Brazil Olympic Report

Major Sporting Events in Brazil
Business Opportunities and the Legal Framework

Brazil, particularly Rio de Janeiro, has been chosen to host several major global sporting events: the 2011 Military World Games; the 2013 FIFA Confederations Cup; the 2014 FIFA World Cup; and the 2016 Olympic and Paralympic Games. This special IBA report looks at the tens of billions of dollars in investment and business opportunities for stadiums, transportation, urban renewal and associated infrastructure, together with the relevant legal framework and likely special regimes.
Important notice to readers The information contained in this booklet has been collected form various sources and is believed in good faith to be correct at the time of writing. However, readers are advised that the laws, regulations, tax rates and all other items contained or mentioned in this booklet are subject to change without notice. Descriptions of laws, regulations, tax rates and other levies are brief introductory summaries that do not include or mention all cases or circumstances. Also, many of the sporting, infrastructure and similar projects described or mentioned in this booklet are still at the planning stage and may not go ahead, or may do so in a different manner to that described here. The inclusion or mention of a proposed sporting or infrastructure project or any other kind of business activity cannot be taken to in any way imply that it does or may constitute a good investment or business opportunity, or even that such an opportunity does or may exist. Readers should undertake their own complete research and evaluation of the sporting or infrastructure projects and business activities mentioned herein before taking any decisions with respect to any form of involvement. The International Bar Association, its employees and all others involved in the preparation of this booklet, including but not limited to researchers, writers, contributors and editors, will not accept responsibility for financial or other consequences of any decision made by any individual or company that may have been partially or totally based on the contents of this booklet.
How do you say business conflict resolution in Brazil? ICDR.

The Brazilian economy has been growing at an unprecedented rate. And considering the increased possibilities from the World Cup and Olympics, its easy to see why more and more businesses are thinking about or currently working in Brazil. Doing business in fast-growing economieswhether its in energy, construction, licensing and distributorships or tourisminevitably requires known and trusted dispute resolution options. For years, the International Centre for Dispute Resolution (ICDR) has resolved business disputes in Brazil on matters as varied as technology, energy, employment, real estate and more. The ICDR panel of arbitratorsinternational and Brazilian experts in their fieldsalong with the ICDR International Arbitration and Mediation Rules are not only well known, but frequently relied upon in Brazil. For effective and familiar international dispute resolution, as well as assistance with contract clause drafting or designing conflict management strategies in Brazil, contact Luis Martinez at MartinezL@adr.org, or visit www.icdr.org.
Contents
1 Brazil wins World Cup and Olympics after years of hard training 4
International presence in Brazil
What Brazil needs from the world
The World Cup and the Olympic Games: events, stadiums and directly associated investments
11
World Cup and Olympics: the gold rush
28
Key points of Brazilian law
32
International experience: shortening the learning curve
51
Acronyms and useful contacts
56
Doing business in Brazil first steps
59
For more information on how to advertise in future updates of this publication, contact: Andrew Webster-Dunn, advertising@int-bar.org.
1. Brazil wins World Cup and Olympics after years of hard training
Its almost as if Brazil was awarded the World Cup and the Olympics for good behaviour. The two major competitions are widely seen and trumpeted by local politicians as international recognition that the country has somehow come of age. While neither competition constitutes an official endorsement of economic policy, its unlikely that Brazil would have been able to mount credible bids, in particular for the Olympics, without the substantial progress of the last couple of decades. Together, the two competitions involve around US$5 billion of directly related expenditure and several times that in associated infrastructure, plus complex planning and execution of stadiums and other projects to a rigid timetable, meaning that the host country must be able to demonstrate convincingly that it can make the necessary preparations and foot the bills. Proof of Brazils economic reliability could be seen during the recent global financial and economic crises. These impacted the country less severely than most of the world, and also much less than numerous international crises of the past. In some ways the country today gives every impression of being stronger and better placed than before as if the turbulence actually did it good. Business is booming and even the most staid of international media appears excited: For the Country of the Future, Its Finally Tomorrow the Wall Street Journal said, while The Economist went with Getting it together at last. Brazil used to be all promise. Now it is beginning to deliver. Success rarely happens overnight. For Brazil, it has been the result of at least two decades of institution building and policy improvement, with much remaining to be done. A good place to start is the end of military government in 1985. Generals who ruled since a 1964 coup dtat left a mixed legacy:
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some rapid industrialisation and iconic infrastructure like the 13km Rio-Niteroi bridge and the Itaipu hydropower dam the worlds largest until China built Three Gorges. But they also left behind an economy shut off from foreign competition, suffocating under state control and saddled with huge foreign debts. The first years of civilian rule were vibrant for the reawakening democracy, but problematic for the economy. Inflation gathered speed and peaked at almost 3,000 per cent a year in 1993. Then the mid-1994 introduction of a new currency dubbed the Real finally ended the chaos. However, todays good times are anchored in much more than just currency stabilisation. Key reforms included privatisation of steel, mining, power distribution and telecommunications. A business phoneline in So Paulo used to cost US$1,000 or more from the state phone company with a waiting list of up to two years or US$5,000 off the shelf via the parallel market. After a decade of private investment, fixed lines go begging. Perhaps the most important privatisation was of the numerous state banks that used to be a back door for politicians to overspend, particularly in election years. Today these are virtually all gone, sold off or closed. This went hand in hand with a tough fiscal responsibility law that requires the President, state governors and city mayors to present proper annual budgets showing the origin and destination of funds, and then to stick within these limits. It also sets borrowing limits for states and municipalities. The fiscal responsibility law is perhaps the most important piece of legislation passed in this country to make the Brazilian Federation efficient and moral, with real prospects of serving the nation for coming generations, wrote leading Brazilian tax lawyer and professor Ives Gandra da Silva
Major Sporting EvEntS in Brazil BusIness OPPORTunITIes And The LeGAL FRAMeWORk
Martins when the law was enacted in 2000. In May 2010 Brazils Finance Minister Guido Mantega heralded the law as, a benchmark in the history of the Brazilian state, and, the first step towards sustainability of Brazils public accounts. A decade earlier, however, Mantega was a senior economic advisor to the Workers Party (PT) that voted against the fiscal responsibility law in Congress. His change of heart illustrated another key reason that Brazil is so well placed today the PTs conversion to economic orthodoxy.
exports have boomed. Brazil is now the worlds largest supplier of coffee, sugar, chicken meat, beef and orange juice, and a top-five producer of soy, iron, tin and cotton, although in some recent years the countrys single largest exporter has been Embraer, the regional jet maker. Strong exports and the inward flood of foreign investment helped push foreign reserves over US$200 billion, and all three major international ratings agencies now class the countrys bonds as investment grade.
A blessed inheritance Many of Brazils basic economic and institutional reforms were put in place during the 1995-2003 administration, headed by President Fernando Henrique Cardoso of the Social Democracy Party (PSDB), and were opposed tooth and nail by the PT, then in opposition. Through 2002, as PT founder Luiz Incio Lula da Silva appeared destined for success in his fourth bid to win the presidency, many sectors of the Brazilian economy went into panic. In the seven months prior to polling, the Bovespa stock index fell by over 40 per cent, and the Real currency dropped 36 per cent against the US dollar. Country risk hit 2,433 basis points and the IMF stepped in with a US$30 billion stand-by loan. Investor jitters were understandable. Until recently the PT had pushed an openly anti-business agenda, for example backing a plebiscite to renege on the countrys foreign debt. But shortly before the election campaign the PT rebranded itself with a broadly social democrat platform. Once elected, Lula as he is generally called gave the market the strongest possible message that economic policy would remain conservative when he named Henrique Meirelles, former global president of BankBoston (now part of Bank of America) to run the Central Bank with virtually full autonomy. Inflation targeting, vilified by the PT when in opposition, has remained a cornerstone of monetary policy, along with the free-floating exchange rate. More radical PT supporters were shocked and some quit the party, but it was a watershed signal that Brazil would stick to the economic straight and narrow. Stability led to growth, and Lula accelerated existing programmes to promote income redistribution. Many foreigners might still see Brazil as a place of shocking inequality a society where the rich fly over shanty towns as they helicopter to business meetings or weekend beach retreats but there has been progress. The minimum monthly wage is now the equivalent of almost US$300, compared with just over US$100 in the mid-nineties. Grass-roots income supplement programmes have been expanded, often tied to social policies like a requirement to have children vaccinated and keep them in school. Consistent primary budget surpluses (before interest) have helped reduce the public debt, while
Major Sporting EvEntS in Brazil
When the city of Rio de Janeiro was chosen to host the 2016 Olympic Games, and to be one of the host cities of the 2014 FIFA World Cup, all Brazilians were ecstatic. Hosting both these major events within less than two years is a terrific opportunity, one that will require a lot of focus, determination and hard work. I have no doubt that Rio will do a great job in preparing for the 2016 Olympics and the 2014 World Cup, and that each of them will be remembered for decades to come as well-organized, peaceful and fun events. Rio is committed to make the very best of this phenomenal situation, which presents the former capital of Brazil with the opportunity to not only remodel its infrastructure, but also showcase this vibrant and beautiful city to a global audience. Additionally, it is a unique occasion to show the world the profound and positive transformations that Brazil has undergone in recent years, resulting in a modern, diverse and democratic society. Ricardo C Veirano Veirano Advogados
How Brazil shrugged off the crisis Thanks to the good economic management since the mid-nineties, Brazil faced the looming international crisis with a bulging piggy bank and its house more or less in order. There was no real estate bubble of the likes seen in Europe and the United States, no massive overhang of consumer debt, and Brazilian banks had relatively low leverage. Exposure to toxic assets was virtually zero. As the international turmoil grew into a tsunami, Lula initially declared Brazil would feel at most a little ripple. When the crisis finally did hit Brazil at the end
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BusIness OPPORTunITIes And The LeGAL FRAMeWORk
of 2008 it was to be sharper than in most of the richer countries, but also much shorter. Private credit vanished overnight, car sales collapsed and export sectors, particularly mining, cancelled investment projects and started layoffs. But the government quickly pumped in money for vehicle purchase, exports, company working capital and the like. Darkest gloom and utter despondency lasted from maybe Christmas 2008 to the pre-Lenten of Carnival 2009, which is normally a slack period anyway. Within months the economy was bouncing back. It ended 2009 with a contraction of just 0.2 per cent, compared with world, euro zone and US average contractions of -0.6 per cent, -4.1 per cent and -2.4 per cent respectively, according to the International Monetary Fund (IMF). One of the great ironies is that Brazil was able to respond rapidly to the crisis because it still had major state-run banks that implement governmentrun programmes exactly the institutions that many foreign experts had been urging the country to get rid of. Export credit and long-term business finance comes from the Brazilian Development Bank (BNDES), while housing, agricultural and small business credit flows from the Banco do Brasil and Caixa Economica. This meant that the government had levers it could pull quickly and precisely. With most businesses now booming again, there is a palpable confidence in Braslia that significant government involvement in the economy has proven its worth. This crisis was provoked and made worse by the irrational behaviour of some white, blue-eyed people, who before the crisis looked like they knew everything about economics, but they have shown that they know nothing about economics, Lula said in March 2009. Heading into 2010, the economy simply took off. First quarter GDP growth was a crazy 9.0 per cent, compared to the terrible Q1 of 2009. Both the local market (as measured by the Central Banks mid-August Focus survey) and the IMF in its July update to the World Economic Outlook predicted Brazilian GDP growth of 7.1 per cent for the year as a whole. TV sales in 2010 were projected to rise by around 20 per cent over 2009 albeit they are usually good in a World Cup year with a strong trend to more expensive large flatscreen models bought on credit. New car sales were up by almost as much, on top of record sales of 3.1 million units in 2009. Indeed, over the last few years car sales have risen in Brazil more or less as fast as they have fallen in the United States and Europe. Residential construction is also surging ahead (see Section 5).
Going for growth but how fast? The lessons of the crisis will be important, whoever is President after the October 2010 election. Both leading candidates Dilma Rousseff of the ruling PT and Jos Serra of the opposition PSDB expressed commitment to broadly the same policies inflation targeting, a free exchange rate and income transfer
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programmes for the poor meaning that differences were likely to be more in terms of nuance, particularly the degree of state involvement. Further significant privatisation was seen as highly improbable under either candidate, while both spoke approvingly of structures such as public-private partnerships. It also looked increasingly likely that the government would dampen down the economy at least slightly, and indeed the Central Bank started raising interest rates in mid 2010. Both candidates were committed to growth, but the big question going forward was how fast Brazil can grow without running into myriad capacity, supply, logistics and human resource bottlenecks. Significantly, in an Economist Intelligence Unit study for the HSBC bank published in mid2010, a survey of 536 senior executives worldwide identified low standard or costly infrastructure including telephones, transport networks (and) utilities to be the single greatest challenge to their business operations in Brazil. Brazil faces a triple challenge to improving its infrastructure. It must invest to maintain what it has; invest to recoup the shortfall of years of underinvestment; and invest to expand for the future. Will there be enough money? According to a May 2010 report on Brazilian infrastructure by Morgan Stanley bank, Brazils infrastructure investment in recent years has run at about 2 per cent of GDP. This needs to climb to 4 per cent to permit average GDP growth of 5 per cent. Getting GDP growth up to 6 per cent would require infrastructure investment of 6 per cent, which is higher than the rate forecast under the governments Faster Growth Plan (PAC-2). PAC-2, described in Section 5, forecasts the equivalent of some US$800 billion in capital investment, 60 per cent of it through 2014, but that is predicated on the countrys total investment rate (including infrastructure) rising from 16.7 per cent of GDP in 2009 and a projected 18.5 per cent in 2010 to 21.5 per cent in 2014. This in turn is tied to average GDP growth of 5.5 per cent. The government has predicted average GDP growth of 5.5 per cent a year, something that appeared easily achievable in 2010 but perhaps more complicated thereafter. Both the local market and the IMF saw Brazilian GDP growth falling in 2011, to 4.1 per cent and 4.5 per cent respectively. Whether or not Brazil manages to crank its infrastructure investment up to the ideal level, there is no doubt that the projects directly related to the World Cup and the Olympics will move ahead, if not perfectly on schedule then at least to be ready for the events. Both events are a matter of national pride and the federal government will make them happen, no matter what. One great plus is that the bulk of the expenditure, as detailed in this report, will be directed not to vanity projects but to non-sport infrastructure that is useful in its own right. Some stadiums might be expanded or upgraded beyond their economic level, but they constitute a small part of the total cost.
2. International presence in Brazil

Brazil has had a long, love-hate relationship with foreign investment. The 1988 Constitution, written shortly after the end of the 1964-85 military dictatorship, barred foreign capital from various strategic sectors of the economy and established a constitutional distinction between companies with local and foreign capital. But within a few years this was amended, and today all companies established in Brazil are treated equally in virtually all circumstances (see Section 6). Ford and GM set up subsidiaries in So Paulo at the end of the First World War, starting what was to be a constant stream of investment. Another wave came in the 1960s and 1970s during the high-growth economic miracle, and today the great majority of global companies have a foothold in the country. Car makers include Fiat, Toyota, Honda, Mercedes, Volkswagen, Hyundai, Mitsubishi, Nissan, Peugeot, Citroen and Renault; retail banks include Citibank, HSBC and Santander. Most globally-known mass-market consumer products are made in Brazil by giants such as Unilever, Procter & Gamble and Nestl. Carrefour and Wal-Mart are expanding fast while the giant supermarket chain Po de Aucar is jointly controlled by its Brazilian founders and French retailer Casino. Telecommunications and IT leaders including Microsoft, Google, HP, Dell, and IBM are all present. All in all, 23 of the 40 largest non-financial companies (by 2008 sales) are wholly or partially foreign-owned, and 17 Brazilian-owned, although some companies in the latter category such as Petrobras and Vale have shares quoted abroad, mainly in New York, via Depository Receipts, and of course many foreign investors own stock in Brazilian companies via the Brazilian Stock Exchange.
International presence in Brazil

Company 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. Petrobras Petrobras dist Vale Volkswagen Fiat Ambev (AB InBev) GM shell Bunge Carrefour Sector energy Wholesale Mining Automotive Automotive Consumer Automotive Wholesale Consumer Retail type state state Private Private Private Private Private Private Private Private Control Brazilian Brazilian Brazilian German Italian Belgian us Anglo-dutch dutch French 2008 Sales US$b 92.4 28.9 15.3 14.4 11.5 11.2 10.7 10.2 10.2 10.0
11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 22 23 25 27 28 29 31 34 40
Ipiranga Telesp Telemar Vivo Wal-Mart Braskem Po de Aucar Oi (Brasil Telecom) Cargill TIM Ford Mercedes-Benz Arcelor Mittal Texaco Claro embratel eletropaulo/Aes souza Cruz (BAT) unilever
Wholesale Telecom Telecom Telecom Retail Chemical Retail Telecom Consumer Telecom Automotive Automotive Iron & steel Wholesale Telecom Telecom energy Consumer Consumer
Private Private Private Private Private Private Private Private Private Private Private Private Private Private Private Private Private Private Private
Brazilian spanish Brazilian Portuguese-spanish us Brazilian French-Brazilian Brazilian-Portuguese us Italian us German Anglo-Indian us Mexican Mexican us-Brazilian uk Anglo-dutch
9.9 9.7 9.1 8.8 7.5 7.2 6.1 6.4 6.2 6.2 6.1 6.1 6.0 5.9 5.7 5.6 5.2 4.9 4.6
3. What Brazil needs from the world

