Doing Business 2020 Brazil Economy Profile Brazil Page 1 Doing Business 2020 Brazil Economy Profile of Brazil Doing Business 2020 Indicators (in order of appearance in the document) Starting a business Procedures, time, cost and paid-in minimum capital to start a limited liability company Dealing with construction permits Procedures, time and cost to complete all formalities to build a warehouse and the quality control and safety mechanisms in the construction permitting system Getting electricity Procedures, time and cost to get connected to the electrical grid, and the reliability of the electricity supply and the transparency of tariffs Registering property Procedures, time and cost to transfer a property and the quality of the land administration system Getting credit Movable collateral laws and credit information systems Protecting minority investors Minority shareholders’ rights in related-party transactions and in corporate governance Paying taxes Payments, time, total tax and contribution rate for a firm to comply with all tax regulations as well as postfiling processes Trading across borders Time and cost to export the product of comparative advantage and import auto parts Enforcing contracts Time and cost to resolve a commercial dispute and the quality of judicial processes Resolving insolvency Time, cost, outcome and recovery rate for a commercial insolvency and the strength of the legal framework for insolvency Employing workers Flexibility in employment regulation and redundancy cost Page 2 Doing Business 2020 Brazil About Doing Business The Doing Business project provides objective measures of business regulations and their enforcement across 190 economies and selected cities at the subnational and regional level. The Doing Business project, launched in 2002, looks at domestic small and medium-size companies and measures the regulations applying to them through their life cycle. Doing Business captures several important dimensions of the regulatory environment as it applies to local firms. It provides quantitative indicators on regulation for starting a business, dealing with construction permits, getting electricity, registering property, getting credit, protecting minority investors, paying taxes, trading across borders, enforcing contracts and resolving insolvency. Doing Business also measures features of employing workers. Although Doing Business does not present rankings of economies on the employing workers indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business, it does present the data for these indicators. By gathering and analyzing comprehensive quantitative data to compare business regulation environments across economies and over time, Doing Business encourages economies to compete towards more efficient regulation; offers measurable benchmarks for reform; and serves as a resource for academics, journalists, private sector researchers and others interested in the business climate of each economy. In addition, Doing Business offers detailed subnational studies, which exhaustively cover business regulation and reform in different cities and regions within a nation. These studies provide data on the ease of doing business, rank each location, and recommend reforms to improve performance in each of the indicator areas. Selected cities can compare their business regulations with other cities in the economy or region and with the 190 economies that Doing Business has ranked. The first Doing Business study, published in 2003, covered 5 indicator sets and 133 economies. This year’s study covers 11 indicator sets and 190 economies. Most indicator sets refer to a case scenario in the largest business city of each economy, except for 11 economies that have a population of more than 100 million as of 2013 (Bangladesh, Brazil, China, India, Indonesia, Japan, Mexico, Nigeria, Pakistan, the Russian Federation and the United States) where Doing Business also collected data for the second largest business city. The data for these 11 economies are a population-weighted average for the 2 largest business cities. The project has benefited from feedback from governments, academics, practitioners and reviewers. The initial goal remains: to provide an objective basis for understanding and improving the regulatory environment for business around the world. To learn more about Doing Business please visit doingbusiness.org Page 3 Doing Business 2020 Brazil Ease of Doing Business in DB RANK DB SCORE Region Latin America & Caribbean Brazil Income Category Upper middle income Population 209,469,333 124 59.1 City Covered São Paulo, Rio de Janeiro Rankings on Doing Business topics - Brazil 61 58 77 98 104 108 133 138 170 184 Starting Dealing Getting Registering Getting Protecting Paying Trading Enforcing Resolving a with Electricity Property Credit Minority Taxes across Contracts Insolvency Business Construction Investors Borders Permits Topic Scores 81.3 51.9 72.8 54.1 50.0 62.0 34.4 69.9 64.1 50.4 Starting a Business (rank) 138 Getting Credit (rank) 104 Trading across Borders (rank) 108 Score of starting a business (0-100) 81.3 Score of getting credit (0-100) 50.0 Score of trading across borders (0-100) 69.9 Procedures (number) 11 Strength of legal rights index (0-12) 2 Time to export Time (days) 17 Depth of credit information index (0-8) 8 Documentary compliance (hours) 12 Cost (number) 4.2 Credit registry coverage (% of adults) 79.0 Border compliance (hours) 49 Paid-in min. capital (% of income per capita) 0.0 Credit bureau coverage (% of adults) 81.2 Cost to export Documentary compliance (USD) 226 Dealing with Construction Permits (rank) 170 Protecting Minority Investors (rank) 61 Border compliance (USD) 862 Score of dealing with construction permits (0-100) 51.9 Score of protecting minority investors (0-100) 62.0 Time to export Procedures (number) 19 Extent of disclosure index (0-10) 5.0 Documentary compliance (hours) 24 Time (days) 338 Extent of director liability index (0-10) 8.0 Border compliance (hours) 30 Cost (% of warehouse value) 1.1 Ease of shareholder suits index (0-10) 4.0 Cost to export Building quality control index (0-15) 8.4 Extent of shareholder rights index (0-6) 4.0 Documentary compliance (USD) 107 Extent of ownership and control index (0-7) 4.0 Border compliance (USD) 375 Getting Electricity (rank) 98 Extent of corporate transparency index (0-7) 6.0 Score of getting electricity (0-100) 72.8 Enforcing Contracts (rank) 58 Procedures (number) 5 Paying Taxes (rank) 184 Score of enforcing contracts (0-100) 64.1 Time (days) 129 Score of paying taxes (0-100) 34.4 Time (days) 801 Cost (% of income per capita) 203.4 Payments (number per year) 10 Cost (% of claim value) 22.0 Reliability of supply and transparency of tariff index (0-8) 6 Time (hours per year) 1,501 Quality of judicial processes index (0-18) 13.1 Total tax and contribution rate (% of profit) 65.1 Registering Property (rank) 133 Postfiling index (0-100) 7.8 Resolving Insolvency (rank) 77 Score of registering property (0-100) 54.1 Score of resolving insolvency (0-100) 50.4 Procedures (number) 14 Recovery rate (cents on the dollar) 18.2 Time (days) 31 Time (years) 4.0 Cost (% of property value) 3.6 Cost (% of estate) 12.0 Quality of the land administration index (0-30) 16.3 Outcome (0 as piecemeal sale and 1 as going 1 concern) Strength of insolvency framework index (0-16) 13.0 Page 4 Doing Business 2020 Brazil Starting a Business This topic measures the number of procedures, time, cost and paid-in minimum capital requirement for a small- to medium-sized limited liability company to start up and formally operate in each economy’s largest business city. To make the data comparable across 190 economies, Doing Business uses a standardized business that is 100% domestically owned, has start-up capital equivalent to 10 times the income per capita, engages in general industrial or commercial activities and employs between 10 and 50 people one month after the commencement of operations, all of whom are domestic nationals. Starting a Business considers two types of local limited liability companies that are identical in all aspects, except that one company is owned by 5 married women and the other by 5 married men. The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate a company To make the data comparable across economies, several assumptions about the business and the (number) procedures are used. It is assumed that any required information is readily available and that the entrepreneur will pay no bribes. • Preregistration (for example, name verification or reservation, notarization) The business: • Registration in the economy’s largest business city -Is a limited liability company (or its legal equivalent). If there is more than one type of limited • Postregistration (for example, social security registration, liability company in the economy, the limited liability form most common among domestic firms is company seal) chosen. Information on the most common form is obtained from incorporation lawyers or the statistical office. • Obtaining approval from spouse to start a business or to leave -Operates in the economy’s largest business city. For 11 economies the data are also collected for the home to register the company the second largest business city. • Obtaining any gender specific document for company -Performs general industrial or commercial activities such as the production or sale to the public of registration and operation or national identification card goods or services. The business does not perform foreign trade activities and does not handle products subject to a special tax regime, for example, liquor or tobacco. It is not using heavily Time required to complete each procedure (calendar days) polluting production processes. • Does not include time spent gathering information -Does not qualify for investment incentives or any special benefits. -Is 100% domestically owned. • Each procedure starts on a separate day (2 procedures cannot -Has five business owners, none of whom is a legal entity. One business owner holds 30% of the start on the same day) company shares, two owners have 20% of shares each, and two owners have 15% of shares • Procedures fully completed online are recorded as ½ day each. -Is managed by one local director. • Procedure is considered completed once final document is -Has between 10 and 50 employees one month after the commencement of operations, all of them received domestic nationals. • No prior contact with officials -Has start-up capital of 10 times income per capita. -Has an estimated turnover of at least 100 times income per capita. Cost required to complete each procedure (% of income per -Leases the commercial plant or offices and is not a proprietor of real estate. capita) -Has an annual lease for the office space equivalent to one income per capita. • Official costs only, no bribes -Is in an office space of approximately 929 square meters (10,000 square feet). -Has a company deed that is 10 pages long. • No professional fees unless services required by law or commonly used in practice The owners: Paid-in minimum capital (% of income per capita) -Have reached the legal age of majority and are capable of making decisions as an adult. If there • Funds deposited in a bank or with third party before registration is no legal age of majority, they are assumed to be 30 years old. or up to 3 months after incorporation -Are in good health and have no criminal record. -Are married, the marriage is monogamous and registered with the authorities. -Where the answer differs according to the legal system applicable to the woman or man in question (as may be the case in economies where there is legal plurality), the answer used will be the one that applies to the majority of the population. Page 5 Doing Business 2020 Brazil Starting a Business - São Paulo Standardized Company Legal form Sociedade Limitada Paid-in minimum capital requirement No minimum City Covered São Paulo Indicator São Paulo Latin America & OECD high Best Regulatory Caribbean income Performance Procedure – Men (number) 11 8.1 4.9 1 (2 Economies) Time – Men (days) 13.5 28.8 9.2 0.5 (New Zealand) Cost – Men (% of income per capita) 3.6 31.4 3.0 0.0 (2 Economies) Procedure – Women (number) 11 8.1 4.9 1 (2 Economies) Time – Women (days) 13.5 28.8 9.2 0.5 (New Zealand) Cost – Women (% of income per capita) 3.6 31.4 3.0 0.0 (2 Economies) Paid-in min. capital (% of income per capita) 0.0 0.4 7.6 0.0 (120 Economies) Figure – Starting a Business in São Paulo – Score 41.2 86.9 98.2 100.0 Procedures Time Cost Paid-in min. capital Figure – Starting a Business in São Paulo and comparator economies – Ranking and Score DB 2020 Starting a Business Score 0 100 94.1: China (Rank: 27) 93.1: Russian Federation (Rank: 40) 91.4: Chile (Rank: 57) 86.1: Mexico (Rank: 107) 81.6: São Paulo 80.8: Rio de Janeiro Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 6 Doing Business 2020 Brazil Figure – Starting a Business in São Paulo – Procedure, Time and Cost Time (days) Cost (% of income per capita) 1.6 12 1.4 Cost (% of income per capita) 10 1.2 Time (days) 1 8 0.8 6 0.6 4 0.4 2 0.2 0 0 1 2 3 4 5 6 7 *8 *9 * 10 * 11 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 7 Doing Business 2020 Brazil Details – Starting a Business in São Paulo – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Check the availability of the company name and the feasibility of the location Less than one day no charge Agency : Municipality (Prefeitura de São Paulo) (online procedure) Business founders can check the availability of the company name online at: www.jucesponline.sp.gov.br but no interaction or response if needed. An analysis of the feasibility of the proposed company address (Análise de Viabilidade) must then be requested to the Municipality. This can be done online through the nationally integrated system for company registration (Sistema de Registro e Licenciamento de Empresas, RLE). It can be accessed at https://rle.empresasimples.gov.br/rle/. The applicant must provide information on the company's activities and on the exact proposed location. If the location is approved, a document (Protocolo REDESIM) will be issued online after a few minutes. 2 Apply for registration with the Federal Tax Authority (Receita Federal) 3 days no charge Agency : Federal Tax Authority (Receita Federal) After verifying the availability of the company's name and the feasibility of the proposed location, the entrepreneur must submit an online application to the Federal Tax Authority (Receita Federal). This must be done by filing the Company's Registration File (Ficha Cadastral da Pessoa Jurídica, FCPJ) and the Members and Managers File (Quadro de Sócios e Administradores, QSA) at the Tax Authority's online platform ("Coleta Online", at https://www38.receita.fazenda.gov.br/redesim/). A document will be generated by the system (DBE, "Documento Básico de Entrada" or "Protocolo de Transmissão", if a digital certificate is used). This document must be presented to the State Commercial Registry (JUCESP) for company registration. 3 Pay registration fees Less than one day fees included in procedure Agency : Commercial Bank (online procedure) 4 Entrepreneurs choose whether to pay at any commercial bank or at the bank window/agency located inside the commercial registry. It is also possible to pay through a wire transfer, at a commercial bank's website in which the person making the payment holds an account. Examples are www.itau.com.br / banco.bradesco / santander.com.br / bb.com.br / caixa.gov.br. A receipt of payment must be obtained to register the company at JUCESP (Commercial Registry). 