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ALL ABOUT… The de-bureaucratization law in Brazil

If you’re leading a business in Brazil, you probably know that the country is considered as one of the most bureaucratic ones in the world. Indeed, procedures such as opening […]

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ALL ABOUT… The de-bureaucratization law in Brazil

Posted 2020-08-28

If you’re leading a business in Brazil, you probably know that the country is considered as one of the most bureaucratic ones in the world. Indeed, procedures such as opening companies, buying or selling properties, registering acts, adopting legal measures and recognizing documents are just a few actions that require a large amount of paperwork.

Thus, the formality required by public bodies is so great that it sometimes ends up making procedures difficult and leading many people, who were previously interested, to give up the act.

In order to alleviate this situation, reduce hassles and speed up procedures, a new law was passed in Brazil that aims to “de-bureaucratize” entrepreneurship in the country.

Prior to the passing of this law called MP 881/2019, startups and small and medium-sized enterprises (SMEs) had to undergo a complex and time-consuming process to register their company.

You’re planning to start a new business in Brazil and need advice to grasp all the benefits of this de-bureaucratization law  ? Feel free to contact our team of experts on the brazilian labour market.

The brazilian de-bureaucratization law :  context & principle

The new legislation aims to increase entrepreneurship in the country by simplifying the processes necessary to start a company.

The obvious benefit for entrepreneurs is that there will be less paperwork, and fewer overhead costs with the new law. Significantly, new companies considered as ‘low risk’ companies will not have to apply for permits before starting business.

Even when permits are required, a “freedom-to-remain-unanswered” policy now exists. In other words, if a permit application receives no answer within a certain time frame, it will automatically mean approval.

Reduction of administrative formalities

This law provides for a series of changes with respect to the documentation required by notaries and in the scope of administrative procedures. 

According to legal provisions, public bodies belonging to all spheres of government have a duty to no longer demand:

  • Signature recognition;
  • Document copy authentication;
  • Birth certificate – which can be replaced by an identity card, work card etc;
  • Voter registration – except in cases of registration of candidacy and when the citizen votes;
  • Notarized authorization in the case of a minor child who is traveling – on the condition that both parents are present at the airport on the day of departure and consent to the fact.

In addition, with the advent of the new legal diploma, the method of checking the veracity of a signature, the recognition of the authenticity of copies of documents becomes the responsibility of public bodies, and no longer the parties that were responsible for signing the deal. or were requesting the service.

Likewise, public bodies are not authorized to require that documents and certificates that have been issued by other institutions of the same power be presented, except for a criminal record certificate and information regarding legal entities.

By reducing the permits and legislation required, the Federal Constitution will now have to trust in the good faith of the entrepreneur.

Before the vote of the de-bureaucratization law, with the innumerous previous conditions and licenses the companies were obligated to fulfill before starting its activities, the companies were obliged to prove that everything was “perfect” before starting anything.

This constituted, in the fast-paced world of startups, a solid restraint for many Brazilian companies. Now, for example, a budding restaurant owner just needs to adhere to existing health and food regulation laws, without having to prove that this is the case before being able to start selling food.

Any question about the new de-bureaucratization law ? Need administrative or financial support to set-up and launch a new business here in Brazil ? Our customer advisors will deal with you personally and give you exactly the right advice for your needs.

Author's post: Europartner Accounting

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