Brazil started opening its economy at the beginning of the 1990s, and today trade is distributed fairly evenly among the United States, Europe, Asia and Latin American neighbours. There has been a shift in recent years, with China surging past the United States to become Brazils largest trading partner in 2009. What does Brazil import? Principally more sophisticated machinery and tools, electronic equipment, components, and various chemicals and raw materials. Most consumer products and durables carry a Made in Brazil label, but they will normally contain a significant proportion of imported parts. The countrys exchange rate has been in the vision of many economists overvalued for some time, in part because of the high domestic interest rates, and this has led to a gradual but worrying process of deindustrialisation. The LCA consultancy estimated that the domestic market share of imported electronic and communications equipment rose from 23 per cent to 50 per cent between 2002 and 2010, for example, while textiles rose from 4.5 per cent to 15 per cent. Local companies are investing and modernising and many sectors have been protected with stiff tariffs, but the jury is still out on how much Brazil, a middle-income country with few specific industrial advantages, will be able defend its manufacturing sectors against cheaper Asian rivals. Cheap toys, clothes and footwear are classic examples. for many years been an exporter of heavy earthmoving equipment, and international markets have slumped since the crisis, so theres plenty of spare local capacity for basic items like bulldozers. Recently, however, there has been an influx of cheaper basic equipment from China. Highervalue, more sophisticated items like large cranes and tunnelling shields are imported and should be in strong demand. Also, as Brazil pours money into highway expansion, the imports of asphalt have soared. The only local supply is from Petrobras refineries. These have a capacity of three million tonnes per year but there is not always enough in the right part of the country, or at the right time of the year construction in many parts of Brazil has a strong seasonal trend because of heavy rainfall. Asphalt imports were US$47 million just in the first half of 2010, compared with US$15 million for the whole of 2009 and under US$5 million in previous years. Petrobras has new refineries planned, but these are long-term projects and the asphalt shortage highlights the various bottlenecks Brazil will face going forward. Cement companies have also announced investments to expand capacity. However, what construction companies complain about most is the lack of specialist manpower. Skilled machine operators and maintenance staff are at a premium. Salaries for experienced civil engineers have risen sharply and some companies have called back retirees. The Ministry of Labour and Employment reported a 27 per cent jump in the number of temporary work permits issued for foreign engineers in the first seven months of 2010, compared with the same period in 2009, but the great majority were for crew coming in from the United States, the United Kingdom and the Philippines to work on offshore oil rigs.
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What about infrastructure? With all the infrastructure investments planned for the World Cup, the Olympics and the Faster Growth Program (PAC-2), some sectors may come under particular pressure. The country has
Foreign engineers are allowed to work normally in Brazil but they must have their foreign degree validated by the Ministry of Education and Culture, which normally seeks the advice of leading Brazilian universities that have courses in the specific area. The result is then assessed by the Federal Council of Engineering, Architecture and Agronomy (Confea), a professional association. The process is essentially the same as for a Brazilian who studies abroad and then wishes to have his foreign diploma recognised. Confea says it is fairly straightforward, and some 900 foreign degrees have been recognised. However, this academic recognition is not the same as a work permit. The engineer or architect seeking to work in Brazil must also obtain a visa see Section 9.
And what about lawyers? The situation for foreign lawyers is broadly the same. There are no nationality requirements as such to practice law, but a foreign law degree must be validated and the candidate must pass the exams of the Brazilian Bar Association (OAB) in the normal way. The law does allow foreign law firms to set up offices in Brazil but only to act as consultants with respect to non-Brazilian law, for example in cross-border mergers. Such offices must register annually with the OAB there are a dozen so registered in So Paulo and are not allowed to practice Brazilian law. Neither may they enter into a permanent relationship with a Brazilian law firm. The Law Firms Study Centre (Cesa) has been investigating foreign law offices following suggestions that some might have used local lawyers as a front to effectively practice Brazilian law. Cesa did not accuse the foreign law offices of acting in bad faith, but said it merely wished to clarify exactly who could do what. On the bright side, both the World Cup and the Olympics should generate a great volume of legal work (see Section 7) for both local and international companies, and most major Brazilian firms have long-established links with overseas counterparts.
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4. The World Cup and the Olympic Games: events, stadiums and directly associated investments
The following pages offer summary descriptions of the five major sporting events scheduled to take place in Brazil during 2016. Monetary values: The World Cup is budgeted by the Brazilian Government in Brazilian currency (R$, real, reais), while the Olympic Games were originally budgeted by the Brazilian Olympic Committee in R$ and US$ at 2008 actual and 2016 projected exchange rates. Brazilian infrastructure projects are budgeted by the Brazilian government in reais. The exchange rate at 30 June 2010 was US$1.00 = R$1.80, and this has been used at various points throughout this section to give guideline indications of US$ values. However, final equivalent values will depend on exchange rate fluctuations over the years and the breakdown of each item between local and imported content.
Notes Data validity: Project descriptions, costs and funding sources are as published in July 2010, unless otherwise indicated. Information of project funding describes planned sources as per official descriptions, and does not necessarily imply such financing has been granted.
What Where When international organisation local organisation Who can take part Competitors (estimated) total participants (estimated) tourism impact Cost, investment and funding
5th CiSM Military World games Rio de Janeiro 16-24 July 2011 International Military sports Council (Conseil International du sport Militaire CIsM) Military sports Commission of Brazil (Comisso desportiva Militar do Brasil CdMB) Members of the armed forces of 132 member countries 4,900 6,700 not significant Mainly covered by the military budget
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What Where When international organisation local organisation Who can take part Competitors total participants tourism impact Cost, investment and funding
FiFa Confederations Cup Brazil four cities yet to be selected 2013 (probably June) The Organising Committee for the FIFA Confederations Cup, appointed by the FIFA executive Committee Local Organising Committee of the 2014 FIFA World Cup (LOC), appointed by the Brazilian Football Confederation eight national football teams 264 400 500 (estimated) depends on qualifying teams, but probably not substantial Basically included in the main World Cup programme
What Where When international organisation local organisations
FiFa World Cup Brazil 12 cities nationwide plus training centres June-July 2014 FIFA Organising Committee, appointed by the FIFA executive Committee Brazilian Football Confederation (CBF) 2014 FIFA World Cup Organising Committee Brazil (LOC), appointed by the CBF
Who can take part Competitors total participants tourism impact
32 national football teams 1,056 3,000 (estimated) plus local staff and volunteers 600,000 (Brazilian Tourism Ministry) 250,000 (south African media estimate for 2010 Cup, after the event)
Event cost total investment Funding sources
R$5.7 billion (stadiums) R$17.3 billion (including urban transportation improvements) Public and private investment, plus loans
Military World Games 2011 The CISM Military World Games are a fairly new addition to the global sporting calendar. They were first held in Rome in 1995, and then at four-yearly intervals in Zagreb (Croatia), Catania (Italy) and Hyderabad (India), with Rio de Janeiro selected to host the fifth games in 2011 under the slogan The Peace Games. In March of 2010, the first Winter Military World Games were held in Acosta (Italy). Competitors are military sportsmen and women from around the world 132 countries are members of the Brussels-based International Military Sports Council (commonly referred to under the French acronym CISM). Each country is represented by
its armed forces or an agency linked to them. In the United States, for example, representation is via the Armed Forces Sports Office, while in Brazil it is the Military Sports Commission of the Defence Ministry (Comisso Desportiva Militar CDM). There are various parallels with the Olympic Games, and indeed the CISM is officially recognised by the International Olympic Committee with which it has collaborated in several events. Member countries bid to host the games and the winner is chosen by secret ballot: Brazil beat Turkey for 2011. Once awarded, the games are organised by the local member with the CISM keeping a watching brief. Despite the parallels, the Military World Games are a much more low-key affair than the Olympics, at
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What Where When international organisation local organisations
olympic games Rio de Janeiro 5-21 August 2016 International Olympic Committee (IOC) Brazilian Olympic Committee (Comit Olmpico Brasileiro COB) Local Organising Committee (Comit Organizador dos Jogos Olmpicos Rio 2016) Olympic Public Authority (Autoridade Pblica Olmpica APO) Brazilian sports Legacy Company (empresa Brasileira de Legado esportivo sA Brasil 2016)
Who can take part Competitors total participants tourism impact Event cost total investment Funding sources
Teams from the 205 national Olympic Committees within the IOC 10,500 in Beijing in 2008 from 204 national Olympic Committees half a million volunteers in Beijing Possibly over 75,000 (see text) us$2.8 billion (2008 prices, including Paralympics) us$14.4 billion (2008 prices, see text) Public and private investment, plus loans
What Where When international organisation local organisation Who can take part Competitors total participants tourism impact Event cost total investment and funding
paralympic games Rio de Janeiro 7-18 september 2016 International Paralympic Committee (IPC) Brazilian Paralympic Committee (Comit Paraolmpico Brasileiro CPB) Teams from 165 national Paralympic Committees (nPC) 4,200 in Beijing in 2008 from 148 countries n/A not significant us$170 million, within overall Olympics budget Within overall Olympics budget
least in terms of investment. The Rio games will mainly use existing military sporting infrastructure and some facilities that were built or significantly upgraded for the XV Pan American Games in 2007, and the events are of similar proportions: 5,633 athletes from 42 countries took part in the Pan American Games, while some 4,900 athletes and 1,800 delegates from over 100 countries are expected in 2011. This existing high-quality infrastructure was cited by the city as one of the key reasons leading to its selection. The largest single investment is three athletes villages housing a total of 7,190 participants in low-rise apartment blocks, complete with restaurants, saunas, gyms, information and medical centres, media
facilities, launderettes and internet cafes. These will be converted into officers housing after the games, one centre for each of the three armed forces. Military Games are significantly smaller than Olympic Games. There will be 20 different events including five specifically military sports, and beach volleyball as a demonstration. The Beijing Olympics had 11,000 athletes competing in 28 sports with 302 events. Some 700 journalists might cover the event, compared with almost 25,000 at Beijing. In terms of logistics and security the Military Games offer Rio city authorities an excellent warm-up for the World Cup and Olympics, building on the experience they gained at the Pan American Games.
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Organisation The fifth CISM Military World Games are being organised by the Brazilian armed forces. An interministerial Committee for the Management of Government Actions supervises an Executive Committee. Below this an Organising Committee coordinates the six main areas of preparation: human resources, corporate relations, games operations, logistics, security and intelligence, and command and control.
Other existinG venues
Venues and events

Pan american Games venues
Joo Havelange Olympic Stadium: athletics, mens football Maria Lenk Aquatics Centre: swimming Micimo da Silva Sports Centre: basketball, womens football
The Deodoro Sports Complex: equestrian events, military pentathalon Modern Pentathalon Centre: modern pentathalon Guanabara Bay: sailing Copacabana Beach: triathlon, beach volleyball Maracanzinho Gymnasium: volleyball National Target Shooting Centre: aeronautical pentathalon, shooting CEFAN Naval Physical Education Centre: naval pentathalon, taekwondo CIAMPA Marine Corps Academy: boxing Parachute/Armoured Cavalry Barracks: fencing Army Physical Education Centre: judo Out of town: skydiving, orienteering
BOARD OF MINISTERS
EXECUTIVE COMMITTEE
(MoD)
EXECUTIVE SECRETARIAT
Director: President of Brazilian Delegation to CISM
ORGANISING COMMITTEE
CISM PROJECT OFFICER
HUMAN RESOURCES
CORPORATE RELATIONS
OPERATIONS OF THE GAMES
LOGISTICS
SECURITY AND INTELLIGENCE
COMMAND AND CONTROL
Training
Institutional Relations
Sports
Transport
Intelligence Operations
Information Technology
Recruitment and Selection
Media and Marketing
Awards
Catering
Operations Security
Telecommunications
Volunteers
International Relations
Sports Policy and Services
Lodging
Accreditation
Operations Communications
Uniforms
Facilities Operation
Health
Doping Control
General Services
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FIFA World Cup 2014 and Confederations Cup 2013 The FIFA World Cup will take place in Brazil in 2014, the fifth time the tournament has been staged in South America. Brazil also hosted the Cup in 1950. World Cup football matches will take place in 12 cities nationwide, each with a football stadium that is being built from scratch or significantly renovated. Each city will have games in one stadium only. The federal government and host cities are planning substantial investment focusing mainly on urban transportation, and most cities will see a greater or lesser volume of private investment in associated areas such as hotels. Each city has nominated one or more urban transportation projects to improve mobility, and these have been included in a federal government priority programme. These are the projects listed on the following pages. Some of them offer specific advantages for the World Cup, for example a Metro or Bus Rapid Transit (BRT) line to a stadium, but many will simply improve general traffic flow. Many of these transportation projects were part of cities existing long-term planning, meaning that the main effect of the World Cup is to bring them forward.
The Sports Ministry study forecast that 78 per cent of all World Cup-related investment would come directly from government coffers, plus 10 per cent in the form of repayable state-bank financing for private projects and 12 per cent from private sources. Direct economic impact was estimated at R$47.5 billion from 2010 through 2014, generating on average 0.26 per cent of GDP through the period. So Paulo and Rio de Janeiro were projected to account for 45 per cent of this impact, with Braslia adding a further 9 per cent. Indirect economic impact was projected at R$129.4 billion through 2014 or R$135.7 billion through 2019, with improved infrastructure and increased tourism being the main multipliers.
Organisation The 2014 World Cup is being organised by the Local Organising Committee (LOC). This is presided over by Ricardo Teixeira, who is also president of the Brazilian Football Confederation (CBF), a post he has held since 1989. So far the LOC has a small policy staff with much of the basic planning outsourced and/or handled by the CBF. Stadium development is handled by the host cities, with the LOC and FIFA monitoring progress. The 12 cities chosen to host matches were selected from 18 applicants. They are not necessarily the 12 cities with the largest populations or economies, nor are they the 12 most important in terms of football. All selected host cities are state capitals except Braslia, which is the federal capital. Among the criteria for selection was a desire to include at least one venue in each Brazilian region. However, not all of the host cities have major football clubs that regularly draw large crowds. While there is little doubt that all stadiums will draw a decent crowd for World Cup games, there are questions about the post-World Cup economic viability of some of them. Some city authorities say this will be mitigated by opening up the stadiums for non-sporting events, and are designing them to allow for this. It is likely that the 12 host cities will be grouped regionally into four blocks of three to reduce travel during the initial groups stage of the tournament. The probable division is reflected in the investment table. It should be noted that several details of stadium construction and renovation and urban transportation projects are still being finalised. Two major items linked to the World Cup are the International Broadcast Centre and the FIFA Conference. The Broadcast Centre is a soughtafter investment because it tends to concentrate the majority of international media spending throughout most of the competition, while the FIFA Conference is a brief but prestigious event that attracts global press coverage.
Financing Direct public spending will be split between the three levels of government federal, state and municipal with additional funds in the form of loans coming from two major federal banks, the Federal Savings Bank (CEF) and the Brazilian Development Bank (BNDES). Generally speaking, the CEF finances urban development while the BNDES will lend for stadium construction and upgrading. In all, these sources are forecast to provide some R$17.3 billion of funding, the equivalent of US$9.6 billion at current exchange rates. Amounts shown in this section are tax-inclusive, although some state governments have enacted or are considering fiscal relief and other conditions for the World Cup. Also, the Brazilian Congress is considering legislation that would reduce taxes on construction. See Section 7 for further details. An economic impact study carried out for the Brazilian Sports Ministry by Value Partners Brasil Ltda, a consultancy, suggested that total World Cup-related investments could reach R$33 billion (US$18.3 billion). In addition to the amounts shown in the table on page 16, the Sports Ministry study projected World Cup-related investment in airports at R$4.8 billion; ports, R$0.7 billion; IT and telecom, R$3.8 billion; security, R$3.6 billion; hotels, R$1.9 billion; and health, R$1.0 billion. Investment opportunities in several of these areas are discussed in Section 5 of this booklet.
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The Confederations Cup This 2013 tournament is essential a dry run for the World Cup. It takes place one year ahead of the main competition and gives the host nation an opportunity to test its organisation, transportation, security and other arrangements, plus some of the stadiums. There is no specific capital investment for the event.
The eight participating countries will be Brazil and Spain as the host nation and reigning world champion respectively, plus the winners of FIFAs six regional competitions: the 2011 Asian Cup; the 2011 Concacaf Gold Cup; the 2011 Copa America; the 2012 African Cup of Nations; UEFA Euro 2012; and the 2012 OFC Nations Cup.
World Cup investments currently forecast by the Brazilian government* (Costs for stadiums and other infrastructure)
Host city (state) investments (r$ millions) Federal government (CEF financing) Manaus (AM) Braslia (dF) Cuiab (MT) Recife (Pe) natal (Rn) Fortaleza (Ce) Rio de Janeiro (RJ) Belo horizonte (MG) salvador (BA) so Paulo (sP) Curitiba (PR) Porto Alegre (Rs) Total %
*
Federal government (BnDES financing) 375.00 400.00 330.00 456.10 250.50 400.00 1,590.00 300.00 400.00 400.00 25.00 0.00 4,926.60 29%
State governments
Municipal governments
others
total
800.00 361.00 454.70 589.00 361.00 414.40 0.00 1,023.30 541.80 1,082.00 440.60 456.20 6,524.00 38%
846.90 348.30 150.70 173.20 119.20 320.30 200.00 126.10 217.60 1,508.50 0.00 0.00 4,010.80 23%
30.00 0.00 0.00 23.30 30.40 50.30 420.00 498.70 0.00 334.50 52.00 36.50 1,475.70 9%
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 90.00 113.00 130.00 333.00 2%
2,051.90 1,109.30 935.40 1,241.60 761.10 1,185.00 2,210.00 1,948.10 1,159.40 3,415.00 630.60 622.70 17,270.10
For data validity see notes at the start of this section; for acronyms see list at the end of this booklet.
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Host City Profiles