4 Register with the State Commercial Registry (JUCESP) to complete registration with the 3 days R$145.91 + R$21.00 for Federal and State Tax Authorities (CNPJ and ICMS), Social Security (INSS) and the registration + R$132.65 Companies Registry (NIRE) (service fee) Agency : Commercial Registry (Junta Comercial do Estado de São Paulo - JUCESP) Company registrations have been simplified with a system called Empreenda Fácil. The company must register with the Commercial Registry (Junta Comercial do Estado de São Paulo - JUCESP) to obtain an identification number from the Companies Registry (Número de Identificação do Registro de Empresas – NIRE). In addition, registrations are carried out with the National Corporate Taxpayer Registry from the Federal Tax Authority (Cadastro Nacional de Pessoas Jurídicas - CNPJ), with the Sales Tax from the State Tax Authority (Imposto sobre Circulação de Mercadorias e Serviços - ICMS) and with the National Institute of Social Security (Instituto Nacional do Seguro Social - INSS). The registration process is as follows: after the application with the Federal Tax Authority (Receita Federal) has been filed and a document called "Documento Básico de Entrada - DBE" has been generated, the applicant must submit an application for company incorporation at Via Rápida Empresa 2, an online platform offered by JUCESP (https://www.jucesp.sp.gov.br/VRE/). The business founders must then visit the Commercial Registry (JUCESP) to present the original documents. Upon the analysis and approval by JUCESP, an online version of the certificate of registration (Certidão de Inteiro Teor) will be made available for download. Once this step has been completed, the company can proceed to Municipal tax registration and obtaining a Municipal license. 5 Register with the Municipal Taxpayers’ Registry (Secretaria Municipal da Fazenda de São Less than one day no charge Paulo) (online) Agency : Municipal Taxpayers’ Registry (Secretaria Municipal da Fazenda de São Paulo) Enrollment with the Municipal Taxpayers' Registry (Cadastro de Contribuintes Mobiliários - CCM) is made through an electronic form that is filled online on the website of the City Hall (https://ccm.prefeitura.sp.gov.br/). Since since Normative Instruction SF/SUREM No. 4 of April 9, 2019, a visit to the municipality is no longer required. After both the Federal Tax Authority and Commercial Registry approve the request, the CCM, when generated, is blocked and the entrepreneur shall unblock it online, through the City Hall website. 6 Obtain a digital certification (token) for the use of e-invoices 2 days R$ 355 Agency : Serasa Experian The costs involved in the obtainment of the digital certification may vary according to the accredited certifying chosen by the applicant. The information on how to obtain a token is available at http://www.receita.fazenda.gov.br/dvssl/atbhe/falecon/comum/asp/formulario.asp? topico=172 Page 8 Doing Business 2020 Brazil 7 Obtain an operations license (Auto de Licença de Funcionamento) from the Municipality 2 days no charge Agency : Municipality (Prefeitura de São Paulo) Business founders must obtain an operations license (Auto de Licença de Funcionamento) from the Municipality. This document authorizes the operation of commercial, industrial, institutional, service, and similar activities. For companies in some sectors of activity and under certain size and location restrictions, as determined by Decree No. 57,298 of 2016, a simplified operations license can be applied for and obtained online, through the integrated business registration system. In those cases, the license is applied for through RLE (Sistema de Registro e Licenciamento de Empresas, at https://rle.empresasimples.gov.br/rle/). For other cases, the license must be obtained from the District-level Municipality's office (Prefeitura Regional). In these cases, the process requires further analysis and it may take several months to be completed. 8 Pay the Municipal Establishments Inspection Fee (Taxa de Fiscalização de Less than one day R$ 470.87 (for retailing Estabelecimentos - TFE) (simultaneous with business, may vary in Agency : Municipal Taxpayers’ Registry (Secretaria Municipal de Finanças) previous procedure) accordance with the According to the Municipality of São Paulo's rules, the annual cost of the TFE fee is based both on company’s activities) the company's activities as well as on the company's number of employees (www.prefeitura.sp.gov.br). After the company is registered with the (Cadastro de Contribuintes Mobiliários - CCM), the TFE fee and can be paid online. The invoice is sent by post or obtained online. 9 Register the employees in the social integration program (Programa de Integração Social - 1 day (simultaneous with no charge PIS) previous procedure) Agency : Federal Savings Bank (Caixa Econômica Federal) Employees must be registered at the company’s employee registry book (livro de registro de empregados) and their information must be up to date with the Social Integration Program (Programa de Integração Social - PIS/PASEP). The PIS/PASEP program is intended to identify workers with the social security system, so that they may request unemployment insurance and, if needed, benefit from the unemployment guarantee fund (Fundo de Garantia do Tempo de Serviço - FGTS). If the employee already has a PIS/PASEP registration from previous employments, the employee must only inform the Federal Savings Bank of the new employment relationship, in order to update their information. Following the hiring, the employer must submit online the information on the company and its employees through a system called SEFIP (Sistema Empresa de Recolhimento do FGTS e informações à Previdência Social - available at http://conectividade.caixa.gov.br/). Once SEFIP has been submitted, the FGTS account, which is a special account at the Federal Savings Bank (Caixa Econômica), will be opened for payment of the benefits related to the unemployment insurance. Notify the Ministry of Labor (Cadastro Geral de empregados e desempregados, CAGED) Less than one day no charge 10 Agency : Ministry of Labor (Cadastro Geral de empregados e desempregados, CAGED) (simultaneous with Pursuant to Law No. 4.923 of December 23, 1965, the employer must inform the Ministry of previous procedure) Labor's General Cadaster of Employed and Unemployed Workers (Cadastro Geral de Empregados e Desempregados - CAGED) of any new hires or employees dismissals. This must be done until the seventh day of the month after the hiring. A form shall be transmitted online to the Ministry of Labor, at https://caged.maisemprego.mte.gov.br/portalcaged/paginas/home/home.xhtml. 11 Registration with the Employers' Union and with the Employees' Union 1 day (simultaneous with no charge Agency : Employers' Union and with the Employees' Union previous procedure) The requirements for company registration with the Employers' Union and Employees' Union (Sindicato Patronal and Sindicato dos Empregados) vary according to the representative Unions. Generally, in order to be registered with the unions, the company must present the following documents: company registration form, Federal Registry of Corporate Taxpayers, articles of association, employee's list etc. These documents can generally be submitted to the unions through their websites. Since the Labor Law was amended in July 2017, the payment of the contributions to the Unions was made optional. Most entrepreneurs opt to register with the Unions after a new company has been incorporated. Takes place simultaneously with previous procedure. Page 9 Doing Business 2020 Brazil Starting a Business - Rio de Janeiro Standardized Company Legal form Sociedade Limitada Paid-in minimum capital requirement No minimum City Covered Rio de Janeiro Indicator Rio de Janeiro Latin America & OECD high Best Regulatory Caribbean income Performance Procedure – Men (number) 10 8.1 4.9 1 (2 Economies) Time – Men (days) 21.5 28.8 9.2 0.5 (New Zealand) Cost – Men (% of income per capita) 5.1 31.4 3.0 0.0 (2 Economies) Procedure – Women (number) 10 8.1 4.9 1 (2 Economies) Time – Women (days) 21.5 28.8 9.2 0.5 (New Zealand) Cost – Women (% of income per capita) 5.1 31.4 3.0 0.0 (2 Economies) Paid-in min. capital (% of income per capita) 0.0 0.4 7.6 0.0 (120 Economies) Figure – Starting a Business in Rio de Janeiro – Score 47.1 78.9 97.4 100.0 Procedures Time Cost Paid-in min. capital Figure – Starting a Business in Rio de Janeiro and comparator economies – Ranking and Score DB 2020 Starting a Business Score 0 100 94.1: China (Rank: 27) 93.1: Russian Federation (Rank: 40) 91.4: Chile (Rank: 57) 86.1: Mexico (Rank: 107) 81.6: São Paulo 80.8: Rio de Janeiro Note: The ranking of economies on the ease of starting a business is determined by sorting their scores for starting a business. These scores are the simple average of the scores for each of the component indicators. Page 10 Doing Business 2020 Brazil Figure – Starting a Business in Rio de Janeiro – Procedure, Time and Cost Time (days) Cost (% of income per capita) 3 20 Cost (% of income per capita) 2.5 15 2 Time (days) 1.5 10 1 5 0.5 0 0 1 2 3 4 5 6 7 *8 *9 * 10 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 11 Doing Business 2020 Brazil Details – Starting a Business in Rio de Janeiro – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Check the availability of the company name and the feasibility of the location 2 days no charge Agency : Municipality of Rio de Janeiro Business founders can check the availability of the company name online through the REGIN system at https://www.jucerja.rj.gov.br/Servicos/regin/ReginServicos#. An analysis of the feasibility of the proposed company address (Pedido de Viabilidade) must then be requested online at the Municipality's website (https://carioca.rio/). An answer is provided in 2 days. 2 Apply for registration with the Federal Tax Authority (Receita Federal) 3 days no charge Agency : Federal Tax Authority (Receita Federal) After verifying the availability of the company's name and the feasibility of the proposed location, the entrepreneur must submit an online application to the Federal Tax Authority (Receita Federal). This must be done by filing the Company's Registration File (Ficha Cadastral da Pessoa Jurídica, FCPJ) and the Members and Managers File (Quadro de Sócios e Administradores, QSA) at the Tax Authority's online platform ("Coleta Online", at https://www38.receita.fazenda.gov.br/redesim/). A document will be generated by the system (DBE, "Documento Básico de Entrada" or "Protocolo de Transmissão", if a digital certificate is used). This document must be presented to the State Commercial Registry (JUCERJA) for company registration. 3 Pay registration fees Less than one day fees included in procedure Agency : Bank (Banco Bradesco) (online procedure) 4 The payment must be made at a bank (Banco Bradesco). The fees can be paid online at https://banco.bradesco/html/classic/produtos-servicos/mais-produtos-servicos/pagamentos.shtm. A receipt of payment must be obtained to register the company at the Commercial Registry (JUCERJA). 4 Register with the State Commercial Registry (JUCERJA) to complete registration with the 5 days R$404 (company Federal and State Tax Authorities (CNPJ), Social Security (INSS) and the Companies registration) + R$21 (DREI Registry (NIRE) fee) Agency : Commercial Registry of Rio de Janeiro (Junta Comercial do Estado do Rio de Janeiro - JUCERJA) Company registrations have been simplified with a system called REDESIM (http://www.redesimples.gov.br/). The company must register with the Commercial Registry (Junta Comercial do Estado do Rio de Janeiro - JUCERJA) to obtain an identification number from the Companies Registry (Número de Identificação do Registro de Empresas – NIRE). In addition, registrations are carried out with the National Corporate Taxpayer Registry with the Federal Tax Authorities (Cadastro Nacional de Pessoas Jurídicas - CNPJ), and with the National Institute of Social Security (Instituto Nacional do Seguro Social - INSS). The registration process is as follows: after the application with the Federal Tax Authority (Receita Federal) has been filed and a document called "Documento Básico de Entrada - DBE" has been generated, the applicant must submit an online application for company incorporation (Protocolo Web, at JUCERJA's website - www.jucerja.rj.gov.br). The business founders must then visit the Commercial Registry (JUCERJA) to present the original documents. Upon the analysis and approval by JUCERJA, an online version of the certificate of registration will be made available for download. Once this step has been completed, the company can proceed to Municipal tax registration and obtaining a Municipal license. 5 Register with the Rio de Janeiro Taxpayers’ Registry (Secretaria Municipal de Fazenda) 5 days no charge Agency : Municipal Taxpayers’ Registry (Secretaria Municipal de Fazenda) Two days after the payment of the Taxpayers' Registry tax, the company must register with the Municipal Taxpayers' Registry (Cadastro Tributário Municipal) from Rio de Janeiro's Municipal Tax Authorities (Secretaria Municipal de Fazenda), to obtain a company identification number for tax purposes (inscrição municipal). 6 Apply and obtain digital a certification (token) for the use of e-invoices 2 days R$ 369 Agency : Serasa Experian A token must be obtained for the use of e-invoices. The company has a period of 2 days to schedule the withdrawal of the token, which will be activated within 24 hours. 7 Obtain an operations license (Alvará de Licença para Estabelecimento) from the 4 days R$858.12 Municipality Agency : Municipality of Rio de Janeiro The company must obtain an operations license (Alvará de Licença para Estabelecimento) from the Municipality. After registration with the Municipal Tax Authorities (Secretaria Municipal de Fazenda – SMF), the company has 30 days to apply for the license by filling out the proper forms and submitting the required documents. The operations license is a prerequisite for the company to begin operations. The Municipality may conduct ex-post inspections to certain companies, based on a risk based assessment. Since December 2015, companies can request and obtain the business license online via the Municipality’s website, which is called Carioca Digital (https://carioca.rio/). Page 12 Doing Business 2020 Brazil 8 Update employees' information with Social Security (Programa de Integração Social - PIS) 1 day (simultaneous with no charge Agency : Federal Savings Bank (Caixa Econômica Federal) previous procedure) Employees must be registered at the company’s employee registry book (livro de registro de empregados) and their information must be up to date with the Social Integration Program (Programa de Integração Social - PIS/PASEP). The PIS/PASEP program is intended to identify workers with the social security system, so that they may request unemployment insurance and, if needed, benefit from the unemployment guarantee fund (Fundo de Garantia do Tempo de Serviço - FGTS). If the employee already has a PIS/PASEP registration from previous employments, the employee must only inform the Federal Savings Bank of the new employment relationship, in order to update their information. Following the hiring, the employer must submit online the information on the company and its employees through a system called SEFIP (Sistema Empresa de Recolhimento do FGTS e informações à Previdência Social - available at http://conectividade.caixa.gov.br/). Once SEFIP has been submitted, the FGTS account, which is a special account at the Federal Savings Bank (Caixa Econômica), will be opened for payment of the benefits related to the unemployment insurance. 9 Notify the Ministry of Labor (Cadastro Geral de empregados e desempregados, CAGED) Less than one day no charge Agency : Ministry of Labor (Cadastro Geral de empregados e desempregados - CAGED) (online, simultaneous Pursuant to Law No. 4.923 of December 23, 1965, the employer must inform the Ministry of with previous procedure) Labor's General Cadaster of Employed and Unemployed Workers (Cadastro Geral de Empregados e Desempregados - CAGED) of any new hires or employees dismissals. This must be done until the seventh day of the month after the hiring. A form shall be transmitted online to the Ministry of Labor, at https://caged.maisemprego.mte.gov.br/portalcaged/paginas/home/home.xhtml. Register with the Employers' Union and with the Employees' Union 1 day (simultaneous with no charge 10 Agency : Employers' Union and Employees' Union previous procedure) The requirements for company registration with the Employers' Union and Employees' Union (Sindicato Patronal and Sindicato dos Empregados) vary according to the representative Unions. Generally, in order to be registered with the unions, the company must present the following documents: company registration form, Federal Registry of Corporate Taxpayers, articles of association, employee's list etc. These documents can generally be submitted to the unions through their websites. Since the Labor Law was amended in July 2017, the payment of the contributions to the Unions was made optional. Most entrepreneurs opt to register with the Unions after a new company has been incorporated. Takes place simultaneously with previous procedure. Page 13 Doing Business 2020 Brazil Dealing with Construction Permits This topic tracks the procedures, time and cost to build a warehouse—including obtaining necessary the licenses and permits, submitting all required notifications, requesting and receiving all necessary inspections and obtaining utility connections. In addition, the Dealing with Construction Permits indicator measures the building quality control index, evaluating the quality of building regulations, the strength of quality control and safety mechanisms, liability and insurance regimes, and professional certification requirements. The most recent round of data collection was completed in May 2019. