Monthly Archives: October 2013

Top ten reasons the World Cup in Brazil won’t be the big mess some say

It happens in every big sporting event. A wave of criticism and pessimism comes. And then, when the real thing is going on, most people are surprised. “I thought this would be terrible.” I heard that in the Beijing Olympics from a Hong Kong couple. I heard that in the London Olympics from everyone I talked to during the first week of competition. Friends that worked in South Africa in the 2010 World Cup said no one believed the bubble of safety would do so well during football’s creme de la creme. Brazil won’t be different.

I find it very important to have an accurate sense of what really impacts in these events. Specially for Brazil. After the World Cup there will be elections and having a fair assessment is important not only for accountability, but also so politicians aren’t too praised for success. Success that is likely to come, although the majority of the population doesn’t think so now. Of course there are real reasons to worry and Brazil needs to speed up in loads. But be less alarmed.

Here is why.

10 – Stadia will be ready

If there is one thing that will work 100% during the World Cup, it is the stadia. Most of the yada-yada-yada comes because some people at Fifa are very intere$ted in having everything finished six months before the World Cup. They claim it is necessary for tests. No one in the Brazilian government agrees with that. Some say it is all about getting expensive emergency contracts to friends. I wouldn’t challenge that — it was exactly what happened in South Africa.

9 – Cheap hotels aren’t as necessary as decades ago.

I heard that from many people in organizing committees. It used to be a big issue, since most people come on a tight budget. But social media has really changed that. Less expensive accommodation isn’t as important as it was because people just stay with someone they met on Couch Surfing or Facebook. It could be a bigger challenge in cities with very few English speakers, such as Cuiabá or Manaus. But it is not going to be a gigantic problem.

8 – Airports are on the way

Of course it would have been better if they had been finished earlier on. But anyone traveling around Brazil can see there are major works in the biggest airports, except for Rio’s. São Paulo and Brasília, which are supposed to be the most important hubs, will have a much better airport within a few months. If you are in doubt just visit and you will see that.

7 – The Armed Forces will do the policing

Violent groups that have taken protests hostage in the last weeks will have a much tougher challenge. Soldiers are much different from the military policy, that aberration we have since the dictatorship years (1964-1985).  That has worked well in various occasions, including the recent visit by Pope Francis.

6 – Rio’s most hated politician probably will be out of office

Rio’s governor Sergio Cabral is probably the biggest target of protesters in Brazil (no, president Dilma Rousseff isn’t nearly as hated, as previous posts here show). It is very likely he will leave office by April because of electoral law. He can’t run for reelection anymore. His deputy isn’t doing well in the polls.

5 – Prices will be regulated by the government

Taking heed from South Africa, Brazil decided to investigate prices so tourists aren’t shocked when they come. Brazil is already very expensive, but at least there will be some care in that regard. South Africa suffered massively in 2010 because hotels and airlines doubled their prices during the World Cup.

4 – Brazilians are friendly

Language can be an issue. But Brazilians help. I spent two months in China and no one helped me when I needed, even during the Olympics (except for the policeman who escorted me to the Immigration Ministry). Perhaps they didn’t want to be seen with foreigners. Brazilians can be too helpful sometimes. And that is particularly true in the poorest regions.

3 – Brazilians adapt

We are used to dire straits. Perhaps we won’t come with the most perfect solutions. But those that do appear are likely to be good enough. And that is particularly true in transportation — just try to stuff six people in a cab in London to see what happens. Shared rides will also be a big thing. I bet most foreigners will make friends quickly so they can enjoy those.

2 – People prepare for the World Cup

I know it sounds stupid, but anyone going to a big sporting event actually prepares. I certainly do. Of course Brazil could be risky. But those who come will be more than prepared to map where they should go and where they shouldn’t. Perhaps they will be so prepared they are alarmed enough not to enjoy. Anyway, very few people decide to go to the World Cup just because.

1 – It is a freaking party, for Christ’s sake

Most people that will come are not as terrified as the people who stay home in fear. They are in a different spirit and they will try to enjoy themselves, not mumble about everything all day long. How could it be different?