Manaus, Amazonas State Braslia, Federal District
Metropolitan region population 2.04 million Economic activity Manaus city is a tax-free zone for manufacturing, with several leading international IT, electronics, household appliance and motorcycle makers. Municipality Population: 1.74 million Area: 11,401 km2 GDP/capita: R$20,894 Stadium Vivaldo (Estdio Vivaldo Lima) belongs to the state government. New stadium, old one demolished; current capacity 31,000, planned capacity 48,000. Costs (official) total R$515 million. Sources of funding R$140 million state government, R$375 million BNDES. Costs (latest reported) R$514 million. Status demolition under way; completion due December 2012. Urban transport improvement Total cost (official): R$1.54 billion. Key elements Construction of R$1.3 billion monorail rapid transit system running 20 km northwards from old city centre, basic project by PricewaterhouseCoopers, funded R$706.9 million by the state government and R$600 million by the federal government via the CEF, completion December 2013; implantation of 77 km BRT system in east of city, integrating with monorail, R$230 million funded R$200 by federal government via the CEF, R$30 million by municipal government, completion March 2014.
Note Monorail tender on hold as of July 2010 awaiting improved project and financial detailing by state government.
Federal District population 2.61 million Economic activity Mainly the federal government, associated agencies and state companies, embassies, and public affairs offices of private companies. Some light manufacturing: agribusiness, pharmaceuticals, IT. Municipality Area: 5,802 km2 GDP/capita: R$40,696 Stadium Man Garrincha belongs to the Federal District government, current capacity 42,000, planned capacity 71,000. Major renovation, virtually a new multipurpose stadium with new grandstands, new roof, commercial centre, underground parking. Will be renamed Braslia National Stadium. Costs (official) R$745.3 million. Sources of funding R$345.3 million federal district government, R$375 million BNDES. Costs (latest reported) R$696 million. Status partial demolition started; contract signed July 2010 with consortium headed by Via Engenharia and Andrade Gutierrez; completion before July 2013 in time for Confederations Cup. Urban transport improvement Total cost (official): R$364 million. Key elements Construction of first part of a 22.5 km light rail system, running from the airport through the city centre. Funding R$3 million from federal district government, R$361 million from federal government via CEF. Work underway; delivery of airport link due March 2012.
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Cuiab, Mato Grosso State
Recife, Pernambuco State
Metropolitan region population 824,000 Economic activity A major centre in Brazils new western agricultural farming region, with fast-expanding agribusiness. Municipality Population: 551,000 Area: 3,538 km2 GDP/capita: R$14,998 Stadium Verdo (Estdio Jos Fragelli) belongs to the Mato Grosso state government, current capacity 40,000, planned capacity 42,500. New multipurpose stadium with removable grandstands to allow flexible use. Development around the stadium will include restaurants, hotels and parking. Costs (official) R$454.2 million. Sources of funding R$124.2 million Mato Grosso state government, R$330 million BNDES. Costs (latest reported) R$342 million. Status contract signed April 2010 with consortium headed by Santa Brbara and Mendes Jnior, old stadium demolished, construction under way, completion December 2012. Urban transport improvement Total cost (official): R$481.2 million. Key elements Construction of R$317.6 million BRT system from the airport to city centre and hotel district; plus other associated BRT and urban road system improvements.
Metropolitan region population 3.77 million Economic activity Port city serving a wide hinterland, mainly agricultural; big tourist centre. Municipality Population: 1.56 million Area: 217 km2 GDP/capita: R$13,510 Stadium Capiberibe (Arena Cidade da Copa or Arena Pernambuco) an all-new multipurpose stadium with capacity for 46,154 spectators and 6,000 parking spaces. It is part of a planned complex called Cidade da Copa (literally, World Cup City) that includes restaurants, hotels, a shopping centre, cinemas, a convention centre, a public hospital, and a 9,000-home residential project for low and middle-income families. This will be connected to the Recife metro network by a BRT system or equivalent. Costs (official) stadium R$529.5 million; other developments around R$1.6 billion. Sources of funding stadium R$132.4 million Pernambuco state government, R$397.1 million BNDES; other developments are private. Status in May 2010 a consortium comprising Odebrecht, ISG (International Stadia Group) and AEG Facilities successfully bid R$532.6 million for a 33-year BOT concession contract (including construction time). This was to be structured within a public-private partnership in which the Pernambuco state government contributes the 220-hectare site (plus 50 ha for the stadium) and private investors provide development funding. Completion due December 2012. Urban transport improvement Total cost (official): R$712.1 million. Key elements Construction of a R$268 million BRT system with a link to the Cidade da Copa development; R$428.3 million for improvement to urban freeways and avenues; one new metro station.
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Natal, Rio Grande do Norte State
Fortaleza, Cear State
Metropolitan region population 1.3 million Economic activity Tourism Municipality Population: 806,200 Area: 170 km2 GDP/capita: R$10,362 Stadium Arena das Dunas new stadium to be built by the Rio Grande do Norte state government via a public-private partnership on a 45-hectare site formerly occupied by the Machado stadium and the Machadinho multisport arena. Planned capacity 45,000, with parking. The project may also include hotels and commercial buildings. Costs (official) R$350 million. Sources of funding stadium R$99.5 million from the Rio Grande do Norte state government, R$250.5 million BNDES. Costs (latest reported) R$400 million. Status awaiting formal launch of tender. Completion due December 2012. Urban transport improvement Total cost (official): R$411.1 million. Key elements Upgrading, extension and construction of various urban avenues and freeways, including the link to the airport. Funding is mainly from the federal government via the CEF.
Metropolitan region population 3.66 million Economic activity Tourism, textile industry, footwear, foodstuffs, industrial development at Pecm Port. Municipality Population: 2.51 million Area: 313 km2 GDP/capita: R$10,066 Stadium Castelo (Estdio Governador Plcido Castelo) major renovation of existing stadium belonging to the Cear state government, current capacity 60,000, planned capacity 66,700. Renovation includes expansion of grandstands, with full roofing, plus 4,200 parking spaces, a running track, swimming pools, tennis courts, a multi-use gymnasium, cinemas, restaurants and shops. Costs (official) R$623 million. Sources of funding R$223 million Cear state government, R$400 million BNDES. Costs (latest reported) stadium R$452.2 million, built via a public-private partnership with eight-year operating rights. Status tender process delayed due to legal questioning; completion due April 2013. Urban transport improvement Total cost (official): R$562 million. Key elements Construction of R$265 million, 13 km light rail line between the main hotel region and the city centre, integrated with the existing metro system, funding split between the Cear state government and the CEF. Construction of an urban BRT system, with R$163.5 million funding split between the Fortaleza municipal government and the federal government via the CEF. Also new metro stations and upgrading urban avenues.
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Rio de Janeiro, Rio de Janeiro State
Belo Horizonte, Minas Gerais State
Metropolitan region population 11.9 million Economic activity Tourism, media, petroleum and petrochemicals, steel, pharmaceuticals, shipbuilding, port, federal agencies. Municipality Population: 6.19 million Area: 1,182 km2 GDP/capita: R$22,903 Stadium Maracan (Estdio Mrio Filho) belongs to the Rio de Janeiro state government. The iconic Maracan stadium was for a long time the worlds largest football venue with an official capacity of 183,340 and record (paying) public of 199,854 at the final of the 1950 World Cup, the tournament for which it was built. Maracan will undergo a major renovation with the current official capacity of 87,100 being further reduced to 76,000. Some grandstands will be remodeled to improve visibility and the roof will be extended inwards to fully cover all seating. The stadium which received a R$196 million upgrading for the 2007 Pan American Games will also undergo modification to host the opening and closing ceremonies of the 2016 Olympic Games. Costs (official) R$600 million. Sources of funding R$200 million Rio de Janeiro state government, R$400 million BNDES. Costs (latest reported) R$720 million. Status tender process under way; completion due December 2012. Urban transport improvement Total cost (official): R$1.61 billion. Key element Rio will receive significant urban transportation investment for the World Cup and the Olympic Games. The principal project specifically linked to World Cup planning is a 28 km expressway running Southwest-Northeast from the Barra de Tijuca beach zone to the Penha suburb. The T5 Corridor, potentially named Transcarioca, will have at least two traffic lanes in each direction plus a central two-lane BRT track with 37 metro-type stations, and will provide an access route to Maracan from some regions. Cost is officially listed at R$1.6 billion, coming R$420 million from the municipal government and R$1.2 billion from the federal government via BNDES financing. As of mid-2010, the project had yet to go to tender.
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Metropolitan region population 5.04 million Economic activity Mining, iron and steel, automobile and construction equipment, petrochemicals, foodstuffs. Municipality Population: 2.45 million Area: 331 km2 GDP/capita: R$15,835 Stadium Mineiro (Estdio Governador Magalhes Pinto) belongs to the Minas Gerais state government. Current capacity of 81,000 will be reduced to 70,000; the pitch will be lowered 3.5 metres to improve grandstand visibility. Upgrading includes installation of large screens, an extended roof, additional parking, new seating, new dressing rooms and structural improvements. Costs (official) total R$426.1 million. Sources of funding R$126.1 million Minas Gerais state government; R$300 million federal government via the BNDES. Costs (latest reported) R$654.5 million. Status work under way; completion due December 2012. Urban transport improvement Total cost (official): R$1.52 billion. Key elements A R$1.24 billion, 38 km BRT system running into the city centre on four main corridors, with exclusive BRT lanes built along major freeways and avenues. Normal daily passenger load is forecast at 850,000. The main link to the Mineiro stadium will have a two-lane BRT corridor in each direction. Plans also provide R$30 million for a traffic control system and R$252.1 million for other urban freeway construction and upgrading. Financing of R$1.0 billion has been approved by the federal government via the CEF, with the municipal government paying for expropriations, and first contracts were signed in June 2010.
Salvador, Bahia State
So Paulo, So Paulo State
Metropolitan region population 3.87 million Economic activity Tourism, petrochemicals, automobile manufacture, port. Municipality Population: 3.00 million Area: 707 km2 GDP/capita: R$9,240 Stadium Fonte Nova (Estdio Octvio Mangabeira) belongs to the Bahia state government. The existing 60-year-old, 80,000 capacity stadium is being completely demolished to allow for construction in the same place of a 50,433 capacity stadium modeled on the AWD Arena in Hanover, Germany that was used for the 2006 World Cup. Plans include 30 VIP boxes, 1,978 parking slots, a football museum, shopping areas and business convention facilities. Cost (official) total R$591.7 million. Sources of funding R$400 million from the federal government via the BNDES; balance private. The Bahia state government opted for a public-private partnership that effectively involves a 35-year BOT concession, with the state government pledged to pay R$107 million per year for 15 years starting in 2013. This will cover operation, maintenance, interest, taxes and repayment of the R$400 million BNDES loan. Status tendering for the PPP concession was won by a consortium comprising the OAS and Odebrecht construction companies. Demolition started June 2010; completion due December 2012. Urban transport improvement Total cost (official): R$567.7 million. Key element A BRT corridor will be constructed from the airport into the citys North Zone. Financing is principally from the federal government via the CEF.
Metropolitan region population 19.89 million Economic activity Finance, media, services, light and some remaining heavy industry, IT, business tourism, logistics. Municipality Population: 11.04 million Area: 1,523 km2 GDP/capita: R$29,394 Stadium Stadium undecided as of early September 2010. Morumbi, the citys largest stadium (capacity 67,400), was initially endorsed by municipal and state authorities as So Paulos candidate to host the World Cup opening match, and the club prepared a major renovation plan. However, the surrounding region has become densely occupied since the stadium was inaugurated in 1960, so construction of additional facilities deemed essential by FIFA was problematic. Also, the fact that the stadium is privately owned (by So Paulo FC) complicated public financing for the upgrade. The Local Organizing Committee said that Morumbi had been officially excluded from their plans. Corinthians FC then announced plans to construct a new stadium (see pictures on page 22) at Itaquera, some 20 km east of So Paulo city centre and approximately one kilometre from an existing metro station. The stadium is budgeted at R$335 million for a 48,000seat capacity. According to the club, a major construction company will build the stadium for free in exchange for 10 years naming rights. However, the Itaquera stadium as announced would be 17,000 seats below the 65,000 minimum required by FIFA to stage the opening match. Corinthians officials said they could increase capacity with temporary bleachers, but that the cost of this could not be born by the club. The CBF said that the Itaquera project had yet to be formally presented and evaluated. Urban transport improvement Total cost (official): R$3.18 billion. Continued overleaf
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Key elements R$2.86 billion for a 21.5 km elevated monorail system integrated with the existing city metro. This will connect the Congonhas metropolitan airport (Brazils busiest) with the Morumbi stadium. Financing comes mainly from the state government and the BNDES, with the municipality contributing just over 10 per
cent. The status of the project was placed in doubt after FIFA rejected Morumbi stadium, but the state government said it would go ahead anyway. There is also a R$315 million plan for urban development in the vicinity of the Morumbi stadium, but the status of this project is also in doubt.
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Curitiba, Paran State
Porto Alegre, Rio Grande do Sul State
Metropolitan region population 3.1 million Economic activity Light and heavy industry, vehicle and auto parts, foodstuffs, electronics. Municipality Population: 1.85 million Area: 435 km2 GDP/capita: R$21,025 Stadium Arena da Baixada (Estdio Joaquim Amrico Guimares) belongs to Atltico Paranaense Football Club, current capacity 28,327, planned capacity 41,375. Major renovation includes new grandstands, new roof, multi-event facility with business centre, stores, parking for 1,908 vehicles. Costs (official) total R$184.5 million, of which stadium budget R$138 million; additional commercial facilities R$46.6. Sources of funding stadium R$113 million private, R$25 million BNDES; commercial development R$46.6 municipal government. Costs (latest reported) stadium R$138 million. Status financing under negotiation; completion due December 2012. Urban transport improvement Total cost (official): R$446.1 million. Key elements Construction of BRT corridors (including R$107.2 million for airport/city centre route); upgrading of urban freeways; upgrading of integrated bus/rail station; R$69.1 million for integrated traffic control system.
Metropolitan region population 4.06 million Economic activity Port, general industry, engineering, automobile manufacture, foodstuffs. Municipality Population: 1.44 million Area: 497 km2 GDP/capita: R$23,534 Stadium Beira-Rio (Estdio Jos Pinheiro Borda) belongs to Internacional Football Club. Planned major renovation includes new roof, 8,000 parking slots, press facilities, VIP boxes, panoramic restaurant and leisure areas. Current capacity of 56,000 will be increased to 62,000. Costs (official) R$130 million. Sources of funding private, from the sale of an old, smaller stadium and pre-leasing for 10 years of VIP boxes. Costs (latest reported) stadium R$130 to R$150 million. Status work started late July 2010; completion due August 2012. Urban transport improvement Total cost (official): R$524.9 million. Key elements R$104 million for a BRT system integrated with the existing urban bus network; R$407.2 million for various urban freeway and avenue extensions and upgrading; R$13.7 million for a traffic monitoring system to improve dispatching and movement of buses along designated corridors.
Note Sources and data for the host city profiles: Population IBGE 2008 or 09; GDP/capita IBGE 2007. Costs official cost is that declared by federal government; reported cost is from tender information, local governments or specialist media. All costs are official unless otherwise stated. Stadiums are called by their commonly-used name, with any different official name shown in parenthesis; completion dates are as per original official planning unless otherwise noted.
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XXXI Olympic Games and XV Paralympic Games 2016 The Olympic Games will be held in South America for the first time in 2016. Rio won selection in Copenhagen in October 2009, beating Madrid, Tokyo and Chicago. However, IOC President Jacques Rogge said that Rio did not win the Games because of its location: We did not choose Brazil because South America had never got the Games before... we chose Brazil because of the quality (of the bid). In addition to an impressively detailed candidacy package and a vigorous lobbying effort, Rios plan for the Games built in some eye-catching features: Opening and closing ceremonies in the legendary Maracan Stadium, now undergoing extensive renovation to stage the finals of the 2014 World Cup. Triathlon and beach volleyball will take place on Copacabana Beach. The marathon and archery events will use the Sambadrome where Rios Carnival parades are held. Rowing and canoeing will take place in the Rodrigo de Freitas lagoon behind Ipanema Beach. Sailing will be based in the downtown Gloria Marina with races in Guanabara Bay. Cycle road races will take place in the Flamengo Park, beside the bay. Most athletes will stay in a purpose-built Olympic Village in the Barra da Tijuca beach zone near the main competition sites. This and three other villages for media and event staff will provide 25,000 bedrooms. One trump card for the Rio candidacy was its ability to fit virtually all events into the city. Only football will be spread around, with games in So Paulo, Braslia, Salvador and Belo Horizonte. The total cost for the Rio Olympic Games is the equivalent of US$14.4 billion. Broadly speaking this comprises US$2.8 billion for the Games themselves with their immediate associated infrastructure, plus US$11.6 billion for general infrastructure upgrading promised by the federal, state and municipal governments. These figures include the Paralympics, which use the same infrastructure and have a relatively small operating budget. The whole package carries a federal government guarantee.
Much of the general infrastructure budget applies to projects that were planned anyway, so the impact of the Games is essentially to bring these projects forward and give them a hard deadline. Main infrastructure projects are described following the Games Map on the page 25.
Organisation and legacy Rio has drawn on Londons experience and is splitting Games preparations between the Local Organising Committee (LOC) and an Olympic Public Authority (Autoridade Pblica Olmpica APO). Essentially the LOC stages the Games while the APO, a consortium that brings together the federal, state and municipal governments, takes care of the infrastructure that makes them possible. However, to give the structure more managerial muscle and agility, Brazil has created a third body, a company that is 100 per cent owned by the federal government called the Brazilian Sports Legacy Company (Empresa Brasileira de Legado Esportivo SA Brasil 2016). This is designed to be the executive arm of the APO. As with all Olympic bidders, Rio was anxious to demonstrate that it will invest in projects that are useful to the city and country afterwards. The fact that the largest stadium already exists, and is frequently full for local football matches, concerts and other events, gives it a head start. One promised legacy item is environmental investment. During 2016 organisers promise to plant 24 million trees to restore degraded areas of the Tijuca mountain rainforest that rises behind the beaches. There are also substantial programmes to promote sports education in schools. The tourism potential is uncertain. Beijing actually saw a drop in foreign visitors during the 2008 Olympics period, but analysts list several possible reasons. Some economists say that megaevents tend to generate their main tourism impact over several subsequent years. According to Rio Olympic planners, the city will have 28,700 rooms in hotels and short-let flats of two stars and above, counting scheduled expansion through 2016. Cruise liners berthing at a planned new passenger quay will potentially add another 8,500. If all these 37,200 rooms are filled with an average of two people, they would accommodate 74,400 visitors. Other tourists may seek bed-andbreakfast type accommodation.
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Map of Rio Olympics plan
1 Barra de tijuca 2 rodrigo de Freitas lagoon 3 Copacabana Beach 4 Flamengo park 5 Maracan 6 joo Havelange Stadium 7 Deodoro
hockey, tennis, velodrome, aquatic center, Olympic arena, main Olympic Village, Media Village, broadcast center, main press center Canoeing, rowing Triathlon, beach volley, sailing, cycling Football, opening and closing ceremonies archery and Marathon start/finish in the samba Parade stadium Athletics Mountain bike, equestrian events, shooting, modern pentathlon
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Rio key urban challenges Investments in Rio de Janeiro The World Cup and the Olympics have the potential to transform Rio de Janeiro. The selfstyled marvellous city endured decades of gradual decline after the federal government moved out to Braslia in 1960 and the drug traffickers moved into the favela slums. But towards the end of the century Rio started to pull itself up by its flip-flops. The successful 2016 Olympics bid followed a failed
attempt for the 2012 Games, when Rio didnt even make the final cut. But the city gained credibility by hosting a spectacular Pan American Games in 2007, with almost 6,000 athletes from 42 countries. Substantial federal investment in security meant there were no significant problems. The same kind of security apparatus will happen again in 2016, but for the Olympics the federal government is also working with the state and municipality on numerous major infrastructure projects.
Olympic-related infrastructure investments listed by the federal government

area Accommodation sports infrastructure (mainly stadiums) security Technology Transportation TOTAL total (r$ billions) 2.59 1.52 0.48 0.41 7.46 12.52
Virtually all of this is government responsibility. Just R$565 million (37 per cent) of the sports infrastructure budget and R$72 million (15 per cent) of the technology budgets are scheduled to come through the Rio 2016 organisers. However, total investment in the city will be far greater. Rios bid for the Games indicates total capital spending of R$23.2 billion or US$11.6 billion at 2008 prices. The question of which investments are directly or indirectly Games-related is sometimes debatable. This happens because several of the infrastructure projects are components of ongoing investments in the same area, and have been brought forward or simply promoted to Olympics-related. Rio International Airport illustrates the point. Expansion of Rios main airport (described below) is included in both the Olympic bid and the federal governments Olympics-related investments at R$810 million or US$405 million (2008 values). The federal government includes this project in its Faster Growth Plan (PAC) which details general investments nationwide, meaning that it would be done anyway, but it also lists the work as an Olympics-related expenditure contained within the R$7.46 billion transportation item shown in the table even though it is timed to be ready for the 2014 World Cup. The Olympic bid goes to considerable lengths to describe how Brazils and particularly Rios airport expansion will help
the Games, and lists the Rio project in its roll of infrastructure commitments, but excludes it from incremental expenditure because it was due to happen anyway. Irrespective of the budget heading, the mass of infrastructure and other projects offer significant business opportunities. Funding is mainly from the federal, state and municipal governments, but some private investment is planned, for example in the metro expansion and Olympic Villages. Among the projects, with values as listed by the federal government, are the following:
Rio airports Antonio Carlos Jobim Airport (Rio International): The annual capacity of 15 million passengers per year (in 2008) will be increased to 25 million by 2014 from 9,100/ hour to 15,000/hour with the two runways extended to handle the Airbus A380. Cargo capacity will be expanded to 120,000 tonnes/ year. No new terminal is planned but the two existing ones will receive satellites that increase total international gates from 23 to 30 and domestic gates from 24 to 34. Santos Dumont Airport (Rio domestic): Passenger capacity will be boosted from 3,000 to 5,000 per hour.
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Metro and BRT R$2.0 billion for three metro projects, including 5 km of new line plus modernisation of various older stretches. A R$2.5 billion BRT system with three lines linking the main Olympic zone in the Barra neighborhood with the Ipanema/Copacabana beach zone, and extending out to various suburbs. Planners have discussed substituting part of the proposed BRT system more metro line.
Olympic villages R$2.6 billion of investment is planned for various Olympic Villages for athletes, staff and media. These will total 25,000 bedrooms. Plans call for them to be totally financed by private companies and then sold off afterwards.
Cruise liner berths Rio is growing as a cruise liner port of call. The government is scheduling a major upgrade to an existing passenger terminal in Rios old downtown docks area to be ready for the Olympics, when cruise ships will make up any hotel-bed shortfall. The passenger terminal could house leisure options like an aquarium, museum and cultural spaces, and maybe offices.
Urban freeways A R$1.3 billion half beltway looping around the West, North and East of the Rio metropolitan region. This 129-km project is already being built. It has little direct link with the Games but is designed to divert substantial through-traffic away from the urban region.
Stadiums Three major Olympic venues exist already the Joo Havelange Stadium and the Maria Lenk Aquatic Centre were built for the 2007 Pan American Games and will house athletics and some swimming events. Upgrading or expansion of these and other existing venues is budgeted at US$124 million. Maracan Stadium is undergoing major renovation for the World Cup and is costed under that budget. Construction of permanent new venues for basketball, martial arts, synchronised swimming and the like has been allocated US$556 million.
Urban rail A R$590 million, four-part upgrading of Rios existing 225-km commuter rail service. Mainly modernisation rather than expansion.
Environmental Games organisers have pledged environmentallyfriendly green Games, with re-use of water and independent sewage treatment plants at some Olympic venues. Among planned investments are R$165 million (including private money) to clean up the Rodrigo de Freitas Lagoon where canoeing and rowing competitions will take place. Games organisers have also promised full carbon emission offset, to which end they will plant three million trees in a 1,360 hectare site.
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5. World Cup and Olympics: the gold rush