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse (number) To make the data comparable across economies, several assumptions about the construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining all necessary clearances, licenses, permits and certificates The construction company (BuildCo): • Submitting all required notifications and receiving all necessary - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest inspections business city. For 11 economies the data are also collected for the second largest business city. • Obtaining utility connections for water and sewerage - Is 100% domestically and privately owned; has five owners, none of whom is a legal entity. Has a licensed architect and a licensed engineer, both registered with the local association of architects • Registering and selling the warehouse after its completion or engineers. BuildCo is not assumed to have any other employees who are technical or licensed Time required to complete each procedure (calendar days) experts, such as geological or topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse upon its • Does not include time spent gathering information completion. • Each procedure starts on a separate day—though procedures The warehouse: that can be fully completed online are an exception to this rule - Will be used for general storage activities, such as storage of books or stationery. • Procedure is considered completed once final document is received - Will have two stories, both above ground, with a total constructed area of approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 meters (9 feet, 10 inches) high and will be • No prior contact with officials located on a land plot of approximately 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the warehouse is valued at 50 times income per capita. Cost required to complete each procedure (% of income per - Will have complete architectural and technical plans prepared by a licensed architect. If capita) preparation of the plans requires such steps as obtaining further documentation or getting prior • Official costs only, no bribes approvals from external agencies, these are counted as procedures. - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory Building quality control index (0-15) requirements). • Quality of building regulations (0-2) The water and sewerage connections: • Quality control before construction (0-1) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there is no water • Quality control during construction (0-3) delivery infrastructure in the economy, a borehole will be dug. If there is no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. • Quality control after construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average wastewater flow • Liability and insurance regimes (0-2) of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and • Professional certifications (0-4) a peak wastewater flow of 1,136 liters (300 gallons) a day. - Will have a constant level of water demand and wastewater flow throughout the year; will be 1 inch in diameter for the water connection and 4 inches in diameter for the sewerage connection. Page 14 Doing Business 2020 Brazil Dealing with Construction Permits - São Paulo Standardized Warehouse Estimated value of warehouse BRL 1,604,333.20 City Covered São Paulo Indicator São Paulo Latin America & OECD high Best Regulatory Caribbean income Performance Procedures (number) 19 15.5 12.7 None in 2018/19 Time (days) 384 191.2 152.3 None in 2018/19 Cost (% of warehouse value) 1.3 3.6 1.5 None in 2018/19 Building quality control index (0-15) 8.0 9.0 11.6 15.0 (6 Economies) Figure – Dealing with Construction Permits in São Paulo – Score 44.0 0.0 93.6 53.3 Procedures Time Cost Building quality control index Figure – Dealing with Construction Permits in São Paulo and comparator economies – Ranking and Score DB 2020 Dealing with Construction Permits Score 0 100 78.9: Russian Federation (Rank: 26) 77.3: China (Rank: 33) 75.9: Chile (Rank: 41) 68.8: Mexico (Rank: 93) 58.4: Rio de Janeiro 47.7: São Paulo Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Page 15 Doing Business 2020 Brazil Figure – Dealing with Construction Permits in São Paulo – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 0.5 350 Cost (% of warehouse value) 300 0.4 250 Time (days) 0.3 200 150 0.2 100 0.1 50 0 0 1 2 *3 *4 *5 6 7 *8 9 10 11 12 13 14 15 16 17 18 * 19 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 16 Doing Business 2020 Brazil Figure – Dealing with Construction Permits in São Paulo and comparator economies – Measure of Quality 16 15.0 14.0 14 13.0 11.7 Index score 12 10 9.0 9.0 8.0 8 6 4 2 0 São Chile China Mexico Russian Rio Latin Paulo Federation de America Janeiro & Caribbean Details – Dealing with Construction Permits in São Paulo – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Request and obtain proof of land ownership from the Real Estate Registry 1 day BRL 61 Agency : Real Estate Registry According to Art.1-Item IV of Federal Decree No. 93,240/86, Article 1, this certificate is valid for 30 days. According to the official fee schedule of the Property Registrars Agency, the fee is BRL 60.8 2 Obtain results of Soil study 15 days BRL 4,000 Agency : Private licensed company 3 Obtain results of topographical study 5 days BRL 6,500 Agency : Private licensed company A topographical study is conducted prior to construction to measure the levels on the specific terrain. It is a general technical requirement when building a structure of this class. Cannot be simultaneous with the previous procedure, as a proof of land ownership is required before any field work can be conducted on the plot. 4 Obtain Technical Term of Responsibility -ART 0.5 days BRL 227 Agency : Engineers Syndicate (Crea) Before the application process, the engineer and architect responsible for the project need to obtain an ART. An ART is a document required by the Engineers Syndicate (Crea) that defines, for legal purposes, who is responsible for the execution of works or services and provides an opportunity for professionals to register their works or services with Crea. The ART is required for each project according to Art. 1 of Federal Law N° 6.496 (December 1977) For contracts or works of more than BRL 15,000.00, the fee is BRL 226.5 5 Request and obtain proof of land tax payment from the Treasury Department of the 0.5 days no charge Municipality Agency : Treasury (Municipality) Attesting to payment of land taxes, this certificate may be issued online and is valid for only 30 days. This request can be done in parallel with procedure 2. 6 Register employees with the Social Security Office 0.5 days no charge Agency : Social Security Office For each construction site, BuildCo must register employees separately with the Social Security Office (Instituto Nacional do Seguro Social, INSS). This procedure can only be done whenever there is a proof of land tax payment,so it cannot be simultaneous with the previous one 7 Request and obtain construction approval permit and construction execution permit 274 days BRL 7,009 Agency : Municipality BuildCo must apply for construction approval permit and the construction execution permit with the Municipality. If the project conforms to municipal legislation, zoning laws, and the municipal building code, the Municipality will issue a document approving construction. To apply for these permits, BuildCo must submit the architectural drawings and real estate documentation (real estate title or real estate tax). The documentation for construction execution permit is set out in Article 24 of São Paulo's Municipality Building Code, Article 12 of São Paulo's Municipality Decree 57,776/17, and in Section 3.B of São Paulo's Municipality Ordinance No. 221/SMUL-G/2017. After examining the project's architecture and engineering and issuing the construction approval permit, the Municipality examines the practical and installation aspects and begins the process of issuing a construction execution permit. According to Article 29 of São Paulo's Municipality Building Code, and Article 22 of São Paulo's Municipality Decree No. 57,776/17, the construction execution permit is valid for: (i) 2 years from the date of publication of the order granting the application, if the work has not been started, or (ii) 1 year from stoppage in work, if the work has been started. 8 Submit project for analysis by Fire Department and obtain report 30 days BRL 98 Agency : Fire Department Build Co must present the building project to the Fire department for approval and obtain a report which includes all the fire security measures that need to be implemented. Page 17 Doing Business 2020 Brazil 9 Receive random inspection from Municipality 1 day no charge Agency : Municipality According to Law No. 11.228, annex 1, No. 6, Municipality is legally entitled to perform inspection required during the construction. The inspections can be carried out anytime, or upon complaint of a citizen. This can only happen once the construction has started. 10 Receive labor inspection from Labor Public Attorneys’ Office 1 day no charge Agency : Labor Public Attorneys' Office This submission happens whenever BuildCo. was granted authorization to start construction. 11 Submit proof of payment to the Social Security Office 0.5 days no charge Agency : Social Security Office At the end of construction, BuildCo must submit proof of payment to its construction workers. 12 Request inspection from Fire Department 1 day no charge Agency : Fire Department The fire department can receive a request from BuildCo whenever the construction of the warehouse has been finalized. 13 Receive inspection from the Fire Department 1 day no charge Agency : Fire Department The Fire Department must approve the warehouse safety equipment. This inspection is valid for 3 years. This request is made by BuildCo. upon finalizing the construction. 14 Obtain Fire Department Certificate (Certificado de Aprovação - AVCB) 29 days BRL 207 Agency : Fire Department This certificate is only given when the Fire Department has already conducted its inspection. 15 Request final inspection from Municipality 1 day no charge Agency : Municipality After construction is completed, BuildCo must request the certificate of occupancy ("Habite-se") from the Municipality to attest that the construction is finished and that the work was performed according to the construction approval permit and the construction execution permit. The approval is valid until the first amendment of the construction project. To request and obtain the conclusion approval, BuildCo must submit the following documents: • Application form, addressed to the São Paulo Municipal Secretariat of Housing and Urban Development (SEHAB) • First page of construction and territorial booklet • Construction permit • Engineering and CREA card • Receipt evidencing payment of construction work tax • Sets of approved plans (two) • Administrative tax • ART of chief engineer 16 Receive final inspection from Municipality 1 day no charge Agency : Municipality The inspection is conducted once it has been requested by BuildCo. 17 Obtain certificate of occupancy ("Habite-se") 28 days BRL 460 Agency : Municipality According to Article 35 of São Paulo's Municipality Building Code, the request for the certificate of occupancy must be accompanied by (i) a statement of the professional responsible for the work, certifying its completion and execution in accordance with the applicable technical standards and provisions of municipal legislation, and (ii) documents and licenses related to the construction execution permit. In order to obtain the certificate of occupancy, the Municipality should have conducted its final inspection. 18 Request and connect to water and sewage 30 days no charge Agency : Water and Sewerage Agencies (SABESP) The connection request is filed with the Waste Management Company (SABESP), a different organization regarding the operation license. Register building with the Real Estate Registry 15 days BRL 1,872 19 Agency : Real Estate Registry At the end of construction, BuildCo must register the warehouse at the Real Estate Registry. BuildCo must present the title of the land and the certificate from the Social Security Office. Takes place simultaneously with previous procedure. Page 18 Doing Business 2020 Brazil Details – Dealing with Construction Permits in São Paulo – Measure of Quality Answer Score Building quality control index (0-15) 8.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; Free 1.0 of charge. Which requirements for obtaining a building permit are clearly specified in the building regulations or on any List of required 1.0 accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in compliance with existing Licensed architect; 1.0 building regulations? (0-1) Licensed engineer. Quality control during construction index (0-3) 0.0 What types of inspections (if any) are required by law to be carried out during construction? (0-2) Unscheduled 0.0 inspections. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 0.0 inspections are not always done in practice during construction; Mandatory inspections are done most of the time during construction. Quality control after construction index (0-3) 2.0 Is there a final inspection required by law to verify that the building was built in accordance with the approved Yes, final inspection 2.0 plans and regulations? (0-2) is done by government agency. Do legally mandated final inspections occur in practice? (0-1) Final inspection does 0.0 not always occur in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use Architect or engineer; 1.0 (Latent Defect Liability or Decennial Liability)? (0-1) Professional in charge of the supervision; Construction company. Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or No party is required 0.0 problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1) by law to obtain insurance . Professional certifications index (0-4) 2.0 What are the qualification requirements for the professional responsible for verifying that the architectural plans University degree in 1.0 or drawings are in compliance with existing building regulations? (0-2) architecture or engineering; Being a registered architect or engineer; Passing a certification exam. What are the qualification requirements for the professional who supervises the construction on the ground? (0- University degree in 1.0 2) engineering, construction or construction management; Being a registered architect or engineer. Page 19 Doing Business 2020 Brazil Dealing with Construction Permits - Rio de Janeiro Standardized Warehouse Estimated value of warehouse BRL 1,604,333.20 City Covered Rio de Janeiro Indicator Rio de Janeiro Latin America & OECD high Best Regulatory Caribbean income Performance Procedures (number) 18 15.5 12.7 None in 2018/19 Time (days) 267 191.2 152.3 None in 2018/19 Cost (% of warehouse value) 1.0 3.6 1.5 None in 2018/19 Building quality control index (0-15) 9.0 9.0 11.6 15.0 (6 Economies) Figure – Dealing with Construction Permits in Rio de Janeiro – Score 48.0 30.5 95.2 60.0 Procedures Time Cost Building quality control index Figure – Dealing with Construction Permits in Rio de Janeiro and comparator economies – Ranking and Score DB 2020 Dealing with Construction Permits Score 0 100 78.9: Russian Federation (Rank: 26) 77.3: China (Rank: 33) 75.9: Chile (Rank: 41) 68.8: Mexico (Rank: 93) 58.4: Rio de Janeiro 47.7: São Paulo Note: The ranking of economies on the ease of dealing with construction permits is determined by sorting their scores for dealing with construction permits. These scores are the simple average of the scores for each of the component indicators. Page 20 Doing Business 2020 Brazil Figure – Dealing with Construction Permits in Rio de Janeiro – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 0.4 250 0.35 Cost (% of warehouse value) 200 0.3 Time (days) 0.25 150 0.2 100 0.15 0.1 50 0.05 0 0 1 2 *3 *4 *5 6 7 *8 9 10 11 12 13 14 15 16 17 * 18 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 21 Doing Business 2020 Brazil Figure – Dealing with Construction Permits in Rio de Janeiro and comparator economies – Measure of Quality 16 15.0 14.0 14 13.0 11.7 Index score 12 10 9.0 9.0 8.0 8 6 4 2 0 Rio Chile China Mexico Russian São Latin de Federation Paulo America Janeiro & Caribbean Details – Dealing with Construction Permits in Rio de Janeiro – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Request and obtain proof of land ownership from the Real Estate Registry 7 days BRL 78 Agency : Real Estate Registry Attesting to proof of land ownership, this certificate is valid for only 30 days. This is one of the documents to be included in the application for the construction permit. 