Pros and Cons of Doing Business in Brazil as a US Business

As the largest economy in Latin America and home to the sixth-biggest population globally, Brazil provides access to a dynamic market with vast potential for growth and innovation.

However, navigating Brazil’s complicated regulations and bureaucracy can make it challenging to operate a business there, known as “Custo Brasil”. The country ranks seventh out of the 10 most complex jurisdictions for doing business.¹

To expand into Brazil successfully, it is essential to understand its economic differences, business etiquette and bureaucratic systems. This article explores the pros and cons of doing business in Brazil to help you decide whether expansion is the right choice for your business.

If you’re planning to start operating internationally, a Wise Business account can help. The Wise Business account is designed with international business in mind, and makes it easy to send business funds to 40+ currencies, including Brazilian Real.
Find out more about Wise Business

Pros and Cons of Doing Business in Brazil

Brazil has the world’s ninth largest gross domestic product (GDP) and the seventh largest purchasing power parity (PPP). Despite past recessions and inflationary pressures, GDP is forecast to grow by 2% in 2025, supported by the primary sector and labor market resilience.²

In recent years, the government has implemented initiatives to liberalize markets and make it easier for foreign companies to enter the country. Brazil offers a large consumer market and strategic location for businesses.

However, there are challenges that businesses face when doing business in Brazil, including beurocracy, taxes, and foreign exchange risks.

The following sections will break down these pros and cons in detail.

Pros of Doing Business in Brazil

There are several significant benefits to doing business in Brazil that make it attractive to small business owners.

Diverse Economy

Brazil’s large diversified economy spans a number of emerging sectors including agriculture, mining, manufacturing, renewable energy and services that are attractive to foreign businesses looking to tap into emerging opportunities.

Modernization in the commodities sector is opening up possibilities for innovation to increase efficiency. The country has also become a leader in hydroelectric and solar power production, creating opportunities in fields like engineering and environmental development and keeping energy costs down.

Access to a Large Consumer Market

With a population of more than 210 million, Brazil offers a broad consumer market for goods and services, especially in urban areas like São Paulo, Rio de Janeiro, and Brasília. Its sizeable urban middle class has increasing purchasing power, driving strong demand for consumer goods, healthcare, and education. This presents an opportunity to reach consumer markets that have untapped potential to scale and diversify revenue streams.

Abundant Natural Resources

Brazil is a major exporter of various important commodities such as coffee, soybeans, iron ore, precious metals, beef, and orange juice. Its wealth of resources supports dynamic agricultural and mining sectors, fueling opportunities for international businesses. The government is committed to expanding these sectors, ensuring ongoing investment and economic development.⁵

Growing Middle Class and Digital Economy

Digital transformation in the country is accelerating. Brazil’s young and increasingly digital-savvy population, with over 180 million Internet users, makes it an attractive destination for e-commerce, digital entertainment and services including fintech. It is Latin America's largest e-commerce market, and is forecast to expand at a compound annual growth rate (CAGR) of 19% from 2024 to $586 billion by 2027.⁶

A startup boom has established São Paulo as a tech industry hub, hosting tech parks and incubators that promote innovation.

Strategic Location in Latin America

Brazil accounts for approximately half of Latin America’s wealth. It has one of the world’s most extensive highway networks and shares borders with 10 other nations, facilitating overland trade, and its extensive Atlantic coastline hosts major international trade ports. That makes Brazil a strategic gateway to other markets in the region like Argentina, Paraguay, and Uruguay through its membership in trade blocs like Mercosur, which reduces tariffs.

Vibrant Culture

Brazil’s rich cultural diversity—shaped by Indigenous, African, European, and immigrant influences—creates a vibrant and inclusive professional environment. This fosters creativity, innovation, and community, all of which are highly valued. It also enhances adaptability and cross-cultural communication skills in businesses expanding internationally.

Business-Friendly Government Initiatives

The Brazilian government has taken steps to make it easier for overseas companies to set up business in the country, including user-friendly online portals for business license registration and dispute resolution legislation.

The government offers tax breaks, subsidies, and special investment zones offering lower tariffs and streamlined administrative processes. It has also created programs such as the Inova Simples program for startups and the Lei do Bem, which grants tax incentives to companies that invest in research, development, and technological innovation.

Cons of Doing Business in Brazil

There are challenges to operating in Brazil that business owners should be aware of, to be prepared to deal with them.

Bureaucracy and Complex Regulations

Navigating extensive red tape poses a risk for US businesses looking to set up local operations. Brazil has multiple layers of government departments and agencies and a complicated, frequently changing regulatory framework that involves convoluted business registration, taxation, and compliance procedures.

Obtaining the necessary permits and licenses to establish a business, executing contracts, and finalizing business transactions can be a difficult process because of the complexity of the legal system.