Faster Growth Plan PAC-2: Major areas US$ billions*
area energy housing (including MCMV) Transportation Better Cities Water and Power for All Citizen Community TOTAL Distribution 2011-14 232.75 139.10 52.25 28.55 15.30 11.50 479.45 60.3% after 2014 313.55 0 2.25 0 0 0 315.80 39.7% total 546.30 139.10 54.50 28.55 15.30 11.50 795.25 100.0% Share 68.70% 17.49% 6.85% 3.59% 1.92% 1.45% 100.0%
As announced by the federal government in March of 2010; programme names are unofficial translations
* R$ values converted unofficially at R$2 = US$1; current rate is roughly R$1.8 = US$1.0
Nobody doubts that major sporting events can be big business. The challenge is deciding the best way to get involved. Brazil will be spending far more on general infrastructure investment than the stadiums themselves. There are various estimates of how much the World Cup and Olympics might generate in terms of business and investment opportunities. Published estimates for Cup-related investment range from US$30 to US$55 billion, while planners for the Olympics speak of US$14.4 billion of event-related business and infrastructure spending, without counting general private-sector investment. Firjan, the Rio State Industry Federation, has estimated Rio state could receive total investment of US$120
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billion through 2016, although that includes much general private investment. The Value Partners study mentioned in Section 4 of this booklet suggested that World Cup-related investments could reach R$33 billion (US$18.3 billion), with a direct economic impact of R$47.5 billion from 2010 through 2014, generating on average 0.26 per cent of GDP through the period with total direct and indirect economic impact of R$183.2 billion roughly US$100 billion at current exchange rates through 2019. PricewaterhouseCoopers estimated a total of US$50 billion in Cup-related infrastructure, with a 1 per cent increase in GDP during 2014.
Adding up direct spending on stadiums and infrastructure projects is fairly straightforward; determining the potential multiplier effect is less precise. Even more debatable is deciding which public construction projects are not merely related to these major events but are happening only because of them. Applying the most restrictive of definitions, excluding all projects that would not happen without the World Cup and Olympics, the net infrastructure increment nationwide is probably quite small, because virtually all infrastructure now being classed as Olympicsrelated or World Cup-related investment was already firmly or provisionally included in national, state or municipal development programmes. This means a much greater chance of leaving a positive legacy.
High speed rail This is the largest and most glamorous project that might be built for the Olympics a high-speed rail link between Rio de Janeiro and So Paulo, serving a combined population in the two metropolitan regions of 32 million, plus several million in nearby cities. It would be the countrys biggest rail project for many decades, if not ever. This is a world-scale project with total cost estimated at between R$35 and R$50 billion US$19 to US$28 billion at current exchange rates. Brazil currently has some 30,000 km of old track, much of which deteriorated through inadequate maintenance until privatisation via long-term concessions in the 1990s. Virtually all inter-city passenger services died away before privatisation. Key routes are now being modernised and there is some network expansion, mainly with government finance and with an emphasis on bulk freight. PAC2 allocates a total of R$43.9 billion to rail expansion and upgrading through 2014. Proponents of the high-speed link say it would attract a substantial part of the passenger traffic now using the Rio-So Paulo air shuttle. The complete route starts at Campinas, 100 km northwest of So Paulo, passes through So Paulo city centre, then heads to Rio via the Paraba Valley. Some 70 km of the 511 km would be in tunnels, mainly to descend the Serra do Mar mountain range. Journey time is projected at 80 minutes non-stop, although some trains would stop at So Paulo and Rio de Janeiro international airports and one or two cities along the way. Top speed is 280 km per hour. Various of the worlds leading high-speed rail equipment makers have expressed interest in the project and some consortia with Brazilian construction firms have been tentatively formed. The project is likely to be undertaken via some form of public-private partnership. No firm date has been set for tender but the government said it will be built for the 2016 Olympics. Other high speed rail routes have been discussed, for example from So Paulo to Belo Horizonte, but they lie a distant second to the Rio So Paulo link.
Stadiums The greatest potential for white elephants is in stadiums. While football is Brazils national sport, not all 12 host cities have major teams that draw big crowds. Two examples: Braslia is planning to spend R$745 million on a 71,000 capacity stadium, while the citys two top teams play in the second and third divisions and drew average crowds in 2009 of around 4,000 and 3,000 respectively. In Cuiab, capital of Mato Grosso state, the cost of the new 42,500-seat stadium was officially put at R$454 million, although it may come in a little under that figure. Meanwhile, the citys two teams averaged crowds of under 2,000 each in the 2009 national third division. In all such cases, planners said that the stadiums will be used after the World Cup for events other than football. For any company seeking investment opportunities in stadium construction or renovation as a contracted supplier of materials, technology or services, where the payment is directly from the state government or via its contracted stadium constructor, the economic viability after 2014 is probably not a matter of concern. However, some stadiums may be offered under some form of build-operate-transfer concession or public-private partnership, in which case potential investors should scrutinise future usage projections with care. The National Association of Architectural and Consulting Engineering Companies (Sinaenco) calculated that design fees for World Cup stadiums exceed R$100 million, or some US$55 million at current exchange rates, approaching 2 per cent of total project costs. Most basic designs have been completed, several of them with the involvement of foreign architects offices that have experience in major stadium design. A number of stadium projects are now being built, but no Olympic construction or upgrading has begun.
Urban transportation Sinaenco calculated that almost 77 per cent by value of the R$9.8 billion of urban mobility projects designated by the federal government as World Cup-related will feature some form of bus rapid transit (BRT) or monorail technology. At least R$239 million or 2.4 per cent of total cost referred to project design. However, this represents just a fraction of urban transportation projects under way in Brazil. The biggest ongoing project is the So Paulo city metro (subway). This currently measures 69 km, with another 20 km under construction, and
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is integrated with an urban rail system giving a network total of 323 km. Several other major cities including Rio de Janeiro, Belo Horizonte, Braslia, Porto Alegre, Salvador, Recife and Fortaleza have embryonic metro systems, mostly with expansion plans. No metro expansion projects were endorsed for the World Cup, possibly because they have a very high cost per mile and a long tradition of construction delays.
Brazils long-term investment plans At the start of 2010 the federal government published an update of its long-term investment plan. This is named Programa de Acelerao do Crescimento literally Faster Growth Plan and generally known as PAC-2, where 2 indicates that it is an update of proposals published 2007. As per the table, PAC-2 forecast R$1.59 trillion of spending, mainly state-led capital investment. At todays exchange rate that would be equal to US$880 billion. Allowing for some devaluation of the Brazilian currency in coming years, a final equivalent might be closer to US$800 billion. Some 60 per cent of PAC-2 is scheduled for 2011-2014, with 40 per cent after that. And almost 69 per cent of PAC-2 is for energy, and the bulk of that will be development of Brazils recently-discovered ultra-deep-water sub-salt petroleum fields and construction of some major hydroelectric dams in the Amazon. Various of the PAC-2 projects are among those listed by the government and/or the Olympic Organising Committee as World Cup-related or Olympics-related, and are described as such in this booklet. The government also launched a specific R$9 billion World Cup PAC in January of 2010 covering the urban mobility projects planned for host cities, described in Section 4 of this booklet. At the same time it announced R$1 billion of additional financing for private-sector hotel development, via the BNDES.
Ports and airports Expansion of Rios Antonio Carlos Jobim airport is a World Cup-related project and described in Section 4. However, many other airports also have expansion plans. So Paulos international airport at Guarulhos, some 27 km from the city centre, handled 21.7 million passengers in 2009, making it the busiest in South America. According to Infraero, the government company that runs most airports in Brazil, this will be expanded to 29 million per year. Plans call for building a third runway. PAC-2 also includes R$7.8 billion for port and waterway expansion. Most of this is split between several projects aimed at expanding capacity and efficiency, including dredging, port access, cargo handling facilities, and waterway multimodal terminals. Foreign companies have been moving into the Brazilian logistics sector. Various cities chosen to host World Cup matches will receive investment for passenger liner quays.
Civil construction Brazil is going through a residential construction boom, nothing like the real estate bubbles that recently afflicted many developed countries, but rather an attempt to start reducing a huge housing deficit. The federal government has launched a major drive to build low-cost housing to attract a shortfall estimated at eight million units, with US$123 billion of grants and financing included in PAC-2. Called Minha Casa Minha Vida (literally, My Home, My Life), the lead programme provides easy financing for up to two million cheaper homes through 2014. The project is split into three income bands, for families with monthly income up to US$700, US$1,400 and US$2,300, approximately. Bottom-rung repayments are limited to 10 per cent of family income with a minimum of R$50 per month, and preferentially the property is registered in the wifes name. This programme has attracted substantial interest from major construction groups and is accelerating a trend towards standardisation and mechanisation in Brazilian residential construction the sector has traditionally made little use of prefabrication, dry-wall and so on. Outside of My Home, My Life, residential construction for middle and upper-class market segments is also booming, thanks mainly to greater available credit, and substantial foreign capital is coming in. Among recent foreign investors in Brazilian civil construction (residential and commercial) are Equity International (Sam Zell, US), Brookfield Asset Management (Canada), Carmignac (Luxembourg) and BlackRock (US). Another consequence of the construction boom is a scarcity of specialist staff. There are restrictions on foreign architects and engineers taking formal responsibility for projects, but they may find opportunities as consultants.
Construction equipment This essential but little-noticed sector is in a slump in Europe and the United States, but booming in Brazil. According to Off-Highway Research, a London consultancy, world construction equipment sales crashed 40 per cent from 2007 to 2009, and have recovered only slightly in 2010. Most developed markets are stagnant. In Brazil, according to local estimates, 2010 sales of construction equipment
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are up by around 50 per cent or 60 per cent over 2009, driven mainly by the infrastructure and civil construction boom. The great majority of earthmoving equipment is made locally by major multinationals, and the country is a net exporter. More sophisticated items like tower cranes, hydraulic cranes, larger off-road dump trucks, tunneling shields and directional boring equipment are imported. CNH, JCB, Terex and Caterpillar have recently announced or opened additional manufacturing capacity, while Sany announced its debut factory.
Financial Several asset managers have launched investment funds targeting Brazilian infrastructure and other sectors they think will benefit from the World Cup and the Olympics. Brazilian banks that have launched or are reported to be considering such funds are Ita, Banco do Brasil, Caixa and Bradesco. Among foreign banks Santander and BNP Paribas have also launched similar funds. Insurance is also expected to benefit in various ways: the group renovating the Mineiro stadium in Belo Horizonte, one of the first projects to get under way, signed insurance policies worth a reported R$8.2 million with the local branch of Germanys Allianz Group.
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6. Key points of Brazilian law