How tough it is to do business in Brazil (not only for foreigners)

By Mark Hillary

I knew that I would need a company in Brazil so my income from writing books, journalism, blogs, and advisory work could all be channeled into a single place. This has become IT Decisions, which is a limited company registered in São Paulo run by my wife and I, but with a large team of writers and translators all contributing to what we do.

Getting to the point where I could say I was on the board of a Brazilian company was quite a journey and I don’t want to bore you with some of the more tedious details, but here are some of my observations on the very strange company law system in Brazil.

First, the entire system is awash with bureaucracy. Just registering a company takes months and requires an enormous amount of paperwork. It is essential to have a knowledgeable accountant or lawyer to guide you through the process because it is not as simple as choosing a company name, listing the directors and – boom – you have a company.

I recall sitting with my accountant at a cartório one day. I had to complete some additional forms because I was a foreigner and wanted to sit on the board of a Brazilian company. I was fed up that the process was taking so long and once one set of forms had been completed, another needed to be done. I showed my accountant while we were waiting in line to sign a form that I could start a British company on my phone in less time than it took for me to get my signature verified in the cartório.

She actually did not believe me, even though I had gone ahead and set up a company using the web browser on my phone and stopped only at the point that I needed to pay the registration cost – which was only about $50.

One of the big complexities with the system in Brazil is that every industry – or type of company – is assessed for tax at different rates. So when registering a company you need to write a detailed description of what exactly you do and if the description falls between the blurred edges of two industries then the description gets filed and you just have to wait and see what kind of tax rate you are going to end up with.

With my own company it was difficult because we engage in a number of activities and wanted to have all the services running from a single organisation. It was possible in the end, but it took a lot of creative writing effort and research by the accountant to make sure we could describe the company in a way that satisfied the authorities.

Companies in Brazil are heavily scrutinised by the unions, tax authorities, and city, state, and federal bodies all want to know what you are up to. Once a company is up and running – even a fairly small company like mine – you need to endlessly report to the authorities. Brazilian companies do not just file accounts at the end of the financial year, there is an ongoing obligation to detail what is going through your books.

Practically this means that my company has to file dozens of reports a month to various authorities, and pay corporation tax on our revenue received in the previous month. Once the company becomes bigger, it becomes possible to start offsetting cost against revenue, but for the small and medium sized players it is just a straight tax on whatever hits your business account.

And the goalposts are always moving. New reports are needed and old ones are scrapped or changed. There is no way I could run my company and also manage the accounts. It’s normal in the UK and USA to have an accountant to help with a small business, but usually just when you need to prepare end of year reports or for other specific filings. In Brazil, you need constant ongoing support from an accountant that will monitor any changes in the law and will file everything you need to get filed.

The lesson I learned from all of this is that you need to find a trustworthy accountant. The accountant is going to guide you through all the paperwork needed to launch a company and then be there as an ongoing presence because of all the reports that need to be filed once you are trading.

The accountant that I first asked for help never bothered calling back when they had promised to, but looking back I think this was a good thing. They had a big impressive office in a smart district of São Paulo and though this might be assuring it is ultimately the client who is paying for all those coloured lights in the office garden.

A friend once asked me why I bother getting paid in Brazil when I could just use offshore accounts and probably dodge all my taxes. I replied that I would rather sleep easy at night and know that I am paying my share for the roads, schools, and hospitals in the country. There is a big difference between asking your accountant to make sure we are paying a reasonable amount of tax and asking your accountant to set up an offshore fund in the Caribbean so we can get paid with anyone in Brazil knowing about it.

Mark Hillary is a British writer who moved to Brazil almost three years ago. He has continued to write books about technology, work, and globalisation along with writing for the media from Brazil. His tenth book was just released last month and explores his own experience of being a foreigner who moved to Brazil, started a publishing company, bought a house, and how it was difficult, but possible. The book is called ‘Reality Check: Life in Brazil through the eyes of a foreigner’ and is available on Amazon here.