between two weeks and two months is now scheduled to be completed in just one week. This is great news for foreign investors who are considering forming a company in Brazil.
In its 2013 Doing Business Report, the World Bank ranked Brazil as 121st out of 185 countries when it comes to the ease of starting a business. The World Bank estimates the process will take approximately 119 days and involve 13 steps. Yet Mexico, Brazil’s largest rival for foreign investment in Latin American, ranks 36th with registration taking just 9 days.
In meeting with potential investors, I frequently hear them complain about the time it takes to get their business up and running in Brazil. Many tell me that they would prefer to invest in Mexico and Colombia, countries that are actively pursuing ways to help ease the process for foreigners doing business abroad.
While it is still unclear whether the authorities in São Paulo will be able to keep to their promise of company formation in just seven days, one thing is clear. This change is a sign that the Brazilian government has finally gotten the message. The country with the 6th largest economy in the world cannot be one of the most difficult for doing business.
Forming a company in Brazil must be straightforward and fast. Hopefully the changes announced this week will do just that. Growing the Brazilian economy means making it easy for foreign investors to invest.