Introduction to the Brazilian legal system Brazil has a civil law system with legislation coming from the bicameral federal Congress, 27 unicameral state Assemblies and some 5,565 unicameral municipal Chambers, all of which are directly elected under universal suffrage. The country is now on its seventh constitution since gaining independence in 1822. The most recent, promulgated in 1988, contains some 50,000 words and 250 articles, plus some 15,000 words and 97 articles in transitional provisions. As of July 2010 the charter had been amended 66 times, an average of once every four months. Amendment requires 60 per cent approval in each of two votes in the federal Senate and House of Representatives (Senado and Cmera dos Deputados). Three separate, equal and independent powers are specified in the constitution: legislative, executive and judiciary. The latter is divided into various levels and areas of interest. In addition to the regular courts there are specific systems for labour, electoral, and military matters. Each of these systems culminates in its own Superior Court the Superior Tribunal of Justice (STJ), the Superior Tribunal of Labour (TST), the Superior Electoral Tribunal (TSE), and the Superior Military Tribunal (STM). Above these sits the Federal Supreme Court (STF), which hears only matters of constitutional interest. The enormous amount of detail written into the Brazilian constitution reflects in the STF workload in 2009 it handed down 121,300 judgments, many of them virtually identical tax, labour and welfare disputes, or cases still dragging on from Brazils era of hyperinflation. The constitution was amended in 2004 to provide that STF decisions passed by an absolute majority of the 11-member court should be binding precedent for lower courts, and indeed the 2009 volume was 24 per cent down on the 2007 record of 159,500 judgments. The federal justice system comprises regional and itinerant courts, while state justice is composed mainly of regular courts and appellate tribunals, plus itinerant and small claims courts. Judges in Brazil enter the profession via competitive public competition. Senior court judges are named from within the profession by the president of the republic, and nominations to superior courts must be ratified by Congress. The constitution provides for separate courts to deal with sporting disputes. These are spelled out in Law 9615 of 1998, also known as the Pel Law. Essentially, these courts are restricted to disputes about sporting competitions, for example onfield misconduct, or an alleged misapplication of championship rules. Normal criminal conduct in a sporting environment is handled by the regular court system. Article 51 of Law 9615/98 specifically excludes the Brazilian Olympic and Paralympic committees from the sports justice system. Law 8906 of 1994 determines that foreigners can practice law in Brazil, but to do so they must have their foreign law degree revalidated in Brazil and pass the exam of the Brazilian Bar Association (OAB).
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It is absolutely essential anywhere in the world to undertake a detailed analysis of tax aspects before initiating a specific endeavor, but this is particularly the case in Brazil. Indeed, in addition to the elevated tax burden imposed, Brazil has a particularly complex tax system comprising several different taxes that are regulated by constantlychanging tax rules and jurisprudence. Hence, in order to navigate safely and effectively within the Brazilian marketplace, one must always keep in mind the specific tax repercussions of each step taken. Condorcet Rezende Ulha Canto, Rezende e Guerra - Advogados
Taxation The following information is an unofficial summary guide to some of the main taxes potentially impacting a company in Brazil. Other taxes and charges not mentioned here may also apply. Many taxes have rates, conditions and special cases that are not covered in this summary. All information is subject to change. Any person or company interested in taxation in Brazil should seek qualified professional advice.
Taxes are levied by the three levels of government federal, state and municipal. As a great over-simplification, the federal government taxes personal and company income, profit, production, imports, exports, capital gains and rural property, while the 26 states and the federal district tax motor vehicles, the movement of goods, donations and inheritance. The 5,566 municipalities tax services, urban property and property sales. The total tax take in Brazil has recently been around 34 per cent 36 per cent of GDP, depending on the calculation. The Brazilian Finance Ministry had it peaking at 34.5 per cent in 2008. According to the 2010 Index of Economic Freedom, published by the Heritage Foundation, Brazils tax take is 35.3 per cent, comparing for example with the United States at 28.3 per cent, the United Kingdom 37.9 per cent, and Argentina 24.5 per cent. In general the Brazilian tax burden is high for a developing country of similar level but lower than most developed countries that provide universal health and education.
General points about the tax system According to the Brazilian Constitution, taxes should comply with five basic principles. They should be legal, applied equally, non-retroactive, with any change taking effect in the following fiscal year, and not represent confiscation. However, some taxes are granted an extra-fiscal function, meaning that they are directed at controlling or regulating the national economy (or specific sectors), rather than revenue raising. As such, they are deemed to be exempt from some of the abovementioned principles, in particular that changes including rate changes should take effect only in the following fiscal year. Taxes deemed to be extra-fiscal include Import Tax, Export Tax, and the Tax on Industrialised Products (IPI). These are all federal taxes, and the government has used rate changes as means of rapid economic intervention. One such case was the reduction of IPI on some new cars and household appliances during the recent economic crisis, as part of a general stimulus package. Some tax revenues are retained and spent exclusively by the government that collects them, while others must be shared. The Tax on the Circulation of Goods and Services, for example, is levied by each state but a proportion is shared out among the municipalities. And the annual license fee for motor vehicles is levied by the state but with 50 per cent returned to the municipality where the vehicle is registered. Some Brazilian states and municipalities have offered tax incentives to attract investments, in particular for projects that create significant numbers of jobs. At state level these are normally sectorial exemption from or reduction of ICMS,
Introduction The Brazilian tax system is spelled out in the 1988 Constitution, principally Title VI, and in numerous laws and regulations. Brazil makes a distinction between: Impostos literally, taxes. Taxas literally, taxes; frequently more like a levy, charge, rate or duty. Contribuies literally, compulsory contributions. Emprstimos compulsrios literally, compulsory loans. However, following the guidance of Blacks Law Dictionary, according to which a tax is any contribution imposed by government [] whether under the name of toll, tribute, tallage, gabel, impost, duty, custom, excise, subsidy, aid, supply, or other name, in this overview these various Brazilian instruments are all generically referred to as taxes, and sometimes specifically by their Brazilian names. Some unofficial counts put the total number of taxes in Brazil at over 70.
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although this requires the agreement of other states and the federal government. Individual companies making major investments have sometimes negotiated a rebate or delayed payment of ICMS. Municipal authorities have offered waivers of IPTU land tax and rebates on ISS service tax. Both the World Cup and the Olympics have special tax regimes (see following section), and in June of 2009 the National Fiscal Policy Council (CONFAZ Conselho Nacional de Poltica Fazendria) issued a ruling (Convnio ICMS 39/09) declaring that operations relating to the World Cup, including importation, would be exempt from ICMS. However, in the absence of a comprehensive federal policy on fiscal waivers and exemption some states and municipalities in early 2010 started discussing or enacting their own incentive packages, raising fears of a fiscal war between states and municipalities trying to attract World Cup related investments.
Small companies known in Brazil as microempresas may qualify for a special fiscal regime where they substitute a single monthly payment of a percentage of their total billing for the separate calculation and payment of many taxes.
Notes on selected taxes Corporate income tax (IRPJ) A federal tax on profit and capital gains. The general base rate is 15 per cent of profit. An addition 10 per cent is charged on profit and capital gains that exceed R$20,000 per month, so making an effective top rate of 25 per cent. There are several allowable deductions, for example losses carried forward, depreciation, support for cultural projects, and so on. The profit on which tax is levied may be real or presumed, where the former is the result of a final or preliminary balance using accrual basis accounting, while the latter is simply a percentage of quarterly billing. Real profit may be estimated and paid monthly and then adjusted at an annual reckoning, or it may be calculated and paid quarterly. Presumed profit is a percentage of gross billing determined by the government, and ranges from 1.6 per cent to 32 per cent of billing according to a companys sector of activity. Presumed profit allows for simplified accounting, but is not available to all sectors of activity or for companies with billings exceeding R$48 million (general limit) in the preceding fiscal year (1 January 31 December). Also: When a company has foreign subsidiaries, the group will be taxed on the consolidated profit. Dividends distributed to corporate or private shareholders in Brazil or abroad are not subject to income tax.
The underground economy Brazil still has a substantial underground or parallel economy, although this has been falling gradually. According to a study by the FGV business school it accounted for 18.3 per cent of GDP in 2009, against 21 per cent in 2003. Companies in the parallel economy tend to be small and work on mainly a cash basis. According to the FGV study, one reason driving the formalisation of the economy was the demand for credit. Another discernible trend over the last decade or more has been a gradual reduction in bureaucracy and the increasing modernisation of fiscal procedures. Brazil, and particularly the tax system, may still seem horrendously bureaucratic to many foreign businessmen, in particular those less familiar with Lusitanian traditions. The country ranked only 129th out of 183 contenders on the World Banks 2010 Ease of Doing Business listing, where 1 is best, and 150th for ease of paying taxes. Nevertheless, information technology is making a difference, so that the vast majority of citizens now file their annual tax return over the internet. For many companies the greatest practical change is coming with the introduction of the electronic Nota Fiscal an online substitute for the paper fiscal bill that companies are obliged to issue for all transactions other than a simple retail sale. At the federal level the electronic Nota Fiscal was introduced in 2008, initially for sectors most prone to tax evasion, for example cigarettes and fuel, and has been gradually expanded to other sectors. Many municipalities now have online Nota Fiscal systems for service companies. In So Paulo municipality, which has Brazils greatest concentration of service providers, over 170,000 are registered. Electronic Nota Fiscal systems considerably reduce bureaucracy and record-keeping costs, while implying no additional tax burden for companies that were already complying with the law.
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Tax on circulation of goods and services (ICMS) A state tax that is akin to an imperfect wholesalelevel value-added tax. Companies charge and remit ICMS on their sales, but can take a credit for ICMS they have paid on inputs. Some services such as telecommunications, the supply of electricity and interstate or inter-municipal transportation are also subject to ICMS. Imports pay ICMS at the time of customs clearance, normally at between 18 per cent and 25 per cent, while exports are exempt. Some products such as books and magazines are exempt, as are leasing operations that do not constitute a sale (ICMS on international leasing transactions is currently under consideration in the Supreme Court). One detail worth noting is that ICMS becomes due with the physical dispatch of goods to a customer, even if they are not paid for. Rates vary from state to state: transactions within the same state are taxed at between 17 per cent and 19 per cent, while interstate transactions are taxed at 7 per cent or 12 per cent. Some states apply 7 per cent to some destinations and 12 per cent to others to
promote economic development, or in an attempt to gain investments and/or influence decisions by economic agents. Some items, for example communications services, may carry a higher rate.
foreign company establishes any kind of presence in Brazil; other cases should be studied individually. There are no municipalities within the Federal District, and the Federal District itself is technically not a municipality, but it nevertheless charges ISS as a special case.
Tax on industrialised products (IPI) This is a type of federal value added tax for manufactured products, where the producer can take a credit for tax paid on inputs against tax owed on sales. It is charged on the sale price at the factory gate, or the declared import price. IPI must be paid monthly and can vary greatly according to the deemed necessity of the goods. For example, most food is zero rated, while alcoholic drinks are taxed at between 11 per cent and 143 per cent. Inputs such as plastics, rubber, textiles, machinery, equipment and instruments are taxed at anywhere from zero to 35 per cent. Most exports are exempt. Note that rates can change at short notice see General points about the tax system above. Contributions Brazil has numerous taxes that are called contributions. Despite the name, there is no question of their being voluntary. Several different contributions are levied on a companys gross billing, and on its payroll. Some also apply to imports. One special group of contributions are called contributions for intervention in the economic domain, known as CIDE for short. One such is charged on gasoline and other fuels with the revenue in theory going to highway development. There is also a 10 per cent CIDE tax on payments for the use of foreign technology, trademarks and patents and the supply of foreign technical assistance. Such payments are also subject to IRPJ at a 15 per cent rate. These CIDE payments do not necessarily fall within the scope of double taxation treaties.
Import tax (II) Rates are fixed by presidential decree and vary according to the classification of the goods. II is charged on the declared CIF value at the time of customs clearance, but in a case where authorities suspect under-billing they can use the wholesale price in the exporting country, plus insurance and freight. The rate of II may be reduced or the tax may be waived where the importer can show that no similar product is made in Brazil, or where the domestic supply is insufficient to meet Brazilian demand. The top rate is currently 35 per cent. The WTO reports that Brazils trade-weighted average tariff in 2006 was 8.6 per cent, comprising 11.0 per cent for agricultural imports and 8.4 per cent for non-agricultural items.
Compulsory loans These were a significant feature of the Brazilian fiscal system during the years of hyperinflation, prior to the introduction of the Real in 1994, albeit they are not officially classed as taxation. One example was a compulsory loan of the local currency equivalent of US$2,000 that travellers were required to deposit with the government to purchase an international air ticket. This was returned in local currency after two years without interest or inflation adjustment, implying a substantial loss of real value. Compulsory loans have fallen into disuse with economic stability, but the authority remains in the Constitution.
Services tax (ISS) A municipal tax on services, with a top rate of 5 per cent of the gross billed value of the services rendered. Services subject to ICMS (see above) are not also subject to ISS. Note that ISS is legally due on the services when they are supplied, even if they are never billed, or if once billed they are not paid for. As a general rule, the tax is due in the municipality where the service supplier is located. However, given that many service suppliers have registered an accounting office in a low-ISS municipality to supply services in another where the ISS is higher normally a major city some municipalities with high ISS have started controlling or registering outof-municipality service companies. This typically occurs in major cities like Rio de Janeiro and So Paulo. Services supplied by a foreign company to an entity in Brazil will normally be subject to ISS if the
Other points of interest Financial reporting standards Brazil is in the process of adopting International Financial Reporting Standards (IFRS) as laid down by the International Accounting Standards Board (IASB). The process started in 2000 and became law on 1 January 2008. Full convergence between Brazilian GAAP and IFRS is scheduled for the end of 2010.
Double taxation Brazil has signed treaties to avoid double taxation with several countries including Argentina, Austria, Belgium, Canada, Chile, the Peoples Republic of China, the Czech Republic, Denmark, Ecuador,
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Finland, France, Hungary, India, Italy, Israel, Japan, Luxembourg, Mexico, the Netherlands, Norway, Peru, the Philippines, Portugal, Slovakia, Spain, Sweden, South Africa, South Korea and Ukraine. Even where no such treaty exists, for example with the United States and the United Kingdom, a Brazilian company can normally claim a credit against Brazilian IRPJ for taxes paid by its overseas operations, up to the limit of the tax that would be payable in Brazil on the same income.
replicate an arms length situation. Three basic methods are used: production cost plus profit, comparative independent price, and resale price less profit. However, in some cases Brazil establishes fixed margins. Charges for services between foreign affiliates and their Brazilian head office, or vice versa, are also scrutinised.
Remittances Income paid by Brazilian companies to foreign companies and individuals is subject to a 15 per cent withholding tax, effectively a special case of income tax.
Thin capitalisation Brazil introduced legislation which came into force in January 2010 to limit deductible interest payments for companies that are capitalised via loans. Among the requirements are that the interest payment must be a necessary part of the companys business. Interest must be charged at a fair market rate and is deductible for income tax and social contributions only up to the level of the TJLP, which is Brazils official long-term interest rate. Also, the interest shall not exceed half of the profit registered by the company in the current or previous period. The remittance is subject to 15 per cent withholding tax. Interest can be paid on the capital of a partner or shareholder, in which case it is treated as a dividend remittance whether it is in fact remitted or capitalised.
Dividends These are not taxed, whether paid to an investor in Brazil or abroad. However, for a foreign investment to qualify it must have been registered with the Brazilian Central Bank when it was brought into the country. Also, a dividend will be recognised as such only if the Brazilian company has made a profit.
Capital gains Capital gains by companies established in Brazil are treated like profit (see above). Capital gains realised by foreign companies on foreign investments registered with the Brazilian Central Bank are subject to a 15 per cent withholding tax. If the capital gain is made by a company located in a tax haven, the rate is 25 per cent.
Transfer pricing Brazilian practices with between international international practices, transfers are effected respect to transfer prices affiliates broadly follow seeking to ensure that under conditions that
Main taxes impacting companies Note: rates shown are those generally applicable. Special cases may apply. Rates may change.
Brazilian name Common name or acronym IRPJ rough translation level Calculated on rate*
Imposto de Renda Pessoa Jurdica Adicional de IRPJ
Corporate income tax
Actual profit, whether presumed or calculated Real profit, whether presumed or calculated Remittances for income and capital gains by nonresidents from Brazilian sources
15%
Adicional de IRPJ IRF
supplementary corporate income tax Withholding income tax
10% on profits over R$240,000 pa 15% or 25%
IR na Fonte
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Imposto sobre Produtos Industrializados Imposto sobre Operaes Financeiras
IPI
Tax on industrialized products Tax on financial operations
sale price at the factory gate; or import price Credit, foreign exchange, insurance, stocks and bonds Adjusted net income Gross monthly billing; also imports
Variable, by product category Varies by type of operation; 0% to 5.38% 9% or 15% 0.65% and 1.65%
IOF
Contribuio social sobre o Lucro Lquido Programa de Integrao social + Programa de Formao do Patrimnio do servidor Pblico Contribuio para Financiamento da seguridade social Contribuio de Interveno no domnio econmico Imposto sobre Circulao de Mercadorias e servios Imposto sobre servios
CsL PIs/PAseP
social contribution on net profit social integration program
F F
COFIns
Contribution for financing social security Contribution for intervention in the economic domain Tax on circulation of goods and services services tax
Gross monthly billing; also imports see main text
3%, 4% or 7.6%
CIde
see text
ICMs
Transfer value
Varies by state and category 7% to 33% Varies by municipality and category - 2% to 5% 0% to 35% Most items are 0%, norm when applied is 30%, limit is 150% up to 4% different in each municipality up to 1.5% in so Paulo
Iss
Billing price of service
Imposto sobre Importao Imposto sobre exportao
II Ie
Import tax export tax
F F
CIF value FOB value
Imposto sobre a Transmisso de Bens Imveis Imposto sobre a Propriedade Predial e Territorial urbana
ITBI IPTu
Property transfer tax urban property and land tax
M M
Fair market value Fair market value
Main payroll charges seguridade social seguro Acidente do Trabalho Inss sAT social security Workers accident insurance Various social services deductions education allowance unemployment compensation fund F F Total wage bill Total wage bill 20% 1%, 2% or 3% depending on activity 3.0% or 3.3% 2.5% 8%
sistema s salrio-educao Fundo de Garantia por Tempo de servio
se FGTs
F F F
Total wage bill Total wage bill Total wage bill
Main employee deductions Imposto de Renda Pessoa Fsica seguridade social IRPF Inss Personal income tax social security F F earned income Monthly salary up to R$3,416 15%, 22.5%, 27.5% 8% up to 11%
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In the past few years, Brazil has consolidated its position as one of the most attractive jurisdictions for foreign investments. Although Brazilian law and general regulations applicable to foreign investments are relatively old, the complementary provisions enacted by the Central Bank and by the Brazilian regulatory agency responsible for the supervision of Brazilian financial and capital markets provide for a safe and not too bureaucratic route for foreign investment to access the Brazilian market. Foreign investors should take a good look at the opportunities arising from Brazil hosting two of the worlds most important sporting events. Raquel Novais Machado, Meyer, Sendacz e Opice Advogados
Foreign investment Note: In this text, as elsewhere in this booklet, the term Brazilian company refers to one properly registered in Brazil under Brazilian law, irrespective of the origin of its capital. A constitutional amendment in 1995 removed the distinction between Brazilian companies of national and foreign capital, and they are treated equally save in the cases mentioned below.
Brazilian Central Bank data showed sectors leading the receipt of FDI in 2009 to be, in descending order, iron and steel making, petroleum and natural gas, vehicle building, and financial services. As of August 2010, according to the Central Banks Focus Report, Brazilian market expectations were for FDI inflows of US$32 billion this year, rising to US$39 billion in 2011. For control and registration purposes, foreign investments in Brazil are divided into two separate categories, namely: 1. foreign direct investments; and 2. portfolio investments.
Foreign direct investment Long-term investment in productive activities is governed by Law 4131 of 1962 which also covers portfolio investments and subsequent regulations. A foreign direct investment can be made via the transfer into Brazil of financial resources to be used in a productive process or service, but the funds must belong to an individual or company that is legally based outside of the country. The investment may also be made in the form of capital goods and/or technology. Capital goods, transfer of technology and other intellectual property are treated as an investment of their cash equivalent. A simpler solution in some cases may be to sell the tangible or intangible assets to the target Brazilian company and then capitalise the payment, although a company doing this must be alert to other possible fiscal implications. Foreign direct investment into Brazil must be registered with the Central Bank. In addition to being a legal requirement, with a fine for noncompliance, registration is essential for future repatriation the capital, or to remit profits, or to reinvest profits in Brazil in a way that increases an investors registered investment. Registration must be effected within 30 days from the date of entry of the investment into Brazil or the date of customs clearance in case of investments in goods. Since 2000 the process of registration is done online using the Central Banks Foreign Direct Investment (IED) module of the Declaratory Electronic Registry (RDE). Registration shall be made by the company in Brazil that receives the investment and by its legal representative in Brazil, or by a bank or broker in Brazil granted with powers to proceed with such registration. There is no minimum time requirement for capital thus registered to remain in Brazil. That means that the investor is free to sell his investment and/or repatriate his capital at any moment. However, repatriation of any amount that exceeds the registered investment will be subject to Brazilian withholding tax and may be subject to scrutiny by the Central Bank and other Brazilian tax authorities. The rate of withholding tax is 15 per cent unless the
Introduction For several years now, Brazil has been a favorite destination for foreign investors interested in emerging markets. In 2008, according to World Bank data, the country received US$45.1 billion of foreign direct investment, defined as net inflows to acquire a lasting management interest (10 per cent or more of voting stock). The annual total represents the sum of equity capital, reinvestment of earnings, other long-term capital, and shortterm capital as shown in the balance of payments. This performance was good enough to rank Brazil 10th in the world overall. Among emerging economies, only China and Russia were higher. FDI into Brazil fell to US$25.9 billion in 2009, during the international crisis, placing the country fourth among emerging economies behind China, Russia and India. Nevertheless, Brazils inward FDI was still greater than Chile and Mexico combined, or five times the amount flowing into Argentina.
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foreign investor is located in a tax haven, in which case a rate of 25 per cent will apply. Profits remitted as dividends are tax free (except for the Tax on Financial Operations IOF), and there is currently no limit to the amount of profits that can be remitted in this way on a registered foreign investment. However, dividends can be remitted only on Brazilian profits that have been declared, taxed and distributed in the manner prescribed in applicable Brazilian laws and regulations. Capital brought into Brazil as a direct foreign investment is subject to IOF. Technically, this is due not on the FDI itself but on the conversion of the investment from a foreign currency into Brazilian reais. See the section on taxation for further information. Constitutional reform in 1995 removed most restriction on foreign investment in Brazil. Today foreign investors are barred or face restrictions in nuclear energy, ownership of rural property, activities within a strip of up to 150 km along the border, commercial fishing, mail and telegraph services, and aerospace. Foreign ownership is limited to 30 per cent in press and broadcasting companies, and the editorial control must be in the hands of a Brazilian who is nativeborn or has been naturalised for at least 10 years. How this applies to internet content is a matter of ongoing debate. The aviation sector is currently limited to 20 per cent foreign ownership but the government has sent a draft constitutional amendment to Congress that would raise this limit to 49 per cent.
company to issue bonds in a foreign capital market. Whichever way the operation is structured, it must be registered with the Brazilian Central Bank by the borrowing company or its legal representative, using the online Financial Operations Registry (ROF) module of the Declaratory Electronic Registry (RDE). Registration must give full details of the terms and conditions of the credit operation.
Import/export financing Companies in Brazil may obtain import and/or export financing, for example the prepayment of exports, from foreign sources. This financing may relate to good or services. The parties are free to negotiate terms and conditions, but the Central Bank may question loans that appear to differ significantly from prevailing market norms. Where import or export financing is for longer than 360 days, it must be registered with the Central Bank using ROF. Financing shorter than 360 days is not subject to Central Bank registration.
Portfolio investment Foreign companies and individuals may invest in Brazilian stocks and shares (including at an Initial Public Offering) and in other financial instruments that are normally available to Brazilian citizens, permanent residents and companies. To do so they must name a legal representative in Brazil, obtain their registration with the Securities and Exchange Commission of Brazil (CVM Comisso de Valores Mobilirios) and cause their legal representative to register with the Central Bank the funds that they wish to invest. Foreign capital brought into Brazil for such a purpose will be subject to IOF on the exchange transaction, in the same way as FDI. However, foreign investors may buy shares in listed companies only via the physical or electronic stock market or authorised and organised over-the-counter market where the shares are listed for trading.
Brazilian laws provide a variety of alternatives on how to structure a foreign investment, and it is important to understand such options in order to optimize the opportunities. The decision on the structure to be adopted, such as the establishment of a direct local presence through a Brazilian subsidiary, the creation of a joint venture with a Brazilian business partner, or the acquisition of an existing Brazilian company, will depend on a case by case analysis. In all such cases, well established legal provisions will govern the investment in terms of corporate aspects, taxation, remittance of funds and other relevant issues. Moira Huggard-Caine TozziniFreire Advogados
Incorporation, mergers & acquisitions and joint ventures
Cross-border financing Brazilian companies are allowed to raise overseas financing in the form of credit, but there are some restrictions. The loan may be granted to a Brazilian company by a foreign individual or company; normally but not necessarily an international financial institution. It is also possible for a Brazilian
A foreign company seeking to do business in Brazil, using strategies other than simply exporting to a Brazilian customer, may constitute a presence in the country. It is possible to open a branch in Brazil but the process is lengthy and complicated. For that reason, most foreign companies opt to incorporate their own Brazilian subsidiary, acquire a minority
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or majority stake in an existing Brazilian company, or form a joint venture with a Brazilian company. What follows is a brief overview of these options.
Incorporating a company Foreign investors are generally allowed to open a company in Brazil, but some restrictions may apply (see Foreign investment). Various structures are available. By far the most common are the limited liability company (sociedade limitada) and the stock corporation (sociedade annima). These two structures face essentially the same tax treatment and share the following features: Two or more partners are required, who may be individuals or other companies. The only exception to the two-partner rule is the whollyowned subsidiary, where 100 per cent of the capital of a stock corporation is held by another Brazilian company. Partners need not be resident in Brazil, but if they are not they must appoint an attorney-infact in Brazil to receive service of process on their behalf. Although not mandatory, it is common practice to empower the attorney-infact to vote on behalf of the non-resident partner in meetings of the Brazilian company. The partners liability is generally limited to their contribution to the capital (in the case of a corporation), or to the full payment of the entire capital (in the case of a limited liability company). However, partners may be held liable for companys debts in certain circumstances (disregard doctrine), especially in connection with labour obligations, environmental damages and damages to consumers. There is no minimum capital requirement, but minimum levels may be necessary in some specific situations.
assets (see Foreign investment for information about FDI in kind). Note that forming a company can take a considerable amount of time in Brazil. The World Banks Doing Business Project ranks the country 126 out of 183 for ease of opening a business (and 131 for closing one). The average time to open is 120 days for 16 bureaucratic procedures, against an OECD average of 13 days and 5.7 procedures.
Buying a company A foreign investor, be they corporate or individual, may purchase a minority or majority stake in an existing Brazilian company. The requirements and restrictions on foreign partners mentioned previously continue to apply. It goes without saying that the articles of association of the target company and any relevant shareholders agreements should be carefully examined in advance for possible limitations or special conditions.
buyinG a Limited LiabiLity cOmPany
This essentially boils down to an amendment to the articles of association, to be duly registered. Although not mandatory, common practice is the simultaneous execution of a purchase-andsale contract, which will specify the quotas (ie the units in which the capital of a limited liability company is divided) to be sold, together with price, conditions, non-competition clauses, guarantees, and so on. For its part the amendment to the articles of association gives effect to the transfer of quotas, including the resultant distribution of quotas, and may simultaneously specify changes to management, responsibilities, and even the corporate purpose. The investor seeking to acquire control of a limited liability company must ensure that he acquires at least 75 per cent of its quotas.
Limited LiabiLity cOmPany
The articles of association or a separate document of appointment must indicate the company managers (one or more partners, or a third party named by the partners). The managers of a limited liability company must be resident in Brazil.
buyinG a cLOseLy-heLd stOck cOrPOratiOn
stOck cOrPOratiOn
May be publicly-held or closely-held. At least 10 per cent of capital must be paid up at the moment of incorporation. Different types and classes of shares may carry different rights and/ or privileges, but at least 50 per cent of the total shall have voting rights (companies incorporated prior to 2001 may have up to two-thirds of shares without voting rights). Shares are not required to have a par value and may be paid up in cash or
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This is effected by noting the transfer of stock in the companys official registered shares book (Livro de Registro de Aes Nominativas), in case of acquisition of registered shares, or in the records of the depositary institution, in case of acquisition of book-entry shares. There will normally be a purchase-and-sale contract similar to that mentioned above.
Joint ventures Brazilian law does not recognise the joint venture as a special form of business relationship. The foreign investor has essentially three options: he may incorporate or fully acquire a Brazilian company as
described above, and then use this as a vehicle to form a joint venture with another company, for example by accepting a new partner; he may acquire a stake (majority, 50/50 or minority) in an existing Brazilian company, probably with a shareholders/quotaholders agreement to pursue specific strategies or projects; or he may simply make a foreign direct investment in an existing Brazilian company, again probably as part of a deal where some form of contract spells out objectives and conditions. In all these cases the joint venture will operate under Brazilian law.
Antitrust All forms of acquisition, merger, incorporation and joint venture are potentially subject to Brazilian antitrust legislation. This is broadly similar to that of the United States, with the main difference being that parties do not need to seek prior approval from CADE, the federal antitrust agency (Conselho Administrativo de Defesa Econmica). They are free to proceed at their own risk with the intended transaction, but must notify CADE within 15 days of the execution of the first binding document between the parties. CADE has the power to investigate and then order partial divestment, and can even order a deal to be undone. General trigger limits for antitrust notification are 20 per cent or more of the respective national market or a turnover in Brazil exceeding R$400 million.
Due diligence review All operations aimed at complete or partial company acquisition or the formation of a joint venture should be preceded by full legal and accounting due diligence reviews. These are essentially the same as in other countries. It is also becoming increasingly common for industrial companies or real estate companies considering developing what was previously an industrial site to seek environmental audits. In addition to tax obligations, a purchaser in Brazil should pay close attention to the possible existence of significant labour liabilities in relation to current and former employees. It is not unusual for companies in particular companies in financial difficulties to accumulate substantial labour liabilities, including in the form of welfare contributions and FGTS retirement fund contributions that have not been paid to the government. Companies in labour-intensive sectors that have faced some period of difficulty should be subject to particular scrutiny before acquisition.
Importing into Brazil The Brazilian economy is basically open, meaning that virtually anything can be imported. Among the few prohibitions are bulk wine, weapons and ammunition, endangered animals and plants, used tyres, used consumer goods, and dangerous goods as defined by the International Air Transport Association. That said, several products face technical restrictions, countervailing duties, quotas and/or a requirement for prior import licensing, in addition to regular import tax (effectively a duty). Import regulations and bureaucratic procedures can be complex, and are beyond the scope of this summary. Following are just a few key pointers: Mercosul Brazil, Argentina, Paraguay and Uruguay are joined in a customs union called Mercosul (Mercosur in Spanish), with Chile and Bolivia as associate members and Venezuela as a candidate for full membership. The four full members apply a Common External Tariff (TEC Tarifa Externa Comum) with an original maximum rate of 20 per cent but there are now hundreds of exceptions. Registration all Brazilian importers must register with the Foreign Trade Secretariat (SECEX). Shipping documents consular authentication is not required. Invoices required for all importations that constitute commercial transactions between companies of goods liable to import tax. Import charges there are various, over and above the import tax (duty) and other internal Brazilian taxes charged at the time of customs clearance. These import charges can be 5 per cent or more of the CIF value. This is in addition to specific logistics charges, for example shipping, container unloading and transportation. Fines inadequate documentation can lead to goods being detained by customs and subject to fines as high as 100 per cent of the tax due, if not outright seizure.
Although Brazil has not been open to imports for very long, there has been very significant and ongoing progress in terms of legislation, incorporating special customs regimes and matters that have increasingly boosted Brazilian international trade policy and the flow of goods with countries within and outside of the Mercosul group. But theres still a lot to do. Our biggest challenges today are to integrate the control systems of the various government agencies that are important to international trade, and to seek a balance between the need to control what enters and leaves the country while also making import procedures easier. Renata Correia Cubas, Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados
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Bonded warehouses most ports have associated bonded warehouse facilities where imports may be deposited without payment of taxes, liable only for storage fees until they are withdrawn and incurring no penalty (other than storage and handling fees) if the goods are subsequently re-exported direct from the bonded warehouse. Despachante this traditional Brazilian figure sometimes referred to as an expediter specialises in helping individuals and companies pick their way through bureaucracy, for a fee. While there is no legal requirement to use such a service, many importers do, and those who dont may find that what they save in despachante fees is outweighed by the cost of inexplicable delays.
Temporary importation Brazil has a special customs regime that provides for goods to be brought into the country for a fixed period without payment of tax technically, the tax is suspended. This process has been used for previous sporting events, although of course the World Cup and Olympics will also be covered by their own importation and tax agreements, as explained in Section 7. A similar regime allows for temporary importation of goods that will be put to economic use. In such a case, customs authorities suspend tax on entry but it becomes due at monthly intervals, based on a calculation of the likely useful life of the equipment. This system is frequently used for example for specialised construction equipment. Authorisations are granted case by case by means of a Executive Declaratory Act (ADE Ato Declaratrio Executivo). This is issued by the Regional Superintendency of the Brazilian Internal Revenue Service (SRRF Superintendncia Regional da Receita Federal do Brasil) that has jurisdiction for the place where the imported items will effectively be used. Should the prospective use fall under multiple regional jurisdictions, then the ADE will be granted by the Central Coordinator of Customs Administration (Coana CoordenaoGeral de Administrao Aduaneira). The application for temporary importation is made by the company or organisation that will be responsible for using the imported items (or their legal representative, for example a company hired to handle customs clearance and logistics). In the case of a temporary importation of items that will actually be used in a sporting event, the application should be made by the responsible organisation.
In practice, a company seeking authorisation for a temporary importation, be it tax-free or with proportional tax payment, must comply with a series of conditions. The most basic of these is to demonstrate the temporary nature of the importation. Other requirements include: the goods may not be imported under foreign exchange cover, because this would tend to suggest a sale; they must be appropriate for the declared purpose; and the description and identification must be precise, not generic, for example with machinery serial numbers where appropriate. Finally, if the importation concerns goods that are subject to prior control by any other Brazilian government agency, for example the National Agency for Sanitary Vigilance (Anvisa Agncia Nacional de Vigilncia Sanitria), then the requirements of these other agencies must be met before obtaining the temporary import license. Where the suspended tax exceeds R$20,000, the importer may be required to provide a customs insurance or bank guarantee against eventual failure to pay. Once all formalities have been observed and the product has been granted temporary entry, customs authorities will set a time of permanence in Brazil. Frequently this will be six months, but it can be one or two years for construction equipment working on a major project, and starts counting from the date of customs clearance. The importing company or organisation must then pay close attention to the calendar, because while extension may be possible, it must always be requested before expiry of the initial period. The law specifically excludes extension requested post hoc, and companies that keep goods in Brazil after expiry of the allowed period are liable to penalty. It should also be noted that temporary importation is closely monitored by customs authorities. Companies face four options at the end of a period of temporary importation: export the goods; cede them (subject to acceptance) to tax authorities without public cost or onus; destroy them, paying all relevant costs but still without tax onus; or transfer the goods to some form of tax-paid importation, paying the relevant taxes. If none of these four options has been exercised by the end of the period of temporary importation, the suspended import tax will become due. The company then has 30 days to export the goods, avoiding tax but paying a fine, failing which it must pay the regular import tax plus interest and a fine.
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Businesses considering selling in Brazil need to be aware of our main rules governing consumer relations. These are laid down by our Consumer Code. The over-riding principle is concern for the health and safety of consumers, followed by the need to give consumers adequate information and provide them with products and services of quality that properly meet their needs, so contributing to improved quality of life and greater transparency and harmony in consumer relations. Jos Antnio Miguel Neto Miguel Neto Advogados Associados
Selling in the consumer market Introduction A foreign company that sees the World Cup or Olympics as a good opportunity to sell goods or services in Brazil must take various things into consideration. First of all, if the goods or services suggest a connection with either of these major events the question of intellectual property and brand protection may well arise. Both FIFA and the International Olympic Committee are extremely protective of their names and logos, together with the names and logos of the specific events, and both have well-established rules and procedures for licensing. A company wishing to market its products or services in Brazil during these major sporting events could in theory set up its own Brazilian subsidiary, with its own distribution network and retail outlets. However, such an investment would be unlikely unless the company planned to seek a major, longterm presence in the country. Even so, it would be more usual to begin by working with a local partner and an established distribution network. Intellectual property, joint ventures, importexport and taxation are covered elsewhere in this section, while the supply of professional services such as architecture and engineering is mentioned in Section 3, and the specific case of cross-border legal services is dealt with in Section 2. The present text looks at regulations impacting the consumer market.
Consumer protection Brazils key legislation is the 1990 Consumer Protection Code (CDC Cdigo de Defesa do Consumidor Law 8.078/90). This is generally regarded as offering modern and robust consumer protection, although there may of course be questions concerning application, definition, scope and enforcement. The CDC recognises the need for government action to protect consumer rights, but also the need to reconcile the legitimate interests of all parties to a commercial transaction. And it understands that consumer protection must keep pace with economic and technological development. Essentially, the CDC seeks to protect consumers from death, injury or danger to health, shielding them from defective products and services, deceptive or fraudulent advertising and coercive or unfair commercial practices. It promotes consumer education while establishing a right to information and to consumer rights protection. It also provides for prevention of and compensation for moral or material damage. Key definitions in Arts 2 and 3 of the CDC include: Consumer: an individual, company or other legally established body that acquires or uses the goods or services as the end user. Supplier: an individual, company or other legally established body, whether public or private, local or foreign, that pursues activities involving the production, assembly, creation, construction, transformation, import, export, distribution or marketing of products or the provision of services. Products: any movable and immovable goods, of a tangible or intangible nature. Service: any act performed in the consumer market in exchange for payment, including acts related to banking, finance, credit and insurance, except acts stemming from an employment relationship. Consumer protection is exercised in general by some 650 foundations or agencies run by state governments under Art 5 of the CDC and known as Procons. This law gives consumers 30 days to complain about a general purchase, or 90 days for consumer durables and automobiles. Consumers also enjoy five years to seek legal redress through a regular civil action. If a consumer receives a product that does not work, is broken or in any other way of an inadequate quality; if it is perishable and past its sell-by date or if the sale has been based on misleading advertising; then the consumer may seek substitution, repair or refund. In the case of a service that was improperly performed, they may seek repair without cost, or a total or partial refund. If a consumer makes a purchase by phone or via a door-to-door salesman, they have seven days from delivery to change their mind and demand their money back without needing to give any reason.
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Companies should also note that under Art 12 of the CDC: the manufacturer, producer or builder, be he Brazilian or foreign, and the importer shall, independent of guilt, answer for the repair of damages suffered by consumers as a result of defects of arising from design, manufacture, construction, assembly, formulas, mixture, presentation or packaging of the products, as well as for insufficient or inadequate information about their utilization or risk (emphasis added). The retailer can be held equally responsible when the maker or producer cannot be properly identified, and any retailer who makes good on a defective product has the right to subsequently seek redress from his supplier. Finally, the CDC holds all parties involved in the production of an item to be potentially responsible. Thus, for example, a person knocked down by a car that suffers a brake failure can sue the maker of the car or of the brakes, or both. Similarly, victims of a commercial air crash or their relatives can seek redress against the airplane maker, and not just the company operating the flight, although in such cases they need to demonstrate guilt, for example in terms of defective design or construction.
more advanced than World Health Organization guidelines, given that Brazil requires detailing of saturated and trans fats, nutritional fibres and sodium. Products exempt from nutritional labelling include: alcoholic and soft drinks; herbs and spices; tea and coffee; fresh and frozen fruit and vegetables; and products sold in packaging that has less than 100cm2 of visible area.
cOsmetics, medicine and PharmaceuticaL PrOducts
Importation is controlled by Anvisa, and requires prior authorisation. Only companies duly authorised by the Health Ministry and licensed by sanitary authorities are allowed to import.
tOys
Some sectors of interest Many products and services are governed by specific regulations. Following are some products categories that may be of particular interest:
FOOd
Brazil is represented in the Codex Alimentarius Commission by the Economic Department of the Ministry of External Relations. Domestic and border control is generally exercised by Anvisa, literally the National Agency for Sanitary Vigilance (Agncia Nacional de Vigilncia Sanitria), subordinated to the Ministry of Health, although in the case of agricultural imports other inspectors from the Ministry of Agriculture, Livestock and Supply may be involved. Food products sold in Brazil, including imported products, must in general carry a label written in Portuguese that describes ingredients and nutritional content and details of energy value, carbohydrates, proteins and fats, each expressed in absolute terms per portion and as a percentage of daily requirements within a 2,000-calorie-perday diet. The package must also show origin, batch number and consume-by date. Volumes and weights must be in metric units. Anvisa states that Brazilian food labelling requirements are today
Toys sold in Brazil, whether made locally or imported, must carry safety certification from Inmetro, the national weights and measures institute. Samples are tested in authorised laboratories. The requirement is policed at street level by the weights and measures agencies of each state, acting under Inmetro delegation. Inmetro understands that Brazilian standards for toy safety are equivalent to those of the more advanced economies. Toys are defined as any product or material designed or clearly destined for use in play by children aged 14 or younger. Among the numerous exemptions from Inmetro rules are scale models, sporting material that meets size and weight specifications laid down in rules for specific games, fireworks, adult bicycles, and educational material that has no entertainment function. Importation of toys must be preceded by a request for an import license registered with SisComEx, the federal system for control of imports and exports. The importer must sign a commitment to destroy or re-export the goods should they fail to meet certification.
cLOthinG
There are no specific controls on the commercial importation of clothing and footwear, although the goods may be subject to normal import taxes and possibly an anti-dumping duty. Commercial imports are of course subject to normal legislation with respect to trade marks.
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Although practices such as counterfeiting of products and other forms of infringement of intellectual property rights are still considered practices frequently adopted in Brazil, the legislation implemented, particularly that enacted after 1996, broadly ensures that the owners of patents, marks, industrial designs, software and copyrights in general have effective procedural instruments to impede their improper use and secure redress of the respective damage. The effective protection of such rights, however, depends above all on the proper application of these mechanisms by the judiciary, in conjunction with the efforts of the private sector and consumers respect for intellectual property rights. Andr Zonaro Giacchetta Pinheiro Neto Advogados
Intellectual property Introduction Anyone who strolls along some of Brazils more popular cut-price shopping streets may notice a brisk trade in what gives every appearance of being blatant intellectual property piracy the latest DVDs for US$2, market-leading computer programs for US$5, and top-line sports shoes for US$15 or US$20. Moving slightly up-market, you might get a handbag with the fanciest Italian brand-name for US$30. Its a cash-only business, no official receipts given. Of course, the DVDs and computer programs will have badly-cut photocopy covers and the sports shoes and handbags might quickly lose their shine. In many cities the street sale of counterfeit products is so entrenched and ubiquitous that police repression appears to be symbolic at best. And piracy contaminates many other areas of the economy: medicines and the auto parts aftermarket, for example. Nevertheless, the country has made significant strides since enacting modern IP legislation in 1996. As of 2010 Brazil remained one of 29 countries on the Watch List issued annually by the United States Trade Representative (USTR), but escaped the 11-country Priority Watch List. The USTR noted that: Brazil continued to show a commitment to fighting counterfeiting and piracy and to strengthening its enforcement efforts; however, significant levels of piracy and counterfeiting continue.
Among areas of concern listed by the USTR were counterfeit pharmaceuticals, weak border enforcement, a lack of expeditious and deterrent sentences, internet piracy, book piracy, the scope of patentability and inadequate protection against unfair commercial use. The Triple Frontier region where Paraguay, Argentina, and Brazil meet near the Iguassu Falls enjoys what the USTR called a longstanding reputation as a hotbed of piracy and counterfeiting of many products. The Business Software Alliance estimated the commercial value of software pirated in Brazil in 2009 at US$2.3 billion, placing the country fifth worldwide after the United States, China, Russia and France. However, Brazils software piracy rate in Brazil has been dropping, the BSA said, from 64 per cent in 2005 to 56 per cent in 2009. It was the second lowest rate in Latin America and the lowest among the BRIC countries.
Legal framework Brazil is party to various of the main international treaties and conventions in the area of trademarks and intellectual property. These include the Paris Conventions of 1883 and 1967, the Bern Conventions of 1886 and 1971 covering artistic and literary copyright, the 1961 Rome Convention for the Protection of Performers, Producers of Phonograms and Broadcasting Organizations, the 1970 Patent Cooperation Treaty (PCT) that seeks to simplify procedures for filing an international patent application to obtain protection in several countries, and the World Trade Organizations agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS). Key pieces of national legislation include the 1996 Intellectual Property Law (Lei de Propriedade Industrial 9.279/96), the 1998 Software Law (Lei de Software 9609/98), and the 1998 Copyright Law (Lei de Direitos Autorais 9.610/98). The Brazilian patents office is officially known as the National Institute for Industrial Property (Instituto Nacional da Propriedade Industrial) but is normally referred to by its acronym, INPI. Its main functions are to register trademarks and issue patents. INPI, which comes under the Ministry of Development, Industry and Foreign Trade (MDIC), is located in Rio de Janeiro but has a network of agents throughout the country.
Trademarks Straightforward trademark applications can be made online at the e-marcas address within the INPI site see list of contacts at the end of this booklet. Trademarks may be Brazilian or foreign in origin. A Brazilian trademark is defined as one deposited in Brazil by a Brazilian resident or company, while
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a foreign trademark is one deposited in Brazil by a non-resident, or one that has been deposited in a country or with an international organisation with which Brazil is bound by a treaty obligation and is then deposited in Brazil within time limits laid down in the relevant treaty. INPI recognises three types of trademarks: Product or service to distinguish a product or service from others that are identical or similar. Collective to identify products or services coming from members of a specified group or body. Certification declaring that a product or service conforms to certain norms of technical specifications. Brazilian law does not allow for protection of signs that are not visible, for example a sound or aroma. Trademarks may be nominative, with only a name or combination of letters and numbers; figurative, with a design or image; mixed, with some of each; or three-dimensional. A simple trademark registration with INPI is valid for 10 years and can be renewed indefinitely for successive 10-year periods, provided normal conditions are met. The holder has the right to the exclusive use of the trademark throughout the country, as well as to assign his registration or application for registration, to license its use, and to care for its property integrity or reputation, but he loses his rights if he fails to use the trademark during a five-year period. Infringement can occur through the unauthorised use of a trademark, including the importation, exportation, sale, offer for sale, maintenance in stock, hiding or exhibition of a product carrying a trademark that has been unlawfully reproduced or imitated. The same applies to a product contained in a package carrying an unauthorised trademark. According to Brazilian intellectual property law, the abovementioned types of behavior configure crimes under penalty of imprisonment or fine. Irrespective of the criminal action, the aggrieved party may file civil actions seeking the abstention of unauthorised use of the trademark and/or compensation for losses and damages resulting from the violation.
Patents Brazilian intellectual property law recognises invention patents and utility model patents. An invention may be patentable when it meets the requirements of novelty, inventive activity and industrial use. An item of practical use, or any part thereof, may be patentable as a utility model
provided that it is susceptible of industrial use, presents a new shape or layout, and involves an inventive act that results in functional improvement in terms of use or manufacture thereof. An invention or utility model is considered to be new when it was not available to the public, by written or oral description, use or any other means, before the date of filing of the patent application. As a general rule, Brazilian law embodies the principle of first to file, meaning that in the case of a dispute, the patent will be awarded to the inventor (or his assignee) who first applies for it. This may not necessarily be the first inventor. Disclosure of the invention or utility model in the 12 months prior to filing a patent application does not necessarily negate novelty, provided such disclosure is made by the inventor; or by the INPI, by official publication of a patent application filed without the consent of the inventor and based on information obtained from him or as a result of his acts; or by third parties, in reliance on information received directly or indirectly from the inventor or as a result of his acts. Patent applications are deposited with INPI. They must refer to individual inventions and must include full descriptions, drawings and justifications, together with proof that all required procedures have been complied with. The application remains secret for 18 months, at which point it is published, but the 18-month period may be reduced at the request of the applicant. The application will then be subject to formal examination. Third parties are allowed to submit objections, and INPI rulings can be challenged in court. An invention patent if granted will be valid for 20 years from the date of filing, with a guaranteed minimum of 10 years from the date of issue of the letters patent. For a utility patent the validity is 15 years from filing date with a minimum of seven years from issuance. The inventor (or his assignee) must make commercial use of the patent within three years of issuance. As a general rule, a patent confers on its owner the right to prevent third parties from manufacturing, using, offering for sale or selling the patented product or process, or importing it for such purposes, unless with the patentees consent. According to Brazilian intellectual property law, the abovementioned types of behaviour configure crimes under penalty of imprisonment or fine. Irrespective of the criminal action, the aggrieved party may file civil actions seeking the abstention of unauthorised use of the patent and/ or compensation for losses and damages resulting from the violation, including for the period between the application disclosure date and the patent date.
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Other points Unpatentable categories Brazilian limitations on patentability are broadly in line with international practice, for example naturally occurring items, abstract concepts, business practices and others.
Industrial design Applications for registration of industrial designs are lodged with INPI. According to Brazilian intellectual property law, an industrial design stands for the ornamental display of an object or the ornamental arrangement of lines and colours applicable to a product, thus providing for a new and original appearance to its external configuration, and that may serve as a type for industrial manufacture. The industrial design registration shall be effective for a period of ten years counted from the filing date, renewable for three successive periods of five years each.
The growing support of Brazilian courts in the last decade has been key to the development of a real and effective arbitration culture in Brazil, and has opened the way to the use of this procedure, which offers quicker settlement of matters and also allows for the use of decision makers who are more familiar with specialist subjects than might be so in court. Gilberto Giusti Pinheiro Neto Advogados
Arbitration and dispute settlement One aspect of major sporting competitions such as the World Cup and the Olympics is that they involve immutable deadlines. This means that companies working on projects or investment opportunities linked to such events cannot risk lengthy delays due to contractual disputes. They are, therefore, well advised to include in their contracts procedures for rapidly resolving any differences that might arise, and arbitration is the natural solution. In countries such as Brazil, where normal civil process can be extremely slow, the need for a pre-established rapid alternative is all the greater. Arbitration has been available in Brazil for many years, but was little used before new legislation in 1996 laid down a firm legal framework. Even then Law 9307 of 23 September 1996 faced a constitutional challenge in the Brazilian Supreme Court, which took approximately five years to judge its validity. In 2001, the court ruled that Law 9307 was constitutional and arbitration practice has grown strongly since then. According to a study by the Getlio Vargas Foundation, a business school and research institute, between 2008 and 2009 arbitration hearings in Brazil grew 74 per cent, with 185 per cent growth in the values involved. Most common cases are contractual disputes between companies and ones involving civil responsibility, for example accidents.
Unfair competition Chapter VI of the 1996 Intellectual Property Law deals with unfair competition. Among the 14 definitions of such practice are using fraudulent means to solicit, for ones own or someone elses benefit, a third-party clientele; making false claims; using, imitating or alluding to another companys advertising in a way that creates confusion between products; improper use of another companys name or brand; publication or utilisation of another companys trade secrets; and selling or offering for sale a product with a false claim of patent protection. Penalties are three to 12 months in jail, or a fine.
Copyright The 1998 Copyright Law establishes that all created works are protected like intellectual property. Authors rights are split between moral and patrimonial, where the former is the intrinsic right of the author to his creation, and the latter are assignable rights to the commercial exploitation of the creation.
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Choice of arbitrator, rules and seat Under Brazilian law, any person over 18 years old can act as an arbitrator. There is no requirement that the arbitrator have specific legal or technical training and there is no restriction on a foreigner acting as an arbitrator in Brazil. The option to refer a dispute to arbitration can be expressed via an Arbitration Clause or Arbitration Commitment, where the former is included in a contract to cover future differences and disputes that may arise, and the latter is an agreement reached after the execution of a contract to resolve a specific and existing dispute that was not previously covered by arbitration jurisdiction. The parties are free to specify the rules that will apply during the process, the only restriction being the normal limitations of respect for public order and customs. However, Brazil already has a dozen well-established arbitration institutions that have adopted their own procedures. There are more than 50 arbitration institutes in So Paulo State alone, several of which also offer mediation services. Many of these institutes are private, commercial operations but some are run by trade associations to handle disputes within specific sectors and professions, for example real estate, energy or engineering, while others come under the auspices of bilateral chambers of commerce, for example the Brazil-United States, BrazilArgentina and Brazil-Canada chambers. There is also a Eurochamber Mediation and Arbitration Chamber supported by eight bilateral Chambers of Commerce representing companies from or doing business with Belgium and Luxembourg, Germany, the United Kingdom, Spain, France, Holland, Italy and Portugal. The Market Arbitration Panel of Bovespa, the Brazilian stock market, has issued detailed regulations for all steps of the process and allocation of costs. Listed companies are not required to use arbitration for stock market related disputes, but it is a requirement for those companies that seek access to Bovespas New Market listings reserved for companies that adopt higher levels of corporate governance. Brazil signed the 1958 New York Arbitration Convention in 2002, meaning that a foreign investor in Brazil can opt to specify a seat of arbitration in any other signatory country, with the decision being recognised in Brazil after homologation by the Brazilian Superior Court of Justice. However, foreign confidence in Brazilian arbitration has been growing fast, and multinational companies in Brazil appear increasingly willing to accept a Brazilian seat, especially because an award rendered in Brazil can be immediately enforced before Brazilian courts. Besides this important point, companies should carefully weigh potential logistical problems, costs and delays when opting for a seat outside of Brazil.
Points about Brazilian arbitration Parties may select one or more arbitrators, but always an odd number. The arbitrators may take statements and hear witnesses. At the request of the parties, they may conduct inspections, seek other proofs, and call on specialists for outside advice. As a first step in an arbitration process, the arbitrators will normally seek conciliation or an amicable solution, failing which they proceed with the process as laid down in the agreed rules. The parties are able to settle at any time during the proceedings. The arbitration award (called a laudo arbitral or sentena arbitral in Brazil) has the same status and effect as a regular court decision. The final text must evaluate the claims of the parties and available evidence, explain the basis of the decision, and set a time-limit for the parties to comply with the decision. It will also define and apportion costs. Where the arbitrators find one or more of the parties to have acted in bad faith, they may impose penalties. Unless the parties to a dispute agree differently, an arbitration process is limited to a maximum of six months. Agreements for a longer period are not uncommon. If the arbitrators fail to reach a decision within six months (or the agreed period), the process is deemed void. Most arbitration institutes publish tables of costs for the various items in the process, some of them based on percentages of the value at stake and others on hourly rates. There is no appeal to a civil court against the terms of arbitration award, but parties can seek legal redress if one of the parties fails to comply with the terms of the award, or if they feel that their rights have not been properly observed during the arbitration process.
Concern for preservation of the environment gained relevance in the Brazilian Federal Constitution of 1988, and it must be taken into account not only during the definition of a project, but also during its installation and operation. This means that environmental licensing has become an important procedure which seeks to reconcile economic activity with environmental protection, thus providing sustainable development of the country and the national economy. Jos Antonio Fichtner Andrade & Fichtner Advogados
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Environmental protection and licensing Introduction Brazil has comprehensive environmental legislation that is generally regarded as modern and appropriate, yet at the same time faces some very significant environmental challenges. Part of this apparent paradox lies in deficient enforcement, but it is important to understand the vast socioeconomic differences between regions and situations. Environmental protection of virgin Amazon rainforest hundreds of miles from the nearest authority presents operational challenges that are very different from monitoring an industrial site in the 19-million population So Paulo metropolitan region. Federal legislation to combat deforestation is usually recognized as advanced, with rural property owners facing requirements to preserve anything from 20 to 80 per cent of native forest. Development is completely banned in many areas of the Amazon, but where occupation is allowed the highest levels of forest preservation apply. Once again, however, the problem is enforcement. Generally speaking, environmental protection has improved significantly over the last couple of decades in Brazils larger cities there are 14 municipalities with populations exceeding one million, and 40 exceeding half a million. Industrial and vehicular emissions are today better controlled, thanks to cleaner fuels, stricter zoning, tougher enforcement and technological advance, but it remains very much a work in progress.
Legislation and structure The Brazilian Constitution of 1988 establishes in Art 23 that: The Union, the States, the Federal District and the municipalities, in common, have the power... to protect the environment and to fight pollution in any of its forms; (and) to preserve the forests, fauna and flora..., while Article 225 lays down that: Everyone has the right to an ecologically balanced environment..., thus requiring that: ...both the government and the community shall have the duty to defend and preserve it for present and future generations (unofficial translation). Even before receiving this constitutional foundation, basic environmental protection was provided by the 1980 Industrial Zoning Law (Law No 6803/80) and the 1981 National Environment Policy (Law No 6938/81). More recently the structure was reinforced with the 1998
Environmental Crimes Law (Law No 9605/98). This creates potential criminal liability for individuals, organisations or companies that pollute or degrade the environment, extending potential culpability to managers, directors, representatives, board members and others if they are aware of and fail to prevent the companys environmental crime. The key national body that oversees environmental licensing policy is the National Environment Council (Conama), subordinated to the Ministry of the Environment. Conama brings together government, NGOs and business representatives. However, policy is implemented at the national, state and municipal levels by, respectively, the Brazilian Institute of Environment and Renewable Resources (Ibama), state environmental secretariats and their respective licensing agencies, and municipal environmental secretariats. As a general guide the appropriate jurisdiction for licensing an industrial development or infrastructure project will be determined by the area of potential impact, starting from the local level and working up: if the impact is contained within a single municipality, then that will be the appropriate licensing level; if it exceeds one municipality, it becomes a state concern; if it goes beyond state borders, it becomes federal. Given that most industrial projects will have some impact on air or water that extrapolates the host municipality, they are normally dealt with at state level. However, Ibama will be involved if a project within a single municipality or state impacts a river flowing into another state, or impinges on an area of federal concern, for example an Indian reservation or federal nature reserve. It is not unknown for projects to be the object of dispute for licensing prerogative between organs at different levels.
Three-stage licensing process Whichever the level of competence for licensing, and whatever the nature of the project, the procedure is essentially the same. The company seeking to implement the project will apply to the licensing authority for a Provisional License (Licena Prvia). The authority will advise the company if it needs to submit a full impact report, known as an Environmental Impact Study/Environmental Impact Report (Estudo Prvio de Impacto Ambiental/Relatrio de Impacto Ambiental EIA/ RIMA). These studies are conducted by experts chosen and paid by the interested company, but they must be qualified independent professionals and follow predetermined technical procedures to examine all aspects of the project. Studies can be rejected should the licensing authority deem them incomplete or inadequate.
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After receiving the reports, the licensing authority may then hold one or more public hearings in the communities potentially impacted by the project to present details of the plans, explain the potential environmental impacts and seek local opinions. If satisfied, the authority will then award the Provisional Licence, which is normally the main hurdle in the process. This licence recognises the general environmental acceptability of the project and specifies any modifications and mitigating or compensatory actions required. In practice, such actions will probably have been a matter of discussion and negotiation during the EIA/RIMA study stage. Typically they might involve additional emission controls, compensatory investment in a nature reserve or reforestation project, and/ or social development programmes within affected communities. Environmental and social compensation programs are nowadays established in relation to the social and environmental impact of the project, not any set percentage, but have typically been in the general order of one per cent of total project cost, over and above the regular environmental controls built into the project itself. With the Provisional Licence granted, the company can more safely move ahead with detailed planning and design. When it is ready to start construction it must apply for the Installation Licence (Licena de Instalao). Assuming everything has been done in accordance with the terms spelled out in the Provisional Licence, the Installation Licence should be pretty much a formality. And once the plant or factory is built, it will require an Operating Licence (Licena de Operao) to turn the key. Provided everything has been built according to specification, this final licence should also be straightforward. Once in operation, the plant may be subject to inspection and to fines if emissions exceed stipulated limits. Similarly, plants operating without proper licensing are also subject to penalty.
www.tocantinsadvocacia.adv.br Cuiaba, Mato Grosso, Brazil +55.65.3623.7713 alex@tocantinsadvocacia.adv.br kleber@tocantinsadvocacia.adv.br
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7. International experience: shortening the learning curve