2 Obtain a topographic map 15 days BRL 3,500 Agency : Private licensed company A topographic map is obtained prior to development of the building plans to assess the levels on the specific terrain. It is a general technical requirement when building a structure of this class.Although the law does not specifically ask for a topographic map to be submitted to obtain a building permit, it is consistently conducted in practice by professionals. 3 Obtain soil test 15 days BRL 6,000 Agency : Private agency 4 Obtain Technical Term of Responsibility -ART 0.5 days BRL 227 Agency : Engineers Syndicate (Crea) Before the application process, the engineer and architect responsible for the project need to obtain an ART. An ART is a document required by the Engineers Syndicate (Crea) that defines, for legal purposes, who is responsible for the execution of works or services and provides an opportunity for professionals to register their works or services with Crea. The ART is required for each project according to the Federal Law N° 6.496 of 7 December 1977. It is possible to obtain it online within a couple of hours. The value of the fee varies according to the value of the contract or the cost of the work. 5 Request and obtain proof of land tax payment from the Treasury Department of the 0.5 days no charge Municipality Agency : Treasury (Municipality) Attesting to payment of land taxes, this certificate may be issued online and is valid for only 30 days. This document needs to be included in the application sent to the municipality. 6 Register employees with the Social Security Office 0.5 days no charge Agency : Social Security Office For each construction site, BuildCo must register employees separately with the Social Security Office (Instituto Nacional do Seguro Social, INSS). If the employer does not register all workers, it can get fined during the inspection. This can only be done once the previous documents have been issued. 7 Request and obtain construction approval permit and construction execution permit 150 days no charge Agency : Municipality BuildCo must apply for construction approval permit and the construction execution permit with the Municipality. If the project conforms to municipal legislation, zoning laws, and the municipal building code, the Municipality will issue a document approving construction. To apply for these permits, BuildCo must submit the In order to apply for a construction approval permit, BuildCo must submit to the Municipality the following documents: (i) architectural drawings, (ii) real estate ownership certificate, (iii) debt clearance certificate (CND/IPTU), (iv) copy of location plan of the property, (v) an statement issued by the professional responsible for the works or for the project that the property is not located less than 50 meters from water courses or near slopes (Declaration of rivers and canals), (vi) copy of registry of the responsible professionals before Crea-RJ and CAU, (vii) statement of the author of the project in accordance with Annex I of the Decree 10,426/91; (viii) proof of payment of 50% of the license fee and (ix) declaration of vegetation suppression. Valid for a year, the construction approval permit is a prerequisite for subsequent procedures. The construction execution permit is valid for 3 years. Page 22 Doing Business 2020 Brazil 8 Submit project for analysis by Fire Department and obtain report 30 days BRL 386 Agency : Fire Department Build Co must present the building project to the fire department for approval and obtain a report which includes all the fire security measures that need to be implemented. The applicant needs to send the design, the ART of the engineer, ownership ownership certificate and copy of ID to the fire department. The cost of this procedure is determined by a fee set by SEDEC, the annual fiscal unit of reference (UFIR) and the number of sq. m of the building. 9 Receive labor inspection from Labor Public Attorneys’ Office 1 day no charge Agency : Labor Public Attorneys' Office The Labor Public Attorneys' Office does random inspections in order to check whether all employees were registered and if the security measures are being undertaken. It will happen once, but may happen more than once in case the Labor Secretary receives any complaints. This can only happen once the construction is ongoing. 10 Submit proof of payment to the Social Security Office 0.5 days no charge Agency : Social Security Office At the end of construction, BuildCo must submit proof of payment to its construction workers. The company should have passed the inspections conducted by the Labor Agency. 11 Request inspection from Fire Department 1 day no charge Agency : Fire Department Once the works have been implemented according to the report, BuildCo must request an inspection so that the fire department verifies that the works were done according to their report. The inspection usually happens after 1 month of being requested. The fire department will then issue a certificate that approves the construction called “ Certificado de Aprovação”. This procedure happens once the proof of payment to the builders has been handed. Legal basis: Decree 897 of 21 of September,1976. 12 Receive inspection from Fire Department 1 day no charge Agency : Fire Department The Fire Department must approve the warehouse safety equipment. This inspection is valid for 3 years. It can only be conducted upon request. 13 Obtain Fire Department Certificate (Certificado de Aprovação - AVCB) 29 days BRL 73 Agency : Fire Department The “Certificado de Aprovação” needs to be included in the application to obtain the operation License. This is issued after BuildCo. passes the inspection, so it cannot be simultaneous. The cost is determined by a fee set by SEDEC and the annual fiscal unit of reference (UFIR) 14 Request final inspection from Municipality 1 day no charge Agency : Municipality After construction is completed, BuildCo must request the certificate of occupancy ("Habite-se") from the Municipality to attest that the construction is finished and that the work was performed according to the construction approval permit and the construction execution permit. The approval is valid until the first amendment of the construction project. In order to receive the certificate of occupancy, BuildCo. must request final inspection and submit the following additional documents: (i) declaration of completion of the facilities to be inhabited (attesting to the existence of sewage, water, gas and power connections); (ii) "Certificado de Aprovação" issued by the fire department; (iii) declaration of compliance with the approved project; and (iv) other documents indicated in the construction permit. 15 Receive final inspection from Municipality 1 day no charge Agency : Municipality This inspection is conducted upon BuildCo.'s request. 16 Obtain certificate of occupancy ("Habite-se") 28 days BRL 1,610 Agency : Municipality This certificate can only be obtained once the final inspection has been successfully conducted. 17 Request and connect to water and sewage 30 days no charge Agency : Water and Sewerage Agencies (CEDAE) The connection request is filed with the Waste Management Company (CEDAE). This line can be requested once the certificate of occupancy has been issued. Register building with the Real Estate Registry 30 days BRL 3,398 18 Agency : Real Estate Registry At the end of construction, BuildCo must register the warehouse at the Real Estate Registry. BuildCo must present the habite-se (occupation permit), the ownership certificate, and the ID of the parties in order to update the title. This procedure can be done ins simultaneity with the previous one, as they respond to different institutions. Takes place simultaneously with previous procedure. Page 23 Doing Business 2020 Brazil Details – Dealing with Construction Permits in Rio de Janeiro – Measure of Quality Answer Score Building quality control index (0-15) 9.0 Quality of building regulations index (0-2) 2.0 How accessible are building laws and regulations in your economy? (0-1) Available online; Free 1.0 of charge. Which requirements for obtaining a building permit are clearly specified in the building regulations or on any List of required 1.0 accessible website, brochure or pamphlet? (0-1) documents; Fees to be paid; Required preapprovals. Quality control before construction index (0-1) 1.0 Which third-party entities are required by law to verify that the building plans are in compliance with existing Licensed architect; 1.0 building regulations? (0-1) Licensed engineer. Quality control during construction index (0-3) 0.0 What types of inspections (if any) are required by law to be carried out during construction? (0-2) No inspections are 0.0 legally required during construction.. Do legally mandated inspections occur in practice during construction? (0-1) Mandatory 0.0 inspections are not always done in practice during construction. Quality control after construction index (0-3) 3.0 Is there a final inspection required by law to verify that the building was built in accordance with the approved Yes, final inspection 2.0 plans and regulations? (0-2) is done by government agency. Do legally mandated final inspections occur in practice? (0-1) Final inspection 1.0 always occurs in practice. Liability and insurance regimes index (0-2) 1.0 Which parties (if any) are held liable by law for structural flaws or problems in the building once it is in use Architect or engineer; 1.0 (Latent Defect Liability or Decennial Liability)? (0-1) Professional in charge of the supervision; Construction company; Owner or investor. Which parties (if any) are required by law to obtain an insurance policy to cover possible structural flaws or No party is required 0.0 problems in the building once it is in use (Latent Defect Liability Insurance or Decennial Insurance)? (0-1) by law to obtain insurance . Professional certifications index (0-4) 2.0 What are the qualification requirements for the professional responsible for verifying that the architectural plans University degree in 1.0 or drawings are in compliance with existing building regulations? (0-2) architecture or engineering; Being a registered architect or engineer; Passing a certification exam. What are the qualification requirements for the professional who supervises the construction on the ground? (0- University degree in 1.0 2) engineering, construction or construction management; Being a registered architect or engineer; Passing a certification exam. Page 24 Doing Business 2020 Brazil Getting Electricity This topic measures the procedures, time and cost required for a business to obtain a permanent electricity connection for a newly constructed warehouse. Additionally, the reliability of supply and transparency of tariffs index measures reliability of supply, transparency of tariffs and the price of electricity. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection (number) To make the data comparable across economies, several assumptions about the warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining all necessary clearances and permits The warehouse: • Completing all required notifications and receiving all necessary - Is owned by a local entrepreneur and is used for storage of goods. inspections - Is located in the economy’s largest business city. For 11 economies the data are also collected for • Obtaining external installation works and possibly purchasing the second largest business city. material for these works - Is located in an area where similar warehouses are typically located and is in an area with no physical constraints. For example, the property is not near a railway. • Concluding any necessary supply contract and obtaining final - Is a new construction and is being connected to electricity for the first time. supply - Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square Time required to complete each procedure (calendar days) feet). The plot of land on which it is built is 929 square meters (10,000 square feet). • Is at least 1 calendar day The electricity connection: • Each procedure starts on a separate day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed capacity of 140- • Does not include time spent gathering information kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 kilowatt (kW). - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution • Reflects the time spent in practice, with little follow-up and no network and is either overhead or underground, whichever is more common in the area where the prior contact with officials warehouse is located and requires works that involve the crossing of a 10-meter road (such as by excavation or overhead lines) but are all carried out on public land. There is no crossing of other Cost required to complete each procedure (% of income per owners’ private property because the warehouse has access to a road. capita) - Does not require work to install the internal wiring of the warehouse. This has already been • Official costs only, no bribes completed up to and including the customer’s service panel or switchboard and the meter base. • Value added tax excluded The monthly consumption: The reliability of supply and transparency of tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 p.m. (8 hours • Duration and frequency of power outages (0–3) a day), with equipment utilized at 80% of capacity on average and that there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours • Tools to monitor power outages (0–1) (kWh); hourly consumption is 112 kWh. • Tools to restore power supply (0–1) - If multiple electricity suppliers exist, the warehouse is served by the cheapest supplier. - Tariffs effective in January of the current year are used for calculation of the price of electricity for • Regulatory monitoring of utilities’ performance (0–1) the warehouse. Although January has 31 days, for calculation purposes only 30 days are used. • Financial deterrents limiting outages (0–1) • Transparency and accessibility of tariffs (0–1) Price of electricity (cents per kilowatt-hour)* • Price based on monthly bill for commercial warehouse in case study *Note: Doing Business measures the price of electricity, but it is not included in the ease of doing business score nor in the ranking on the ease of getting electricity. Page 25 Doing Business 2020 Brazil Getting Electricity - São Paulo Standardized Connection Name of utility Enel Distribuição São Paulo Price of electricity (US cents per kWh) 16.8 City Covered São Paulo Indicator São Paulo Latin America & OECD high Best Regulatory Caribbean income Performance Procedures (number) 5 5.5 4.4 3 (28 Economies) Time (days) 132 66.8 74.8 18 (3 Economies) Cost (% of income per capita) 333.1 407.2 61.0 0.0 (3 Economies) Reliability of supply and transparency of tariff index (0-8) 6 4.4 7.4 8 (26 Economies) Figure – Getting Electricity in São Paulo – Score 66.7 50.4 95.9 75.0 Reliability of supply and transparency of Procedures Time Cost tariff index Figure – Getting Electricity in São Paulo and comparator economies – Ranking and Score DB 2020 Getting Electricity Score 0 100 97.5: Russian Federation (Rank: 7) 95.4: China (Rank: 12) 85.7: Chile (Rank: 39) 74.0: Rio de Janeiro 72.0: São Paulo 71.1: Mexico (Rank: 106) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Figure – Getting Electricity in São Paulo – Procedure, Time and Cost Time (days) Cost (% of income per capita) 300 120 Cost (% of income per capita) 250 100 200 Time (days) 80 150 60 100 40 20 50 0 0 1 2 3 *4 5 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures Page 26 Doing Business 2020 Brazil reflected here, see the summary below. Figure – Getting Electricity in São Paulo and comparator economies – Measure of Quality 9 8 8 7 7 7 7 Index score 6 6 6 5 4.4 4 3 2 1 0 São Chile China Mexico Russian Rio Latin Paulo Federation de America Janeiro & Caribbean Page 27 Doing Business 2020 Brazil Details – Getting Electricity in São Paulo – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain a project approval (Anotação de Responsabilidade Técnica, ART) from the Regional 2 calendar days BRL 150.44 Council of Engineering (CREA-SP) Agency : Regional Council of Engineering (Conselho Regional de Engenharia e Agronomia, CREA-SP) In order to apply for a new connection, the client's electrician must obtain a project approval from the Regional Council of Engineering (Conselho Regional de Engenharia e Agronomia, CREA-SP). This document can be obtained online at https://creanet1.creasp.org.br/Seguranca/Login.aspx? Acesso=UHJvZmlzc2lvbmFs&solicitacao=preencherArt This document is obtained online in 2 days upon payment of the fee, which is charged based on the cost of works. 