High Tax Burden

Brazil is known for its complex tax system and high rates, which can be difficult to navigate. The tax structure is decentralized and there are various federal, state, and municipal taxes, with 26 states and over 5,000 municipalities each enacting their own rates and rules. The cumulative amount owed can quickly add up, and companies that fail to meet their tax obligations correctly can be fined 20-150% of the unpaid amount.

It is important to stay up to date with tax rules and respond quickly to changes. Many foreign companies hire local experts such as an employer of record (EOR), adding to the cost.

Infrastructure Challenges

Brazil’s vast size and geographic diversity pose logistical challenges. Many rural and remote areas have inadequate road or rail transportation and insufficient utilities, including unreliable Internet services, which can disrupt business operations. The country’s ports are also constrained by congestion and bureaucracy.

The government has launched initiatives to improve infrastructure development, but companies need to evaluate whether the quality of infrastructure and logistical bottlenecks could affect where they can operate.

Currency Exchange Considerations

The Brazilian real (BRL) has historically been volatile against the US dollar. The government has previously implemented foreign exchange controls to stabilize the currency. The exchange regime is now more flexible, but US businesses operating in the country still need to navigate currency volatility, which can affect pricing strategies, cross-border payments, cost projections, and profitability. Businesses must be aware of the regulations around the repatriation of profits and foreign investments to ensure they comply.

Labor Policies and Unions

Brazil’s labor laws are highly protective of employees and can be difficult for foreign companies to navigate. Understanding these laws is essential, as failing to comply can result in significant penalties or litigation. Some businesses may need to hire local HR experts to assist.

The Consolidation of Labor Laws (CLT) mandates strict rules regarding wages, benefits, working hours, and termination procedures. While this promotes employee welfare, it can also drive up labor costs. Labor unions in Brazil are strong and can limit a company’s flexibility in managing its workforce.

Legal and Cultural Considerations

US businesses aiming to establish operations in Brazil need to understand the country’s common business practices, complex legal frameworks, culture and consumer markets to be successful.

Most domestic and foreign businesses in the country register as limited liability companies (sociedades limitadas or Ltdas). The incorporation process can take 60-90 days. Even after incorporation, business owners can face difficulties in opening a bank account or tax registration.

Taking time to develop trust and personal relationships, known as “jeitinho brasileiro,” through friendly face-to-face meetings and small talk is key in conducting business. These informal interactions reflect the social nature of Brazilian culture.

Many business professionals speak English, but fluency or at least a working knowledge of Portuguese, the country’s official language, is an asset. Conducting business in Portuguese demonstrates respect and improves communication with employees, clients and partners.

Businesses that understand the nuances of Brazil’s cultural values and adapt their practices accordingly are well-positioned to build strong business relationships, retain top talent and appeal to consumers. Working with experienced local advisors and consultants can provide insights to make this easier.

Is Brazil a Good Place to Start a Business?

Brazil can be a rewarding location to start a business with the right preparation. The country’s large and diverse market, natural resources, and digital adoption create a range of opportunities for entrepreneurs and growing businesses.

However, there are high barriers to entry associated with compliance, taxes, and logistics. Businesses that are prepared to navigate the challenges can benefit from first-mover advantage in underserved sectors.

What Are the Main Risks of Doing Business in Brazil?

The primary risks of expanding into Brazil include:

• Regulatory uncertainty
• Currency volatility
• Infrastructure gaps
• Cultural misunderstandings

Businesses that conduct due diligence, work with trusted local partners and develop adaptable business models can mitigate these risks.

Discover Wise: The Hassle-Free Way to Expand Globally

Starting a business in Brazil as a foreigner can be a complex process to navigate. Wise Business can help by providing a seamless and efficient way to send payments to BRL without monthly account fees. This is a great solution for renting an office space, for example.

Wise is not a bank, but a Money Services Business (MSB) provider and a smart alternative to banks. The Wise Business account is designed with international business in mind, and makes it easy to send, hold, and manage business funds in 40+ currencies. You can also send money to 140+ countries.

Open a Wise Business account online

Read the guide on how to open a Wise Business account

	Editor & Business Expert:
	Panna is an expert in US business finance, covering topics from invoicing to international expansion. She creates guides and reviews to help businesses save time and make informed decisions. You can read more useful business articles on her author profile.

	Author:
	Nicole is a professional journalist with two decades of experience in writing and editing, she has also run her own freelance business for the past five years. Her expertise spans the financial and technology industries, including payment processing and small business banking.

---

Sources:

¹The 10 most complex jurisdictions for doing business in 2024 | TMF Group
²Brazil and the IMF
³Brazil Government Debt: % of GDP, 2006 – 2025 | CEIC Data
⁴Unemployment, total (% of total labor force) (modeled ILO estimate) - Brazil
⁵Brazil still has room to grow in commodities, says Minas Gerais deputy governor | Summit Brazil USA
⁶E-commerce market data for Brazil 2024-2027