Planning for 2014 and 2016 incorporates international experience from previous events, in particular intellectual property protection and prevention of ambush marketing for what have become billion-dollar businesses. Areas ranging from ticketing to the Olympic Torch Relay call for vast amounts of legal work. Both the World Cup and the Olympic Games have become huge businesses over recent decades, and the growth of income marches hand in hand with ever-more-rigid policing of intellectual property and broadcast rights. Given that both events are rooted albeit increasingly distantly in amateur sports, there is sometimes public and media confusion or consternation about what can appear to be a clash of principles. The Paris-based International Federation of Association Football (FIFA) and the Lausanne, Switzerland-based International Olympic Committee (IOC) are adamant that these enormous sporting events simply would not happen at least on anything like their current scale without equally massive sponsor support. This in turn requires strict intellectual property and copyright protection for the billions of dollars invested. In 2008, the year of the Beijing Olympics, the IOC reported gross revenue of US$2.4 billion. Of this, US$1.73 billion came from broadcast rights and US$436 million from sponsorship and marketing. FIFA spokesman Nicolas Maingot announced during the World Cup in South Africa that the estimated gross revenue of the tournement was US$3.2 billion. He didnt break down the income stream, but the New York Times reported earlier that broadcast rights for the event earned the federation US$2.15 billion, up by 53 per cent on the 2006 competition. Higher prices for sales to cable TV were the main driver. Open TV, be it free or commercial, has consequently faced gradual exclusion. This trend effectively transfers the cost more directly to the fans, although economists might argue that at the end of the day the fans pay anyway, be it through pay-TV subscriptions, product consumption in a sports bar, purchase of sponsors product, or national taxes or a TV licence (in the case of a publicly-funded channel). Selling TV rights through pay TV maximises broadcast revenue while focusing the payment cost on those people specifically interested in the event and willing and able to pay, rather than socialising the cost to consumers or society in general. Its a debate with very different implications in rich and poor countries, where there is a greater or lesser prevalence of pay TV. Whatever the arguments, the bottom line is that the World Cup and the Olympics are today billiondollar undertakings. Both are run by not-for-profit organisations that insist the host countries grant broad tax exemption for the competitions and their official sponsors, but both seek to maximise income in much the same way as for-profit corporations. In their defence, both organisations say they look to these four-yearly events as a source of funding to see them through the lean years. Moreover, the way the bulk of the surplus is distributed is very different from the way profit-making enterprises do so. IOC figures for Beijing showed that the committee made grants totalling US$1.77 billion to National Olympic Committees the US Olympic Committee for example received US$138 million. In all, the IOC reported it returns 92 per cent of Olympic revenues to national committees, teams,
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athletes and sports worldwide, retaining just 8 per cent for its own administration. FIFAs Maingot said 75 per cent of World Cup revenue would be ploughed back into grass-roots development of the game around the world. TV companies might complain about the cost of broadcast rights, but they still bid for them. And sponsors appear happy. Adidas reported that World Cup-related sales of official team shirts which often retail at US$80 or more topped one million each for Germany, Mexico, Argentina, South Africa and Spain. Nike reported football-related sales up 39 per cent in value in the first quarter of 2010, compared with the same period of 2009, while Sony, another official sponsor, used the event to promote its new 3D television sets worldwide.
Promising protection Section 41 of the Host City Contract for the London Olympics commits that city, the UK Olympic Committee and the Local Organising Committee to ensuring that the IOCs various symbols, trademarks and associated terms enjoy proper legal protection, and that procedures are put in place to allow related intellectual property disputes to be solved in a timely manner, in particular before and during the actual period of the Games. In other words, not through a civil law suit that drags on for years. In Section 48 the same parties acknowledge the importance of protecting the rights granted to Olympic sponsors and other commercial partners and commit to taking all necessary steps, at their cost (including developing and implementing a programme in relation to the prevention of ambush marketing activities and the taking of legal recourse, if appropriate), to prevent and/or terminate any ambush marketing or any unauthorized use of Olympic properties. While the Host City Contract for Rio de Janeiro has not been made public, Rios official Olympic bid, backed by the federal government, took pains to detail all existing Brazilian IP legislation. It noted that the Portuguese equivalent of names such as Rio 2016, Olympic, Olympics, and Paralympics, and variations thereof, were already protected under Brazilian law, while the Brazilian Olympic Committee has registered various corresponding internet domains and extensions. The bid pointed out that Art 124 of Brazils 1996 Intellectual Property Law specifically prohibits a third party from registering the name, prize or symbol of an official or officially-recognised sporting, artistic, cultural, social, political, economic or technical event, or an imitation liable to cause confusion, save under the express authorisation of the competent authority or entity promoting the event (unofficial translation). Attempting to win clients by fraudulent association with the Games would be covered by Art 195. The Rio bid committed the federal, Rio state and Rio municipal governments to implementing
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any additional legislation that may be necessary, in particular considering the possibility that new technologies might create new challenges for intellectual property protection. Local police forces will apply trademark protection measures vigorously, the bid promised, with an additional police contingent specially assigned to the effective control of falsified products. In a country where uniformed police have been known to stroll past street stalls of pirate DVDs, this constitutes an important pledge. Trademark protection units will be created at each level of government to combat the distribution and sale of goods falsified before and during the Games. Adding substance to Rios bid, in October of 2009 Congress passed the Olympic Act (Ato Olmpico Law 12035/09) providing legislative muscle for various of the key conditions promised in the bid, and further legislation is possible. In April of 2010, however, Carlos Arthur Nuzman, the president of the Rio-2016 Organising Committee, ran into opposition when he asked federal legislators to greatly extend the list of protected terms. They said the net was being thrown too wide, with a wishlist that included the Portuguese equivalents of medals, Rio, twenty-sixteen, 2016, sponsor and games. Senator Marisa Serrano argued that the additional protection could potentially threaten school sports competitions that in Brazil are often loosely termed Olympics. The Brazilian Olympic Act also formalised an undertaking to suspend all contracts for advertising space in airports or federals areas of interest to the Rio 2016 Games during the period from 5 July 5 2016 to 26 September 2016 in other words, roughly one month before and after the proposed period of the Games. Such suspension will happen at the request of the Rio OrganiSing Committee, which may then rent the same spaces at the 2008 price, plus inflation, and negotiate them with official sponsors. In the words of one Games organiser, among the aims of such a provision is: to avoid tourists arriving in Brazil for the Olympics and being confronted with advertising from soft drinks company A, while in fact soft drinks company B is an official sponsor. Olympic host cities are also required to ban all nonsponsor advertising in stadiums and Games venue, or indeed anything that might be visible from such places. This includes the sky: no ambush marketing from above; no blimps with competitors logos; no sky-writing airplanes. Londons O2 Arena, formerly the Millennium Dome, will briefly become The North Greenwich Arena when it is used for gymnastics and basketball in 2012.
Seeing orange With respect to ambush marketing, the Rio OrganiSing Committee understands that existing Brazilian legislation is sufficient to ensure sponsors
enjoy their proper rights, and recalled the citys recent experience: The integrated mobilisation of public authorities, advertising agencies and the media during the 2007 Pan American Games allowed for prevention of any serious incident of ambush marketing, the official bid said. Nevertheless, the Organising Committee and the three levels of government committed to modifying existing legislation or introducing new laws if necessary, giving priority to rapid decisions to support measures against ambush marketing. The need to defend against ambush marketing became global news in South Africa when some attractive young ladies were accused of the practice. Their crime? Wearing tight, bright orange minidresses to a football stadium when the Dutch national team was playing. The colour was said to recall a brand of Dutch beer that had not paid sponsorship rights, and indeed the dresses had been distributed with packs of beer and carried a label albeit very discreet with the beer brand. The case raised a number of interesting points. Orange is historically associated with the Netherlands, and with the countrys football team shirt. Its common for fans everywhere to flaunt their teams colours. Its also not unknown for groups of fans to go to a match together, perhaps even wearing matching or combined costumes. Nevertheless, the group of three dozen fairskinned blondes located prominently in a block close the pitch and performing choreographed cheering in miniskirts was obviously no accident. According to one of the group they were invited by stewards to leave the stadium, then questioned by FIFA officials and South African police who photocopied their passports and threatened them with six months in jail. All charges were eventually dropped, but not before two Dutch women in the group, alleged to be the organisers, were accused in special FIFA Courts of ambush marketing. Dutch Foreign Minister Maxime Verhagen described the threat of a six-month jail term as absurd and said that any action for illegal marketing should be taken against the company involved, and not against ordinary citizens walking around in orange dresses. FIFA, defending its position, said the beer company was guilty of misleading innocent people and leaving them open to possible criminal sanction. Britains Guardian newspaper called it yet another triumph for FIFAs chillingly efficient rights protection team, but the federation said that ambush marketing had become a major threat to the World Cup, carried out by companies seeking to reap rewards illicitly.
Need for speed The orange ladies incident threw light on South Africas so-called FIFA Courts created by special legislation to operate as a fast track to hear World Cup-related crimes.
Sponsors of both the World Cup and the Olympics say that they derive institutional and marketing returns on their investment for some time before and after the events themselves, but the main impact is naturally concentrated during the events and the short period immediately before, when global visibility and interest is highest. This means that the host country must have or provide mechanisms for IP disputes be resolved quickly. With ambush marketing, the need for quick action is even greater. In fact, mechanisms for rapid hearings have advantages beyond IP protection and the battle against ambush marketing. If some local or visiting fans are bent on causing trouble, for example, then they must be dealt with in a manner that prevents repetition during the event. If regular petty criminals decide that the thousands of national and international fans and participants constitute a soft target, then they must be taken out of circulation. In the years leading up to the 2010 World Cup, the international media frequently expressed concern about problems of violence at what was to be the first-ever such event held on the African continent, in a country normally plagued by high rates of violent crime. It is highly likely that Brazil will face similar foreign pressure. In August of 2010, for example, some armed drugs dealers fleeing from police holed up for a few hours in the kitchen of a beachfront five-star hotel. Hostages included a few foreign hotel guests, none of whom were injured. One of the worlds leading news agencies immediately linked the incident with the Olympics. The incident dramatised the security challenges faced by the host of the 2016 Olympic Games, AFP said in the second paragraph of its story, while the New York Times, reporting the same episode, noted that the gunmen came from a favela slum that is located along the corridor to Barra da Tijuca, where more than half of the events for the 2016 Olympic Games are scheduled to be held. In South Africa the government went to great lengths to prepare a huge police presence and set up a FIFA Courts system that involved 54 courts with a reported 110 magistrates, 260 prosecutors, 1,140 court officials and 200 translators. They (the courts) were created to deal with all kinds of World Cup-related criminal offences, which means they didnt deal only with incidents at a football ground, or even directly related to football, they could handle a regular crime like a mugging if it involved a tourist, said William Booth, a leading South African criminal litigator who defended cases in the FIFA Courts. South Africa has a huge backlog of cases in the regular criminal courts, and the aim was to be able to deal rapidly with people who were visiting for just a short time and get them out of the country quickly. The FIFA Courts applied normal South African law, plus some laws passed specially for the event. They sat for much longer hours, from 8.30 am until
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11 pm. And they used extremely expedited process, so much so that at least one case has now been set aside on appeal because the accused did not have his rights properly explained to him. Perhaps more of a problem, Booth said, was that the FIFA Courts system ended up leading to criminal prosecution of behaviour that would normally be treated as a misdemeanour. Two high-profile cases in this category involved trespass by a person entering the wrong area inside a football stadium, and a minor drugs offence committed by a girl friend of US media personality Paris Hilton. Possession of a very small amount of cannabis would not normally be prosecuted in South Africa, but this girl was charged, pleaded guilty and now has a criminal record, Booth said. Most World Cup cases (tried in the special FIFA Courts) were in fact very petty, but some of them led to senior lawyers and senior policemen spending a lot of time, I think merely to show the world that South Africa was dealing with things, Booth said. No such special courts have been proposed for the London Olympics, a lawyer involved in the Games planning said, and any incidents would be dealt with through existing structures: The Local Organising Committee has been given some quite significant special rights by UK legislation, but it will have to enforce these through the normal courts. Will Brazil adopt something similar to South Africa? Brazil after all is another country renowned for its snails-pace judiciary. Organisers of both the 2014 World Cup and the 2016 Olympics have been paying close attention to precedent. The Rio Olympics Committee sent a team to study the February 2010 Winter Games in Vancouver and has visited London to see preparations there, while organisers for the 2014 World Cup went to South Africa, studying its organisation, stadium designs, transport solutions and so on. A Brazilian lawyer involved in preparations for 2014 said he thought Brazil might be able to use its existing Special Criminal Courts (Juizado Especial Criminal) system, in particular making sure that at least one such court was conveniently located in each of the 12 cities chosen to host World Cup matches. The Special Criminal Courts structure was created in the 1988 Constitution but implemented for federal cases only in 2001. The goal is to seek simplicity and rapidity geared towards conciliation or an agreed penalty. Special Criminal Courts are limited to hearing cases with a maximum penalty of two years detention, or a fine, which would cover all infractions specified in Brazils 1996 Intellectual Property Law. So far Brazil has introduced special legislation to facilitate investment in World Cup stadiums and infrastructure, and granting FIFA tax exemption, but a general law containing further provisions relating to the Cup was still under discussion, the lawyer said. This would probably contain addition provisions relating to intellectual property protection and ambush marketing, and might also address the question of rapid judicial response.
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Brazil confirms tax breaks Both the Olympics and the World Cup will benefit from virtually blanket tax exemption in Brazil. Congress is debating a draft law (PL 7422/2010) covering the World Cup and associated stadiums, and the Olympics should be the subject of similar legislation in the future. A lawyer working on World Cup preparations said it was likely the draft law would be approved this year. Among the main concessions, which in general terminate shortly after the event, are: Tax exemption for all FIFA activities, even banquets. FIFA can incorporate up to five wholly-owned subsidiaries in Brazil. Just about everything imported by or for FIFA will enjoy exemption from federal taxes including PIS/Cofins (see Taxation above), Import Tax (II) and Tax on Industrialised Products (IPI); also importation fees. Durables must be subsequently re-exported or donated. FIFA, regional football confederations and foreign companies working for FIFA receive exemption from corporate income tax and associated levies IRPJ, IOF, welfare contributions, and others on earnings or receipts in Brazil. Foreigners who come to Brazil to work temporarily for FIFA are also exempt from income tax. This includes referees and players. Brazilian companies and residents that make money from the event must pay taxes as normal, but volunteers will be allowed to receive up to five minimum salaries per month currently roughly US$1,450/month free of income tax. FIFA and its subsidiaries can buy Brazilianmade goods direct from the maker without paying IPI. The government has created a special tax regime called RECOM (Regime Especial de Tributao para Construo, Ampliao, Reforma ou Modernizao de Estdios de Futebol) to cover construction and renovation of stadiums to be used in the World Cup. Generally speaking this provides tax exemption for importation of materials and new equipment where no equivalent is produced in Brazil. Unofficial calculations indicate the various stadium tax exemptions could add up to some R$350 million, or roughly US$200 million at current rates, during 2014. Other legislation pending in Congress and likely to be voted in 2010 included a draft law (MP 496/10) that allows cities hosting World Cup matches to exceed their borrowing limits to help them invest in or guarantee financing for stadiums, hotels, ports, airports and urban transportation projects.
London experience indicates work for lawyers Six years before the Olympic flame reaches Rio de Janeiro, modern offices full of apparently highly professional specialists are poring over spreadsheets, plans and projections, emanating efficiency and drive that would do a multinational proud. The operation is still ramping up, but if London is anything to go by the staff will be substantial, with plenty of work for lawyers. Twenty of the 350 organisers at the London Organising Committee are legal staff. What often surprises people is the amount of legal work involved in staging the Olympics, said Tim Jones, a partner at Freshfields Bruckhaus Deringer LLP in London. Hes heading up Freshfields Olympic support operation that started in 2003 when the firm helped prepared the London bid. The office is one of 19 Official Suppliers and Providers to the Games, a status that ranks below the companies putting in the big money the 11 Worldwide Partners, the seven Official Partners and the seven Official Supporters but still good enough for Freshfields to formally associate itself with the event and put the Games logo on the company website. We dont charge and we dont get paid but its not pro bono, we do it for the institutional return, Jones said. Freshfields also stresses that the 330-strong London office has a long-standing commitment to social programmes rooted in the communities around the 2012 Olympics site in Londons run-down East End. What calls for so much legal time? Jones explains: Some things are pretty obvious, for example intellectual property. The International Olympics Committee is fiercely protective of its own IP in the form of the rings, the name, and the association with the Games. Then theres the protection of the IP of the sponsors, and in particular against ambush marketing. But it goes much further. The Games will require what Jones called an extraordinary number of contracts for example staging the torch relay, which is a relatively minor part of the whole event, takes some 7,000 contracts just to go round the UK. Interested parties include local police, sponsors, broadcasters, local authorities, torchbearers, and transportation and accommodation providers. Every detail must be nailed down and watertight in every municipality the torch will pass through. It mounts up very quickly, and as soon as you go international it becomes more complicated, for example how do you get the torch through airport security? Jones said.
Public or private? The amount and nature of legal work required when preparing for the World Cup or Olympic Games depends in part on how the event is split between the government and the private sector. Associated infrastructure in areas like urban transportation is normally public responsibility, albeit some might happen via concession or public-private partnership, but for core facilities such as stadiums the Olympics have traditionally been more public, the World Cup more private. At least thats the theory. Brazil initially declared that no public money would be put into construction and renovation of World Cup stadiums, estimated at around US$3 billion, but in fact it looks like the vast majority will be financed by loans from the federal governments Brazilian Development Bank, with guarantees from the respective state governments. How much of this is ever repaid from truly private sources remains to be seen. The Olympic Games carry a blanket federal government guarantee to pick up any shortfall, but thats very different from planning a publicly-financed event from the start. Londons Local Organising Committee says almost all of the 2 billion budget will come from the private sector. Jones observed that as the Olympic Games become more private-sector dependent, so the work for lawyers naturally increases. In the UK, everything that needs to get done is the subject of a contract, he said. Freshfields staff have advised the London Local Organising Committee and the Olympic Delivery Authority on contractual aspects of ticketing, including public sales and ticket allocation to sponsors, procurement and construction arrangements for the roads and bridges within the Olympic Park site, easements, environmental impact assessment and procurement planning, intellectual property protection, utilisation agreements for the various venues, anti-doping and the related question of searching premises, sponsor negotiations, real estate negotiations and employment issues. One IOC concern of particular interest to Rio is to pass on as much knowledge as possible. For example, lawyers for the London organisers have worked to ensure that the international ticket vendor selected to handle sales is contractually bound to transfer all acquired knowledge. Freshfields is not involved in preparations for the Rio Olympics, but drawing on his London experience Jones said that the vast bulk of the work in Brazil would probably fall to local law companies, with contracts prepared under Brazilian law.
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8. Acronyms and useful contacts