2 Submit application to Enel Distribuição São Paulo and receive service layout 30 calendar days BRL 0 Agency : Enel Distribuição São Paulo The customer needs to submit, online or in person, a set of documents, including the electrical project and the ART (obtained from CREA-SP, the Engineers' Association), to Enel Distribuição São Paulo. After receiving the documents, the technicians may conduct an external site inspection and develop a work project to make the necessary adjustments in the network with estimated costs and time and send it back to the client. The site visit is done outside of the property and the customer need not be present. After approval, the utility will issue a technical opinion ('parecer técnico'), to be accepted by the client along with the cost estimate. 3 Sign energy supply agreement and receive external connection works 90 calendar days BRL 16,736.54 Agency : Enel Distribuição São Paulo The costumer receives an invoice with the estimated value of the works, a contract and a service order ('ordem de serviço'). Once the contract and the service order are signed and the invoice is paid, Enel Distribuição São Paulo will proceed to scheduling the necessary adjustments in its network. Enel will obtain the necessary permits for works on a public road from the Municipality and any other relevant authorities. After that, they will schedule the works. Once the works have been completed, the utility informs the costumer and a request for the external connection must be made. 4 Hire a private company to purchase and install a transformer 7 calendar days BRL 90,000 Agency : Electrical contractor In parallel with the connection works, the customer must hire an electrical contractor to purchase and install a transformer with a shed (cabine primária). These costs must be paid by the client. 5 Receive an inspection, meter installation and electricity flow from utility 10 calendar days BRL 0 Agency : Enel Distribuição São Paulo The customer must request an inspection and meter installation to Enel. The utility will schedule a visit to inspect the wiring and the transformer's shed and install the meter. After the visit, in 2 days the electricity is available at the switchboard/meter. Takes place simultaneously with previous procedure. Page 28 Doing Business 2020 Brazil Details – Getting Electricity in São Paulo – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 6 Total duration and frequency of outages per customer a year (0-3) 1 System average interruption duration index (SAIDI) 6.3 System average interruption frequency index (SAIFI) 3.5 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 3.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? Yes Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? Yes Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online https://www.eneldistribuic aosp.com.br/para-seu- negocio/tarifa-de-energia- eletrica and https://www.eneldistribuic aosp.com.br/para-seu- negocio/impostos-e- outros-encargos Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 29 Doing Business 2020 Brazil Getting Electricity - Rio de Janeiro Standardized Connection Name of utility Light Price of electricity (US cents per kWh) 18.8 City Covered Rio de Janeiro Indicator Rio de Janeiro Latin America & OECD high Best Regulatory Caribbean income Performance Procedures (number) 5 5.5 4.4 3 (28 Economies) Time (days) 123 66.8 74.8 18 (3 Economies) Cost (% of income per capita) 0.5 407.2 61.0 0.0 (3 Economies) Reliability of supply and transparency of tariff index (0-8) 6 4.4 7.4 8 (26 Economies) Figure – Getting Electricity in Rio de Janeiro – Score 66.7 54.3 100.0 75.0 Reliability of supply and transparency of Procedures Time Cost tariff index Figure – Getting Electricity in Rio de Janeiro and comparator economies – Ranking and Score DB 2020 Getting Electricity Score 0 100 97.5: Russian Federation (Rank: 7) 95.4: China (Rank: 12) 85.7: Chile (Rank: 39) 74.0: Rio de Janeiro 72.0: São Paulo 71.1: Mexico (Rank: 106) Note: The ranking of economies on the ease of getting electricity is determined by sorting their scores for getting electricity. These scores are the simple average of the scores for all the component indicators except the price of electricity. Figure – Getting Electricity in Rio de Janeiro – Procedure, Time and Cost Time (days) Cost (% of income per capita) 0.5 120 Cost (% of income per capita) 100 0.4 80 Time (days) 0.3 60 0.2 40 0.1 20 0 0 1 2 3 4 5 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures Page 30 Doing Business 2020 Brazil reflected here, see the summary below. Figure – Getting Electricity in Rio de Janeiro and comparator economies – Measure of Quality 9 8 8 7 7 7 7 Index score 6 6 6 5 4.4 4 3 2 1 0 Rio Chile China Mexico Russian São Latin de Federation Paulo America Janeiro & Caribbean Page 31 Doing Business 2020 Brazil Details – Getting Electricity in Rio de Janeiro – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain a project approval (Anotação de Responsabilidade Técnica, ART) from the Regional 2 calendar days BRL 150.44 Council of Engineering (CREA-RJ) Agency : Regional Council of Engineering (Conselho Regional de Engenharia e Agronomia, CREA-RJ) In order to apply for a new connection, the client's electrician must obtain a project approval from the Regional Council of Engineering (Conselho Regional de Engenharia e Agronomia, CREA-RJ). This document can be obtained online at https://creaonline.crea- rj.org.br/creaOnLine/home/efetuarloginAction.do?action=inicioProfissional This document is obtained online in 2 days upon payment of the fee, which is charged based on the cost of works. 2 Submit application to Light and await estimate 30 calendar days BRL 0 Agency : Light The customer must submit an application for a new connection along with the following documents: Sign Up Form Technical Information - Substations Simplified - duly completed and with all data and assessed the installed load demand; Descriptive loads (2 copies); Plant Situation / Location (4 copies) listed; Project approval (ART) duly repaid (1 copy); Power of Attorney, on letterhead and notarization as attached model (1 copy); Charter Service Request (2 copies); Letter of no parallelism with Light's network (2 copies); Copy of the contract or bylaws in force, or the like, according to the type of legal entity, and subsequent changes, together with the election of its current directors, duly registered with the competent agency documents; Copy of card from the National Register of Legal Entities (CNPJ); Copies of Identity and Registration of Individuals (CPF) of the Legal Representatives; Copy of Lease Agreement or similar, if the customer is not the owner of the property; Copy of proof of ownership of the property (certificate of encumbrances); All documents have to be notarized. Each notarization costs BRL 10. All documents should be already in possession of the applicant except for the ART and the proof of ownership. The utility has a deadline of 30 days to respond, according to Art. 31 of Resolution 414 of ANEEL. 3 Receive an inspection by utility 3 calendar days BRL 0 Agency : Light Light carries out an inspection to verify where will the connection point be and the future network's location and conditions. To avoid delays, it is advisable that the electric engineer responsible for the works is present, in case the technician conducting the inspection has questions about the process.Within 3 days of the site visit, the client receives a budget, if there is a cost, and a supply contract ('carta-contrato'), for signing. Works will be scheduled by Light after the contract is signed. 4 Sign a contract and receive external works from utility 83 calendar days BRL 0 Agency : Light After the site visit, Light will calculate the cost estimate and determine if the client must partially cover the connection costs. Connection costs are by Law partially absorbed by the utility, and can be partially paid by the client. For this type of connection, generally Light will absorb the costs and the client is not charged. Also, the regional network's capacity is usually sufficient, and a transformer would not be required. It depends on the client's preference to be connected to low- or medium-voltage. However, the customer may be charged based on the utility's cost analysis for each situation. Once the contract is signed, Light will schedule the necessary works to connect the warehouse to the network. The Municipal permit for works on a public space will be obtained by the utility, which will then procure the materials, schedule the works and notify the region of potential power cuts. The client will be informed once works are completed. 5 Receive meter installation and electricity flow from utility 5 calendar days BRL 0 Agency : Light At the end of the works, Light will proceed to scheduling a visit for final inspection and meter installation. The client or a representative has to be present for the meter to be installed. Once it is finalized, the client starts to receive energy within 1 day. Takes place simultaneously with previous procedure. Page 32 Doing Business 2020 Brazil Details – Getting Electricity in Rio de Janeiro – Measure of Quality Answer Reliability of supply and transparency of tariff index (0-8) 6 Total duration and frequency of outages per customer a year (0-3) 1 System average interruption duration index (SAIDI) 7.2 System average interruption frequency index (SAIFI) 4.0 What is the minimum outage time (in minutes) that the utility considers for the calculation of SAIDI/SAIFI 3.0 Mechanisms for monitoring outages (0-1) 1 Does the distribution utility use automated tools to monitor outages? Yes Mechanisms for restoring service (0-1) 1 Does the distribution utility use automated tools to restore service? Yes Regulatory monitoring (0-1) 1 Does a regulator—that is, an entity separate from the utility—monitor the utility’s performance on reliability of supply? Yes Financial deterrents aimed at limiting outages (0-1) 1 Does the utility either pay compensation to customers or face fines by the regulator (or both) if outages exceed a certain cap? Yes Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online http://www.light.com.br/pa ra-residencias/Sua- Conta/composicao-da- tarifa.aspx Are customers notified of a change in tariff ahead of the billing cycle? Yes Note: If the duration and frequency of outages is 100 or less, the economy is eligible to score on the Reliability of supply and transparency of tariff index. If the duration and frequency of outages is not available, or is over 100, the economy is not eligible to score on the index. If the minimum outage time considered for SAIDI/SAIFI is over 5 minutes, the economy is not eligible to score on the index. Page 33 Doing Business 2020 Brazil Registering Property This topic examines the steps, time and cost involved in registering property, assuming a standardized case of an entrepreneur who wants to purchase land and a building that is already registered and free of title dispute. In addition, the topic also measures the quality of the land administration system in each economy. The quality of land administration index has five dimensions: reliability of infrastructure, transparency of information, geographic coverage, land dispute resolution, and equal access to property rights. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on immovable property To make the data comparable across economies, several assumptions about the parties to the (number) transaction, the property and the procedures are used. • Preregistration procedures (for example, checking for liens, The parties (buyer and seller): notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). • Registration procedures in the economy's largest business city. - Are located in the periurban (that is, on the outskirts of the city but still within its official limits) • Postregistration procedures (for example, filling title with area of the economy’s largest business city. For 11 economies the data are also collected for the municipality) second largest business city. - Are 100% domestically and privately owned. Time required to complete each procedure (calendar days) - Perform general commercial activities. • Does not include time spent gathering information The property (fully owned by the seller): • Each procedure starts on a separate day - though procedures - Has a value of 50 times income per capita, which equals the sale price. that can be fully completed online are an exception to this rule - Is fully owned by the seller. • Procedure is considered completed once final document is - Has no mortgages attached and has been under the same ownership for the past 10 years. received - Is registered in the land registry or cadastre, or both, and is free of title disputes. • No prior contact with officials - Is located in a periurban commercial zone (that is, on the outskirts of the city but still within its official limits), and no rezoning is required. Cost required to complete each procedure (% of property - Consists of land and a building. The land area is 557.4 square meters (6,000 square feet). A two- value) story warehouse of 929 square meters (10,000 square feet) is located on the land. The warehouse is 10 years old, is in good condition, has no heating system and complies with all safety standards, • Official costs only (such as administrative fees, duties and building codes and legal requirements. The property, consisting of land and building, will be taxes). transferred in its entirety. • Value Added Tax, Capital Gains Tax and illicit payments are - Will not be subject to renovations or additional construction following the purchase. excluded - Has no trees, natural water sources, natural reserves or historical monuments of any kind. - Will not be used for special purposes, and no special permits, such as for residential use, Quality of land administration index (0-30) industrial plants, waste storage or certain types of agricultural activities, are required. - Has no occupants, and no other party holds a legal interest in it. • Reliability of infrastructure index (0-8) • Transparency of information index (0–6) • Geographic coverage index (0–8) • Land dispute resolution index (0–8) • Equal access to property rights index (-2–0) Page 34 Doing Business 2020 Brazil Registering Property - São Paulo Indicator São Paulo Latin America & OECD high Best Regulatory Caribbean income Performance Procedures (number) 14 7.4 4.7 1 (5 Economies) Time (days) 24.5 63.7 23.6 1 (2 Economies) Cost (% of property value) 3.6 5.9 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 16.5 12.0 23.2 None in 2018/19 Figure – Registering Property in São Paulo – Score 0.0 88.8 76.3 55.0 Procedures Time Cost Quality of the land administration index Figure – Registering Property in São Paulo and comparator economies – Ranking and Score DB 2020 Registering Property Score 0 100 88.6: Russian Federation (Rank: 12) 81.0: China (Rank: 28) 71.1: Chile (Rank: 63) 60.2: Mexico (Rank: 105) 55.0: São Paulo 52.7: Rio de Janeiro Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Page 35 Doing Business 2020 Brazil Figure – Registering Property in São Paulo – Procedure, Time and Cost Time (days) Cost (% of property value) 3.5 3 20 Cost (% of property value) 2.5 Time (days) 15 2 1.5 10 1 5 0.5 0 0 1 *2 3 *4 *5 *6 *7 *8 *9 * 10 11 12 13 * 14 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 36 Doing Business 2020 Brazil Figure – Registering Property in São Paulo and comparator economies – Measure of Quality 30 26.0 25 24.0 Index score 20 16.5 16.3 16.0 15 14.0 12.0 10 5 0 São Chile China Mexico Russian Rio Latin Paulo Federation de America Janeiro & Caribbean Details – Registering Property in São Paulo – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Acquire 10 Certificates of Registries and Disputes (Certidão dos Cartórios de Protestos) 2 days BRL 133; (BRL 13.30 each from the Distributor of Disputes Registry (the total is BRL 133.30)) Agency : Disputes Registry (Cartórios de protesto) The buyer can request the certificates on the existence of debts on the website: https://www.protesto.net.br/index.php?act=certidao. Although this certificate is not required by law, it is common practice to request it particularly in transactions between companies that tend to be more conservative and are usually assisted by lawyers. The seller will usually request 5-year certificates. 