acronym or common name English name or description phone no Website
Brazil government sources Presidncia Governo Brasileiro Ministrios Itamaraty Ministrio da Justia Ministrio do esporte Ministrio do Turismo sTF Official site of the Presidency Principal site of the Brazilian government List of ministries in english Brazilian Foreign Ministry Justice Ministry (Portuguese only) sports Ministry (Portuguese only) Tourism Ministry Brazilian supreme Court (Portuguese only) superior Tribunal of Justice (Portuguese only) senate special World Cup page (Portuguese only) Brazilian Consulate new York: Visa information Brazilian Consulate London: Visa information n/A n/A n/A 55 (61) 3411-6155 61 2025.3587 55 (61) 3217-1800 55 (61) 2023-7024 55 (61) 3217-3000 www.presidencia.gov.br/ingles http://www.brasil.gov.br http://www.brazil.org.uk/government/ministries. html www.itamaraty.gov.br/o-ministerio/o-brasil-noexterior www.mj.gov.br www.esporte.gov.br www.turismo.gov.br www.stf.jus.br
sTJ
55 (61) 3319-8000
www.stj.gov.br
senado
55 (61) 3303-4141
www5.senado.gov.br/fiscaliza2014
Consulado Brasileiro new York Consulado Brasileiro Londres
1 (917) 777-7777
en.brazilny.org/index.php?/consulado/t_c/visas
44 (20) 7659-1550
www.consbraslondres.com
56
Transparncia 2016
Brazilian government public accountability site for the Olympics (Portuguese only) Brazilian government public accountability site for the World Cup (Portuguese only) Brazilian savings Bank Brazilian Patents Office (Portuguese only) national Agency for sanitary Vigilance (Portuguese only) data-base of Brazilian legislation (Portuguese only) Brazilian Census Bureau statistics and Geography Institute Brazilian development Bank
n/A
www.portaltransparencia.gov.br/rio2016
Transparncia 2014
n/A
www.portaltransparencia.gov.br/copa2014
Caixa CeF InPI Anvisa
n/A 55 (21) 2139-3000 55 0800 642-9782
www1.caixa.gov.br/idiomas/ingles/index.asp www.inpi.gov.br portal.anvisa.gov.br
Legislao
n/A
www.presidencia.gov.br/legislacao
IBGe
55 (21) 2142-4501
www.ibge.gov.br/english
Bndes
55 (21) 2172-7447 London: 44 (20) 3008-6741 55 (21) 2334-3773 55 (21) 2976-1000
www.bndes.gov.br
Rio - estado Rio - Prefeitura
Rio state Government (Portuguese only) Rio City Government (Portuguese only)
www.governo.rj.gov.br www.rio.rj.gov.br
Events organisation IOC Rio 2016 2014 FIFA World Cup CBF Confederao Brasileira de Futebol International Olympic Committee Olympics Local Organizing Committee FIFA site for 2014 World Cup Brazilian Football Confederation: World Cup Local Organising Committee (Portuguese only) Brazilian Military sports Commission International Military sports Council 41 (21) 621-6111 55 (21) 3433-5777 41 (0) 43 222 7777 55 (21) 2432-2014 www.olympic.org www.rio2016.org/en www.fifa.com/worldcup/brazil2014 www.cbf.com.br
Comisso desportiva Militar CIsM
55 (61) 3312-4000
www.defesa.gov.br/esporte_militar www.cism-milsport.org
57
other information sources AAsP OAB Association of Lawyers in so Paulo Brazilian Bar Association (Portuguese only) Bar Association in so Paulo (Portuguese only) Bar Association in Rio de Janeiro (Portuguese only) Bar Association in Braslia (Portuguese only) Brazilian stock exchange 55 (11) 3291-9200 55 (61) 2193-9600 www.aasp.org.br/aasp www.oab.org.br
OAB-sP
55 (11) 2155-3737
www.oabsp.org.br
OAB-RJ
(21) 2272.2001
www.oab-rj.org.br
OAB-dF
55 (61) 3036-7000
www.oabdf.org.br
BM&FBovespa
55 (11) 2565-7010 London: 44 (208) 528-1082 new York: 1 (212) 750-4197
www.bmfbovespa.com.br
FGV
Getlio Vargas Foundation business school (Portuguese only) national Association of Architectural and of Consulting engineering Companies Private news site for 2014 World Cup
55 (21) 3799-6400
portal.fgv.br
sinaenco
55 (11) 3123-9200
www.sinaenco.com.br
Portal 2014
n/A
www.copa2014.org.br/en
58
9. Doing business in Brazil first steps