10-year certificates are also available for higher fees. There are 10 Protest Notaries in São Paulo, and it is necessary to research them all. 2 Acquire a Civil Distributor's Certificate (Certidão dos Distribuidores Cívies), a Fiscal 1 day no charge Executive Certificate (Certidão de Executivos Fiscais) and a Bankruptcy Certificate (Certidão de Falencias e Concordatas) from the City Court Office Agency : Distributor of the State Courts (Tribunal de Justiça de São Paulo) These three certificates guarantee that the seller does not owe any payment as a result of a civil, fiscal, and commercial legal dispute. Additionally, it states that no pending sentences or legal proceedings are linked to the seller. These certificates can be retrieved online at no cost since August 2016 (https://esaj.tjsp.jus.br/sco/abrirCadastro.do). It takes around 1 day for the certificate to be issued if it is negative (that is, that the seller does not have any pending payment nor legal proceedings) Certificates are issued immediately when requested in person at the Fórum do Tribunal de Justiça. 3 Obtain a Labor Justice Certificate (Certidão da Justiça do Trabalho) from the Regional Less than one day, no charge Labor Court online Agency : Regional Labor Court (Tribunal Regional de Trabalho No. 2) This document is not required by law. Technically, the buyer and seller can agree to trust that all these checks are represented and warranted by the seller without needing to submit the certificate to the public notary. In practice, however, for transactions between companies, the seller will provide these documents. Since January 2016, the Labor Justice certificate can be retrieved online immediately according to Act GP/CR No. 1/2016. This certificate identifies all the ongoing procedures at the Regional Labor Court in which the company (buyer) is a defendant. The certificate is valid for 90 days, and its authenticity can be verified online as well. 4 Obtain a Certificate of Good Standing on Labor Debts (Certidão Negativa de Débitos Less than one day, no charge Trabalhistas) online Agency : High Labor Court (Tribunal Superior do Trabalho) The Certificate of Good Standing on Labor Debts is not required by law and therefore does not prevent the registration of real estate transactions. It is, however, common practice and highly recommended to check the standing on labor debts of the seller. 5 Obtain a 20-year certificate (Certidão de matrícula) from the Real Estate Property Registry Less than one day, BRL 52.85 (Cartório de Registro de Imóveis) online Agency : Real Estate Property Registry (Cartório de Registro de Imóveis) The 20-year certificate (Matricula) needs to be obtained in order to (i) certify the successive chain of owners (and ownership titles) of the plot in the past 20 years; (ii) check if the seller is really the owner of the property; and (iii) check about any encumbrances over the land. The certificate might be requested online at https://www.registradores.org.br/Servicos/frmTabelaCustas.aspx. The digital certificate has the same legal validity as the one issued on paper format. 6 Request a Land-Tax Certificate and a Cadastral Certificate (Certidão de Dados Cadastrais Less than one day, no cost if obtained online do Imovel) from City Hall online Agency : Municipal Prefecture of Sao Paulo (Prefeitura Municipal de São Paulo) These certificates can be obtained in the website: www.prefeitura.sp.gov.br They will establish if there is any pending tax debt affecting the property. The certificate is free if obtained online. The buyer can waive this certificate if he assumes the obligation to pay all pending land tax debt related to the real state according to § 2 of Art. 1 of Decree 93.240/86. Page 37 Doing Business 2020 Brazil 7 Acquire a Clearance Certificate from Tax Agency and a Federal Tax Clearance Certificate Less than one day, no charge (Certidão de Débitos Relativos a Créditos Tributários Federais e à Dívida Ativa da União) online Agency : Federal Tax agency (Ministério da Fazenda, Procuradoria Geral da Fazenda Nacional, Secretaria da Receita Federal do Brasil - RFB) The joint certificate (Certidão de Débitos Relativos a Créditos Tributários Federais e à Dívida Ativa da União) can be obtained online at www.receita.fazenda.gov.br since November 2014. The joint certificate includes: (i) Clearance Certificate (Certidão Conjunta Negativa de Débitos relativos aos Tributos Federais e à Dívida Ativa da União emitida pelo Ministério da Fazenda – Procuradoria Geral da Fazenda Nacional – Secretaria da Receita Federal do Brasil) from the Tax Agency: this certificate includes the debts related to taxes administered by the Internal Revenue Service of Brazil (RFB) and the inscriptions on Union Debts with the General Attorney of National Treasury (PGFN). This certificate, which is issued in the name of the headquarters and applies to all its subsidiaries, refers only to the information of the taxpayer within the RFB and PGFN, and does not include social security contributions and the contributions due, by law, to third parties, including those debts enrolled in the National Social Security Institute (INSS), that are object of the second certificate. (ii) The Federal Tax Clearance Certificate (Certidão Negativa de Débitos relativos às Contribuições Previdenciárias e às de Terceiros emitida pelo Ministério da Fazenda, Secretaria da Receita Federal do Brasil) refers exclusively to social security contributions and the contributions owed by law, to third parties, including those enrolled in Union Debts (Dívida Ativa da União - DAU) and does not include other taxes administered by RFB and the remaining debts in the DAU, administered by the General Attorney of National Treasury (PGFN) object PGFN Joint Certificate / RFB. If one is a certified representative of the company with a passcode, one can obtain this certificate online at www.receita.fazenda.gov.br/previdencia/CND free of charge. The certificate was formerly provided by the National Social Security Institute (INSS), but is now provided by the Internal Revenue Service, after both agencies were partially unified according to Law N° 11.457/07. 8 Acquire a Worker’s Fund Certificate (Certidão de Regularidade de Situação do FGTS) at the Less than one day, no charge federal bank- Caixa Economica Federal online Agency : Federal bank (Caixa Economica Federal) The Worker's Fund Certificate assures that the company has kept its pension fund plan up to date with payments. This certificate is obtained online at the site Caixa Economica (https://webp.caixa.gov.br/cidadao/Crf/FgeCfSCriteriosPesquisa.asp) free of charge. It is not required by law, but in practice it is usually requested by the buyer in transactions between companies. 9 Acquire a Federal Justice Certificate (Certidão da Justiça Federal) from the Receita Federal Less than one day, no charge - (Certidão de Distribuição de Ações e Execuções Cíveis, Fiscais, Criminais e dos Juizados online Especiais Federais Criminais Adjuntos junto ao Poder Judiciário – Justiça Federal de Primeiro Grau em São Paulo) Agency : Justiça Federal This certificate is obtained online at (http://www.jfsp.jus.br/certidoes-emissaoonline/). The certificate will show if there are any pending cases at civil, tax, criminal and special federal criminal courts. If the company has any pending claims, the certificate will have to be picked up in person by a representative at the Justiça Federal. Verify the company's information at the Company Registry (Junta Comercial de Estado de Less than one day, no charge 10 São Paulo) online Agency : Company Registry (Junta Comercial de Estado de São Paulo) The company's information is verified on the website of the Company Registry (Junta Comercial) to make sure that (i) the articles of association presented by the parties and (ii) the legal representatives mentioned in the articles of association correspond with the most recent ones registered. 11 Pay transfer tax (ITB I) and other fees at a commercial Bank Less than one day, BRL 48,130; (3% of the Agency : Municipal Prefecture of Sao Paulo (Prefeitura Municipal de São Paulo) online property value registered The buyer must pay the transfer tax before the parties can sign the transfer deed. Most notaries with the cadastre of the prefer to receive the tax payment themselves and then take care of transferring it to the Prefecture for ITBI) Municipality because they are responsible for checking that the tax payment is correct. Notaries also must file a declaration of all the transactions that they were part of, given that they are jointly liable, to the tax authorities. For the ITBI, it is common practice for the notary to provide the payment form obtained online (http://www.prefeitura.sp.gov.br/cidade/secretarias/financas/servicos/itbi/) to the buyer. 12 Drafting of Public Deed of Purchase and Sale (Escritura Pública de Venda e Compra) by a 3 days BRL 5,099.02; (BRL Public Notary (Tabelião de Notas) 5,099.02 (according to the Agency : Public Notary (Tabelião de Notas do Estado de São Paulo) fee schedule published on The notary will review all the documents obtained in the previous Procedures and proceed to the official notary website)) notarize the sale deed. Notary fees are incurred for the notarization of the sale and purchase agreement. Page 38 Doing Business 2020 Brazil 13 Register the escritura (transfer deed) at the appropriate Real Estate Registry with 15 days BRL 3,712.31; (BRL jurisdiction over the property to finalize registration and name change 3,712.31 (according to the Agency : Real Estate Registry (Cartório de Registro de Imóveis) schedule in There are 18 Real Estate Registries in São Paulo. The registration of the deed at the https://www.registradores. corresponding Real Estate Registry is required for the transfer of ownership of the property. It can org.br/Servicos/frmTabela be arranged directly by the parties or by the notary if the notary offers this supplementary service. Custas.aspx)) By law, the Real Estate Registry has 30 days to analyze the documents and register the transfer deed. Update the land taxation records (IPTU – Imposto Predial e Territorial Urbano) to the new 5 days no charge 14 owner's name at City Hall Agency : Municipal Prefecture of Sao Paulo (Prefeitura Municipal de São Paulo) Theoretically, the Real Estate Registry should inform the Municipality about the transfer of the real estate and the Municipality should automatically update its land taxation records. In practice, however, this automatic system does not really work. The Municipality updates the records a few times a year, sometimes even only once a year. Therefore, in practice, the parties need to go to the Municipality and request the update. Takes place simultaneously with previous procedure. Page 39 Doing Business 2020 Brazil Details – Registering Property in São Paulo – Measure of Quality Answer Score Quality of the land administration index (0-30) 16.5 Reliability of infrastructure index (0-8) 5.0 Type of land registration system in the economy: Deed Registration System What is the institution in charge of immovable property registration? Cartórios de Registro de Imóveis de São Paulo In what format are past and newly issued land records kept at the immovable property registry of the largest Computer/Scanned 1.0 business city of the economy —in a paper format or in a computerized format (scanned or fully digital)? Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, Yes 1.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Prefeitura Municipal de São Paulo In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business Computer/Fully digital 2.0 city of the economy—in a paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing cadastral information Yes 1.0 (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral or mapping agency Separate databases 0.0 kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the same identification No 0.0 number for properties? Transparency of information index (0–6) 5.0 Who is able to obtain information on land ownership at the agency in charge of immovable property registration Anyone who pays the 1.0 in the largest business city? official fee Is the list of documents that are required to complete any type of property transaction made publicly available– Yes, online 0.5 and if so, how? Link for online access: http://www.cnbsp.org. br/index.php? pG=X19wYWdpbmFz &idPagina=6009 Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable Yes, online 0.5 property registration in the largest business city made publicly available–and if so, how? Link for online access: For Notaries fees: http://www.cnbsp.org. br/index.php? pG=X190YWJlbGFzX 2Vtb2x1bWVudG9z For Land Registry fees: https://www.registrad ores.org.br/Servicos/f rmTabelaCustas.aspx Does the agency in charge of immovable property registration agency formally commit to deliver a legally Yes, online 0.5 binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard? Link for online access: http://www.planalto.g ov.br/CCIVIL_03/leis/ L6015compilada.htm (capitulo III law 6015) https://api.tjsp.jus.br/ Handlers/Handler/File Fetch.ashx? codigo=101773 Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency Yes 1.0 in charge of immovable property registration? Page 40 Doing Business 2020 Brazil Contact information: https://www.registroi mobiliario.org.br/mec anismo-de- reclamacao Are there publicly available official statistics tracking the number of transactions at the immovable property Yes 0.5 registration agency? Number of property transfers in the largest business city in 2018: 159.2 Who is able to consult maps of land plots in the largest business city? Freely accessible by 0.5 anyone Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how? Yes, online 0.5 Link for online access: Free of charge (http://www.prefeitura. sp.gov.br/cidade/secr etarias/financas/servi cos/certidoes/index.p hp?p=2404) Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and No 0.0 if so, how does it communicate the service standard? Link for online access: Is there a specific and independent mechanism for filing complaints about a problem that occurred at the No 0.0 cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 2.0 Are all privately held land plots in the largest business city formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the economy formally registered at the immovable property registry? No 0.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Are all privately held land plots in the economy mapped? No 0.0 Land dispute resolution index (0–8) 4.5 Does the law require that all property sale transactions be registered at the immovable property registry to make Yes 1.5 them opposable to third parties? Legal basis: Art. 221 and 1245 of Law 10.406, January 2002 Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Type of guarantee: State guarantee Page 41 Doing Business 2020 Brazil Legal basis: Art. 22 law 8935/94, February 2019. Federal Supreme Court - decision with general repercussions (which binds all instances), in which the direct responsibility of the State was established for damages caused by the Property Registry "The State responds objectively to the acts of the notaries and official registrars who, in the exercise of their duties, cause damage to third parties, based on the obligation to return against the person responsible, in cases of fraud or guilt, under penalty of administrative impropriety " Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Legal basis: Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., Yes 0.5 checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Does the legal system require verification of the identity of the parties to a property transaction? Yes 0.5 If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Is there a national database to verify the accuracy of government issued identity documents? No 0.0 What is the Court of first instance in charge of a case involving a standard land dispute between two local Tribunal de justica do businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located estado de Sao Paulo in the largest business city? How long does it take on average to obtain a decision from the first-instance court for such a case (without Between 2 and 3 1.0 appeal)? years Are there publicly available statistics on the number of land disputes at the economy level in the first instance Yes 0.5 court? Number of land disputes in the economy in 2018: 2 053 cases of land disputes in 2018 - First instance Sao Paulo Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 42 Doing Business 2020 Brazil Registering Property - Rio de Janeiro Indicator Rio de Janeiro Latin America & OECD high Best Regulatory Caribbean income Performance Procedures (number) 13 7.4 4.7 1 (5 Economies) Time (days) 40.5 63.7 23.6 1 (2 Economies) Cost (% of property value) 3.6 5.9 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 16.0 12.0 23.2 None in 2018/19 Figure – Registering Property in Rio de Janeiro – Score 0.0 81.1 76.3 53.3 Procedures Time Cost Quality of the land administration index Figure – Registering Property in Rio de Janeiro and comparator economies – Ranking and Score DB 2020 Registering Property Score 0 100 88.6: Russian Federation (Rank: 12) 81.0: China (Rank: 28) 71.1: Chile (Rank: 63) 60.2: Mexico (Rank: 105) 55.0: São Paulo 52.7: Rio de Janeiro Note: The ranking of economies on the ease of registering property is determined by sorting their scores for registering property. These scores are the simple average of the scores for each of the component indicators. Page 43 Doing Business 2020 Brazil Figure – Registering Property in Rio de Janeiro – Procedure, Time and Cost Time (days) Cost (% of property value) 40 3.5 35 3 Cost (% of property value) 30 2.5 Time (days) 25 2 20 1.5 15 1 10 5 0.5 0 0 1 *2 *3 *4 *5 *6 *7 *8 *9 10 11 12 13 Procedures (number) * This symbol is shown beside procedure numbers that take place simultaneously with the previous procedure. Note: Online procedures account for 0.5 days in the total time calculation. For economies that have a different procedure list for men and women, the graph shows the time for women. For more information on methodology, see the Doing Business website (http://doingbusiness.org/en/methodology). For details on the procedures reflected here, see the summary below. Page 44 Doing Business 2020 Brazil Figure – Registering Property in Rio de Janeiro and comparator economies – Measure of Quality 30 26.0 25 24.0 Index score 20 16.5 16.0 16.3 15 14.0 12.0 10 5 0 Rio Chile China Mexico Russian São Latin de Federation Paulo America Janeiro & Caribbean Details – Registering Property in Rio de Janeiro – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain the certificates of Certificates of Registries and Disputes (Certidão dos Cartórios de 4 days BRL 1,125.49; ((i) BRL Protestos), Acquire a Civil Distributor's Certificate (Certidão dos Distribuidores Cívies), a 114.04 for each Civil Fiscal Executive Certificate (Certidão de Executivos Fiscais) and a Bankruptcy Certificate Distributor's Certificate (Certidão de Falencias e Concordatas) from the City Court Office issued by the 1st, 2nd, 3rd Agency : Rio Rapido and 4th Distributor (x4) These certificates guarantee that all civil, fiscal, and commercial legal settlements have been finalized and no pending sentences or legal proceedings are linked to the seller. In Rio de Janeiro, (ii) BRL 125.18 for the it is possible to request these certificates online via a centralized certification office named "Rio Fiscal Executive Rapido". Although they can be requested online, they need to be picked up personally. Certificate; (iii) BRL 114.04 for each Additionally, since December 2017 it is possible to request and receive these certificates online Bankruptcy Distributor's through E-Cartorios RJ (https://e-cartoriorj.com.br/Home/View/Default.aspx#/kitcertidoes. The Certificate issued by the majority of practitioners are still using Rio Rapido as of May 1, 2018. 1st, 2nd, 3rd 4th Distributor (x4) (iv) BRL 87.99 for the Certificate of Registries and Disputes) 2 Obtain a 20-year certificate (Certidão de matrícula) from the Real Estate Property Registry 3 days BRL 107.73 (Cartório de Registro de Imóveis) Agency : Real Estate Registry (Cartório de Registro de Imóveis) The 20-year certificate (Certidão Vintenária) needs to be obtained in order to (i) certify the successive chain of owners (and ownership titles) of the plot in the past 20 years; (ii) check if the seller is really the owner of the property; and (iii) check about any encumbrances over the land. The Internal Affairs Bureau of the State Court of Rio de Janeiro ("Corregedoria Geral da Justiça do Tribunal de Justiça do Rio de Janeiro") together with the Association of Public Notaries and Public Registry Offices in the State of Rio de Janeiro ("ANOREG-RJ") have implemented E- Cartorios RJ (https://e-cartoriorj.com.br/Home/View/Default.aspx#/kitcertidoes) which is an online platform that aims to concentrate the issuance of all certificates for transferring property, in order to make the process of issuing and registering public deeds faster. The 20-year certificate is one of the certificates that may be obtained online, but only in connection with Real Estate Registries in the City of Rio de Janeiro. The digital certificate has the same legal validity as the one issued in physical format. 3 Obtain a Labor Justice Certificate (Certidão da Justiça do Trabalho) from the Regional 3 days BRL 5.53 Labor Court Agency : Regional Labor Court (Tribunal Regional do Trabalho No. 1) This document is not required by law. Technically, the buyer and seller can agree to trust that all these checks are represented and warranted by the seller without needing to submit the certificate to the public notary. In practice, however, for transactions between companies, the seller will provide these documents. The Labor Justice Certificate (Certidão de Feitos Trabalhistas) may have one or several sheets. It will depend on the quantity of suits against the company under analysis. The cost for a one page certificate is BRL 5.53 and for each additional page BRL 5.53. There are 24 Regional Labor Courts in Brazil. The certificates must be issued by the Regional Labor Court of seller's headquarters and of the location of the real estate. Some practitioners request two certificates, one about 1st instance cases and another on 2nd instance cases at the Regional Labor Court. 4 Obtain a Certificate of Good Standing on Labor Debts (Certidão Negativa de Débitos Less than one day, no charge Trabalhistas) online Agency : High Labor Court (Tribunal Superior do Trabalho) The Certificate of Good Standing on Labor Debts is not required by law and therefore does not prevent the registration of real estate transactions. It is, however, common practice and highly recommended to check the standing on labor debts of the seller. Page 45 Doing Business 2020 Brazil 5 Request a Land-Tax Certificate and a Cadastral Certificate (Certidão de Dados Cadastrais Less than one day, no charge do Imovel) from City Hall online Agency : Municipality of Rio de Janeiro (Prefeitura do Rio de Janeiro) These certificates will establish if there is any pending tax debt affecting the property. The certificate is free if obtained online, or BRL 11.85 if obtained in person. The buyer can waive this certificate if he assumes the obligation to pay all pending land tax debt related to the real state according to § 2 of Art. 1 of Decree 93.240/86. 6 Acquire a Clearance Certificate from Tax Agency and a Federal Tax Clearance Certificate Less than one day, no charge Agency : Federal Tax agency (Ministério da Fazenda, Procuradoria Geral da Fazenda Nacional, online Secretaria da Receita Federal do Brasil - RFB) The joint certificate (Certidão de Débitos Relativos a Créditos Tributários Federais e à Dívida Ativa da União) can be obtained online at www.receita.fazenda.gov.br since November 2014. The joint certificate includes: (i) Clearance Certificate (Certidão Conjunta Negativa de Débitos relativos aos Tributos Federais e à Dívida Ativa da União emitida pelo Ministério da Fazenda – Procuradoria Geral da Fazenda Nacional – Secretaria da Receita Federal do Brasil) from the Tax Agency: this certificate includes the debts related to taxes administered by the Internal Revenue Service of Brazil (RFB) and the inscriptions on Union Debts with the General Attorney of National Treasury (PGFN). This certificate, which is issued in the name of the headquarters and applies to all its subsidiaries, refers only to the information of the taxpayer within the RFB and PGFN, and does not include social security contributions and the contributions due, by law, to third parties, including those debts enrolled in the National Social Security Institute (INSS), that are object of the second certificate. (ii) The Federal Tax Clearance Certificate (Certidão Negativa de Débitos relativos às Contribuições Previdenciárias e às de Terceiros emitida pelo Ministério da Fazenda, Secretaria da Receita Federal do Brasil) refers exclusively to social security contributions and the contributions owed by law, to third parties, including those enrolled in Union Debts (Dívida Ativa da União - DAU) and does not include other taxes administered by RFB and the remaining debts in the DAU, administered by the General Attorney of National Treasury (PGFN) object PGFN Joint Certificate / RFB. If one is a certified representative of the company with a passcode, one can obtain this certificate online at www.receita.fazenda.gov.br/previdencia/CND free of charge. The certificate was formerly provided by the National Social Security Institute (INSS), but is now provided by the Internal Revenue Service, after both agencies were partially unified according to Law N° 11.457/07. The certificate is electronically issued with negative effects if there are no pending debts. If the company has any pending debts with suspended collection (exigibilidade suspensa), a representative of the company must show up to the Revenue Service of Brazil to obtain a positive certificate with negative effects or, if the company has any pending debts in charge, a positive certificate may be issued, according to Joint Ordinance RFB/PGFN 1,14015751 of October 2, 2014. 7 Acquire a Worker’s Fund Certificate (Certidão de Regularidade de Situação do FGTS) at the Less than one day, no charge federal bank- Caixa Economica Federal online Agency : Federal bank (Caixa Economica Federal) The Worker's Fund Certificate assures that the company has kept its pension fund plan up to date with payments. This certificate is obtained online at the site Caixa Economica (https://webp.caixa.gov.br/cidadao/Crf/FgeCfSCriteriosPesquisa.asp) free of charge. It is not required by law, but in practice it is usually requested by the buyer in transactions between companies. 8 Acquire a Federal Justice Certificate (Certidão da Justiça Federal) from the Receita Federal Less than one day, no charge - (Certidão de Distribuição de Ações e Execuções Cíveis, Fiscais, Criminais e dos Juizados online Especiais Federais Criminais Adjuntos junto ao Poder Judiciário – Justiça Federal de Primeiro Grau no Rio de Janeiro Agency : Justiça Federal da Seção Judiciária do Rio de de Janeiro (Federal Justice of Rio de Janeiro) This certificate is obtained online at (http://www10.trf2.jus.br/consultas/certidao-eletronica). The certificate will show if there are any pending cases at civil, tax, criminal and special federal criminal courts. If the company has any pending claims, the certificate will have to be picked up in person by a representative at the Justiça Federal. The Federal Justice Court in Brazil is divided in 5 sections per zone of group of States. In practice, for the risk assessment of real estate property transfer, the certificate from the Federal Justice Court of the location of company's headquarters address for the last 10 years shall be analyzed. 9 Obtain company name certificate Less than one day, BRL 183 Agency : Company Registry (Junta Comercial do Estado do Rio de Janeiro) online The notary will check the website of the Company Registry (Junta Comercial) to make sure that (i) the articles of association presented by the parties and (ii) the legal representatives mentioned in the articles of association correspond with the most recent ones registered. Page 46 Doing Business 2020 Brazil 10 Pay transfer tax (ITB I) at the Bank 1 day BRL 48,130; (3% of the Agency : Commercial bank property value) The buyer must pay the transfer tax before the parties can sign the transfer deed. Most notaries prefer to receive the tax payment themselves and then take care of transferring it to the Municipality because they are responsible for checking that the tax payment is correct. Notaries must also file a declaration of all the transactions that they were part of, given that they are jointly liable, to the tax authorities. Therefore, the notary provides the payment on behalf of the buyer and the parties pay at the notary. The payment slip in most cases can be issued online at http://smfonlineitbi.rio.rj.gov.br/cgi-bin/itbi2simulacao_cgi.exe/EntSimulacao. Payment can only be made at Banco Santander's office in the City Hall. 11 Drafting of Public Deed of Purchase and Sale (Escritura Pública de Venda e Compra) by a 3 days BRL 3,699.98; (BRL Public Notary (Tabelião de Notas) 3,235.49, based on the Agency : Notary's office (Tabelião de Notas) following fee schedule: The notary will review all the documents obtained in the previous Procedures and proceed to Public deed with a notarize the sale deed. Notary fees are incurred for the notarization of the sale and purchase declared amount up to R$ agreement. 15,000.00 costs BRL An electronic platform to issue electronic public deeds through a Notary has been tested in 191.38. From R$ several Notary offices of Rio de Janeiro, however it has not been implemented widely as of May 1, 15,000.01 to R$ 30,000.00 2018. - BRL 316.22/ From R$ 30,000.01 to R$ 45,000.00- BRL 441.09/ From 45,000.01 to R$ 60,000.00 - BRL 540.95/ From 60,000.001 to R$ 80,000.00 - BRL 958.80/ From 80,000.01 to R$ 100,000.00 - BRL 1.131.92/ From 100,000.01 to R$ 200,000.00 - BRL 1,531.41 / From 200,000.01 to R$ 400,000.00 - BRL 1,643.24. For properties valued at R$ 400,000.01 and higher - BRL 144.75 for each additional R$ 100,000.00.) 