The World Banks Doing Business index ranks Brazil a lowly 129th out of 183 countries in 2010 for overall ease of doing business, falling as low as 150th for ease of paying taxes. The country does best for protecting investors and getting credit, ranking 73rd and 87th respectively. However, these rather dismal figures dont tell the whole story. It often depends on how the question is asked, said John Mein, a former president of the BrazilUS Chamber of Commerce in So Paulo and now a business consultant in the city. Theres obviously a lot of room for improvement, but most businessmen coming from the US or Europe will find Brazil culturally pretty similar, with companies facing the same kind of problems and dynamics as where they come from. Sure there are differences everywhere, but people normally find they can learn their way around without too much problem. Most businessmen with a Western background say they feel far more at home in Brazil than in any of the other BRIC countries. Senior local managers almost always speak English and an impressive number hold international MBAs. In addition to matters of taxation, trade and company formation, which are all dealt with elsewhere in this booklet, some frequent questions are: Corruption and petty bureaucracy? corruption exists at various levels, but it is probably not as blatant or pervasive as in many developing countries. Foreign investors can do business quite easily with other companies in the private sector without a problem. As in many countries, the most vulnerable areas tend to be government procurement contracts and tenders, and here the growing use of technology for online tendering has helped. Low-level bureaucracy and petty corruption go hand in hand in many countries,
and indeed Brazilians have an old expression that translates roughly as creating difficulties to sell solutions. The temptation to accelerate snails-pace procedures with an unofficial gesture of thanks may sometimes arise. However, there is growing professionalism in the public sector and an ongoing trend for improvement through reduction of paperwork and the expansion of online services. Violence? everyone should be street-wise in major cities. Normal rules apply: use reliable cab services and in particular use the licensed cabs at airports; dont walk around alone at night; dont flash cash in the street; leave as much as possible in the hotel safe; carry a photocopy of your passport. Visas? depending on your nationality, you may need to request and receive a visa before travelling to Brazil. This requirement is basically a question of reciprocity. US citizens must apply in advance to the nearest Brazilian consulate, while citizens of the United Kingdom, France, Germany and many other European countries can receive a 90day temporary stay visa at the airport on arrival. Anybody planning on conducting business for example, making sales visits or negotiating potential deals should say so and ask for a temporary business visa. However, anyone who will be remunerated in Brazil, either on a shortterm or long-term contract but with payment from a Brazilian source, must have a temporary work visa, normally issued for two years. Application for this visa must always be made in advance through a Brazilian consulate, and it carries potential Brazilian income-tax liability. All foreigners who hold senior management positions in a limited liability company must be legal residents. A list of consulates is available on the foreign ministry website for the URL see Section 8.
59
World Cup and/or Olympics? competitors, officials and other people coming to Brazil in direct connection with these competitions will normally be covered by special arrangements, where an official credential substitutes the national visa requirement, although a valid national passport will always be required. However, this will not apply to a regular business visit for a project that happens to be eventrelated. Health and vaccination? everyone should carry adequate international health insurance. So Paulo, Rio de Janeiro, Braslia and most other major cities in the South and Southeast have good hospitals. No special vaccinations are required for the aforementioned cities, but anyone planning to go to the Amazon, Northeast, or other rural regions should check with their government or a Brazilian consulate about the need for yellow fever or other vaccinations. Temporary office accommodation? available for rent in most major cities, within the better hotels on in major business districts.
Food? good international cuisine in major hotels; excellent barbecue steak houses in most cities. Interesting regional specialties include various seafood and saltwater fish dishes with spices, dend oil and coconut in the Northeast; freshwater fish dishes in the Amazon and Centre-West. The feijoada black-bean stew is a must. Restaurant tipping is not obligatory but 5 per cent to 10 per cent is normal, on top of the service charge. Voltage? 110v and/or 220v. Always check. Cash and credit cards? Visa and MasterCard taken just about everywhere; Diners and American Express in major hotels, expensive restaurants, etc. US dollars accepted in major hotels, but becoming less common since currency stabilisation in 1995. Euros rarely seen. ATMs readily available. Internet, wi-fi and cell phones? broadband available in most business hotels; wi-fi hotspots in major airport lounges. Cell phone coverage ubiquitous in urban areas and many major highways. Driving and car rental? regular national licences accepted, also international licences. Some major international rental companies present. The permitted blood alcohol level is zero.
The International Bar Association would like to thank all those who helped with the preparation of this booklet, including Jos Antonio Fichtner, Victor Benezath and Marina Maciel at Andrade & Fichtner Advogados (Rio de Janeiro); Raquel Novais and Bruno Marino Gomes at Machado, Meyer, Sendacz e Opice Advogados (So Paulo); Roberto Quiroga Mosquera and Renata Correia at Mattos Filho, Veiga Filho, Marrey Jr e Quiroga Advogados (So Paulo); Jos Antnio Miguel Neto and Cristina Salvador at Miguel Neto Advogados Associados (So Paulo); Gilberto Giusti, Andr Giacchetta and Renato Stephan Grion at Pinheiro Neto Advogados (So Paulo); Moira Huggard Caine and Marcela Waksman Ejnisman at TozziniFreire Advogados (So Paulo); Gustavo Brigago and Bruno Lyra at Ulha Canto, Rezende e Guerra - Advogados (Rio de Janeiro); and Ricardo Veirano at Veirano Advogados (So Paulo). The International Bar Association would also like to thank the Brazilian Ministry of Tourism for their assistance. International Bar Association London: Tim Hughes Deputy Executive Director and Director of Marketing and Public Relations James Lewis Director of Media Content Andrew Webster-Dunn Head of Advertising and Sponsorship Tim Licence Head of Production and Design Romana St Matthew-Daniel Press Office Lucy Winder Senior Content Editor Leonie Girard Creative Artworker International Bar Association So Paulo: Flavia Alves Marketing & Project Coordinator Writer/researcher Brian Nicholson (So Paulo) Additional research Geiza Martins (So Paulo)
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Brazil Olympic Report

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Brazil Olympic Report

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Major Sporting Events in Brazil

Business Opportunities and the Legal Framework

How do you say business conflict resolution in Brazil? ICDR.

International presence in Brazil

What Brazil needs from the world

World Cup and Olympics: the gold rush

Key points of Brazilian law

International experience: shortening the learning curve

Acronyms and useful contacts

Doing business in Brazil first steps

BusIness OPPORTunITIes And The LeGAL FRAMeWORk

2. International presence in Brazil

International presence in Brazil

Major Sporting EvEntS in Brazil

BusIness OPPORTunITIes And The LeGAL FRAMeWORk

3. What Brazil needs from the world

BusIness OPPORTunITIes And The LeGAL FRAMeWORk

Major Sporting EvEntS in Brazil

BusIness OPPORTunITIes And The LeGAL FRAMeWORk

What Where When international organisation local organisations

Who can take part Competitors total participants tourism impact

Event cost total investment Funding sources

What Where When international organisation local organisations

Major Sporting EvEntS in Brazil

BusIness OPPORTunITIes And The LeGAL FRAMeWORk

Other existinG venues

Venues and events

CISM PROJECT OFFICER

OPERATIONS OF THE GAMES

SECURITY AND INTELLIGENCE

COMMAND AND CONTROL

Recruitment and Selection

Media and Marketing

Sports Policy and Services

Major Sporting EvEntS in Brazil

BusIness OPPORTunITIes And The LeGAL FRAMeWORk

Host City Profiles

Major Sporting EvEntS in Brazil

BusIness OPPORTunITIes And The LeGAL FRAMeWORk

Cuiab, Mato Grosso State

Recife, Pernambuco State

Natal, Rio Grande do Norte State

Fortaleza, Cear State

Major Sporting EvEntS in Brazil

BusIness OPPORTunITIes And The LeGAL FRAMeWORk

Rio de Janeiro, Rio de Janeiro State

Belo Horizonte, Minas Gerais State

Salvador, Bahia State

So Paulo, So Paulo State

Major Sporting EvEntS in Brazil

BusIness OPPORTunITIes And The LeGAL FRAMeWORk

Curitiba, Paran State

Porto Alegre, Rio Grande do Sul State

Major Sporting EvEntS in Brazil

BusIness OPPORTunITIes And The LeGAL FRAMeWORk

Map of Rio Olympics plan

Major Sporting EvEntS in Brazil

BusIness OPPORTunITIes And The LeGAL FRAMeWORk

Olympic-related infrastructure investments listed by the federal government

Major Sporting EvEntS in Brazil

BusIness OPPORTunITIes And The LeGAL FRAMeWORk

5. World Cup and Olympics: the gold rush

Major Sporting EvEntS in Brazil