12 Update the land taxation records (IPTU – Imposto Predial e Territorial Urbano) to the new Less than one day, no charge owner's name at City Hall online Agency : Tax Deparment of the Municipality of Rio de Janeiro (Secretaria municipal da fazenda) Before presenting the title to the Real Estate Registry Office, the new owner needs to update his name on the municipality's records. The information is submitted online to the Municipality. Once the information is submitted, a protocol number for the name change request is issued, which needs to be informed to the registrar. The registrar will verify the information submitted and attach the number of registration of the property (numero de matricula) and then sends the information to the municipality via the internet portal (https://dief.rio.rj.gov.br/dief/asp/mcriweb/login_usuri.asp) Page 47 Doing Business 2020 Brazil 13 Register the escritura (transfer deed) at the appropriate Real Estate Registry with 30 days BRL 3,704.9; (As of Jan, jurisdiction over the property to finalize registration and name change 2017 the fee for Agency : Real Estate Registry (Cartório de Registro de Imóveis) registration is BRL There are 12 Real Estate Registries in Rio de Janeiro. The registration of the deed at the 3,240.22 based on the competent Real Estate Registry is required for the transfer of ownership of the property. It can be following fee schedule: arranged directly by the parties or by the notary if the notary offers this supplementary service. By Registration of economic law, the Real Estate Registry has 30 days to analyze the documents and register the transfer deed. content to R$ 15,000.00 costs BRL 191.38. From Since December 2017, the request to register the property transfer can be done online at R$ 15,000.01 to R$ https://www.registradores.org.br/eProtocolo/DefaultAC.aspx 30,000.00 - BRL 316.22/ From R$ 30,000.01 to R$ 45,000.00- BRL 441.09/ From 45,000.01 to R$ 60,000.00 - BRL 540.95/ From 60,000.001 to R$ 80,000.00 - BRL 958.80/ From 80,000.01 to R$ 100,000.00 - BRL 1.131.92/ From 100,000.01 to R$ 200,000.00 - BRL 1,531.41 / From 200,000.01 to R$ 400,000.00 - BRL 1,647,97. For properties valued at R$ 400,000.01 and higher - BRL 144.75 for each additional R$ 100,000.00.) Takes place simultaneously with previous procedure. Page 48 Doing Business 2020 Brazil Details – Registering Property in Rio de Janeiro – Measure of Quality Answer Score Quality of the land administration index (0-30) 16.0 Reliability of infrastructure index (0-8) 4.0 Type of land registration system in the economy: Deed Registration System What is the institution in charge of immovable property registration? Cartórios de Registro de Imóveis do Rio de Janeiro (Real Estate Registry Office) In what format are past and newly issued land records kept at the immovable property registry of the largest Computer/Scanned 1.0 business city of the economy —in a paper format or in a computerized format (scanned or fully digital)? Is there a comprehensive and functional electronic database for checking for encumbrances (liens, mortgages, No 0.0 restrictions and the like)? Institution in charge of the plans showing legal boundaries in the largest business city: Prefeitura do Rio de Janeiro - Secretaria Municipal de Urbanismo (Rio de Janeiro City Hall) In what format are past and newly issued cadastral plans kept at the mapping agency of the largest business Computer/Fully digital 2.0 city of the economy—in a paper format or in a computerized format (scanned or fully digital)? Is there an electronic database for recording boundaries, checking plans and providing cadastral information Yes 1.0 (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral or mapping agency Separate databases 0.0 kept in a single database, in different but linked databases or in separate databases? Do the immovable property registration agency and cadastral or mapping agency use the same identification No 0.0 number for properties? Transparency of information index (0–6) 5.5 Who is able to obtain information on land ownership at the agency in charge of immovable property registration Anyone who pays the 1.0 in the largest business city? official fee Is the list of documents that are required to complete any type of property transaction made publicly available– Yes, online 0.5 and if so, how? Link for online access: http://www.1sri- rj.com.br/Compraeve ndadoacao.pdf Is the applicable fee schedule for any type of property transaction at the agency in charge of immovable Yes, online 0.5 property registration in the largest business city made publicly available–and if so, how? Link for online access: http://cgj.tjrj.jus.br/doc uments/1017893/141 5195/custas- extrajudiciais- 2019.pdf Does the agency in charge of immovable property registration agency formally commit to deliver a legally Yes, online 0.5 binding document that proves property ownership within a specific timeframe –and if so, how does it communicate the service standard? Link for online access: http://www.planalto.g ov.br/CCIVIL_03/leis/ L6015compilada.htm Is there a specific and independent mechanism for filing complaints about a problem that occurred at the agency Yes 1.0 in charge of immovable property registration? Contact information: https://www.registroi mobiliario.org.br/mec anismo-de- reclamacao Are there publicly available official statistics tracking the number of transactions at the immovable property Yes 0.5 registration agency? Page 49 Doing Business 2020 Brazil Number of property transfers in the largest business city in 2018: 66.3 Who is able to consult maps of land plots in the largest business city? Freely accessible by 0.5 anyone Is the applicable fee schedule for accessing maps of land plots made publicly available—and if so, how? No cost 0.5 Link for online access: http://www2.rio.rj.gov. br/smu/acervoimagen s/principal.asp http://www.rio.rj.gov.b r/web/smf/exibeconte udo?id=142219 http://www.rio.rj.gov.b r/web/ipp/siurb Does the cadastral/mapping agency formally specifies the timeframe to deliver an updated cadastral plan—and Yes, online 0.5 if so, how does it communicate the service standard? Link for online access: http://www.rio.rj.gov.b r/web/smf/exibeconte udo?id=142219 http://www2.rio.rj.gov. br/smu/acervoimagen s/ principal.asp Is there a specific and independent mechanism for filing complaints about a problem that occurred at the No 0.0 cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 2.0 Are all privately held land plots in the largest business city formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the economy formally registered at the immovable property registry? No 0.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Are all privately held land plots in the economy mapped? No 0.0 Land dispute resolution index (0–8) 4.5 Does the law require that all property sale transactions be registered at the immovable property registry to make Yes 1.5 them opposable to third parties? Legal basis: Art. 221 and 1245 of Law 10.406, January 2002 Art. 1.227 of Law 10.406/2002 (Código Civil) Is the system of immovable property registration subject to a state or private guarantee? Yes 0.5 Type of guarantee: State guarantee Page 50 Doing Business 2020 Brazil Legal basis: Art. 22 law 8935/94, February 2019. Federal Supreme Court - decision with general repercussions (which binds all instances), in which the direct responsibility of the State was established for damages caused by the Property Registry "The State responds objectively to the acts of the notaries and official registrars who, in the exercise of their duties, cause damage to third parties, based on the obligation to return against the person responsible, in cases of fraud or guilt, under penalty of administrative impropriety " Is there a is a specific, out-of-court compensation mechanism to cover for losses incurred by parties who No 0.0 engaged in good faith in a property transaction based on erroneous information certified by the immovable property registry? Legal basis: Does the legal system require a control of legality of the documents necessary for a property transaction (e.g., Yes 0.5 checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Does the legal system require verification of the identity of the parties to a property transaction? Yes 0.5 If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Is there a national database to verify the accuracy of government issued identity documents? No 0.0 What is the Court of first instance in charge of a case involving a standard land dispute between two local Tribunal de Justiça do businesses over tenure rights for a property worth 50 times gross national income (GNI) per capita and located Estado do Rio de in the largest business city? Janeiro How long does it take on average to obtain a decision from the first-instance court for such a case (without Between 2 and 3 1.0 appeal)? years Are there publicly available statistics on the number of land disputes at the economy level in the first instance Yes 0.5 court? Number of land disputes in the economy in 2018: 5.3 Equal access to property rights index (-2–0) 0.0 Do unmarried men and unmarried women have equal ownership rights to property? Yes Do married men and married women have equal ownership rights to property? Yes 0.0 Page 51 Doing Business 2020 Brazil Getting Credit This topic explores two sets of issues—the strength of credit reporting systems and the effectiveness of collateral and bankruptcy laws in facilitating lending. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Strength of legal rights index (0–12) Doing Business assesses the sharing of credit information and the legal rights of borrowers and lenders with respect to secured transactions through 2 sets of indicators. The depth of credit • Rights of borrowers and lenders through collateral laws (0-10) information index measures rules and practices affecting the coverage, scope and accessibility of • Protection of secured creditors’ rights through bankruptcy laws credit information available through a credit registry or a credit bureau. The strength of legal rights (0-2) index measures the degree to which collateral and bankruptcy laws protect the rights of borrowers and lenders and thus facilitate lending. For each economy it is first determined whether a unitary Depth of credit information index (0–8) secured transactions system exists. Then two case scenarios, case A and case B, are used to • Scope and accessibility of credit information distributed by determine how a nonpossessory security interest is created, publicized and enforced according to credit bureaus and credit registries (0-8) the law. Special emphasis is given to how the collateral registry operates (if registration of security interests is possible). The case scenarios involve a secured borrower, company ABC, and a Credit bureau coverage (% of adults) secured lender, BizBank. • Number of individuals and firms listed in largest credit bureau In some economies the legal framework for secured transactions will allow only case A or case B as a percentage of adult population (not both) to apply. Both cases examine the same set of legal provisions relating to the use of movable collateral. Credit registry coverage (% of adults) • Number of individuals and firms listed in credit registry as a Several assumptions about the secured borrower (ABC) and lender (BizBank) are used: percentage of adult population - ABC is a domestic limited liability company (or its legal equivalent). - ABC has up to 50 employees. - ABC has its headquarters and only base of operations in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. - Both ABC and BizBank are 100% domestically owned. The case scenarios also involve assumptions. In case A, as collateral for the loan, ABC grants BizBank a nonpossessory security interest in one category of movable assets, for example, its machinery or its inventory. ABC wants to keep both possession and ownership of the collateral. In economies where the law does not allow nonpossessory security interests in movable property, ABC and BizBank use a fiduciary transfer-of-title arrangement (or a similar substitute for nonpossessory security interests). In case B, ABC grants BizBank a business charge, enterprise charge, floating charge or any charge that gives BizBank a security interest over ABC’s combined movable assets (or as much of ABC’s movable assets as possible). ABC keeps ownership and possession of the assets. Page 52 Doing Business 2020 Brazil Getting Credit - São Paulo Indicator São Paulo Latin America & OECD high Best Regulatory Caribbean income Performance Strength of legal rights index (0-12) 2 5.3 6.1 12 (5 Economies) Depth of credit information index (0-8) 8 5.1 6.8 8 (53 Economies) Credit registry coverage (% of adults) 79.0 14.6 24.4 100.0 (2 Economies) Credit bureau coverage (% of adults) 81.2 47.6 66.7 100.0 (14 Economies) Figure – Getting Credit in São Paulo – Score 50.0 Score - Getting Credit Figure – Getting Credit in São Paulo and comparator economies – Ranking and Score DB 2020 Getting Credit Score 0 100 90.0: Mexico (Rank: 11) 80.0: Russian Federation (Rank: 25) 60.0: China (Rank: 80) 55.0: Chile (Rank: 94) 50.0: Rio de Janeiro 50.0: São Paulo Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Page 53 Doing Business 2020 Brazil Figure – Legal Rights in São Paulo and comparator economies 12 10 10 9 Index Score 8 6 5.3 4 4 4 2 2 2 0 São Chile China Mexico Russian Rio Latin Paulo Federation de America Janeiro & Caribbean Page 54 Doing Business 2020 Brazil Details – Legal Rights in São Paulo Strength of legal rights index (0-12) 2 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents No to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description No of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of No collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the No original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; No and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an No electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third No party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? No Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law Yes protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell Yes the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in São Paulo and comparator economies 9 8 8 8 8 8 7 7 7 Index Score 6 5.1 5 4 3 2 1 0 São Chile China Mexico Russian Rio Latin Paulo Federation de America Janeiro & Caribbean Page 55 Doing Business 2020 Brazil Details – Credit Information in São Paulo Depth of credit information index (0-8) Credit bureau Credit registry Score Are data on both firms and individuals distributed? Yes Yes 1 Are both positive and negative credit data distributed? No Yes 1 Are data from retailers or utility companies - in addition to data from banks and Yes No 1 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries No Yes 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes Yes 1 By law, do borrowers have the right to access their data in the credit bureau or Yes Yes 1 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes Yes 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help Yes No 1 banks and financial institutions assess the creditworthiness of borrowers? Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 108,230,957 110,080,409 Number of firms 10,479,059 5,364,601 Total 118,710,016 115,445,010 Percentage of adult population 81.2 79.0 Page 56 Doing Business 2020 Brazil Getting Credit - Rio de Janeiro Indicator Rio de Janeiro Latin America & OECD high Best Regulatory Caribbean income Performance Strength of legal rights index (0-12) 2 5.3 6.1 12 (5 Economies) Depth of credit information index (0-8) 8 5.1 6.8 8 (53 Economies) Credit registry coverage (% of adults) 79.0 14.6 24.4 100.0 (2 Economies) Credit bureau coverage (% of adults) 81.2 47.6 66.7 100.0 (14 Economies) Figure – Getting Credit in Rio de Janeiro – Score 50.0 Score - Getting Credit Figure – Getting Credit in Rio de Janeiro and comparator economies – Ranking and Score DB 2020 Getting Credit Score 0 100 90.0: Mexico (Rank: 11) 80.0: Russian Federation (Rank: 25) 60.0: China (Rank: 80) 55.0: Chile (Rank: 94) 50.0: Rio de Janeiro 50.0: São Paulo Note: The ranking of economies on the ease of getting credit is determined by sorting their scores for getting credit. These scores are the sum of the scores for the strength of legal rights index and the depth of credit information index. Page 57 Doing Business 2020 Brazil Figure – Legal Rights in Rio de Janeiro and comparator economies 12 10 10 9 Index Score 8 6 5.3 4 4 4 2 2 2 0 Rio Chile China Mexico Russian São Latin de Federation Paulo America Janeiro & Caribbean Page 58 Doing Business 2020 Brazil Details – Legal Rights in Rio de Janeiro Strength of legal rights index (0-12) 2 Does an integrated or unified legal framework for secured transactions that extends to the creation, publicity and enforcement of functional equivalents No to security interests in movable assets exist in the economy? Does the law allow businesses to grant a non possessory security right in a single category of movable assets, without requiring a specific description No of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a specific description of No collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and replacements of the No original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be secured between parties; No and can the collateral agreement include a maximum amount for which the assets are encumbered? Is a collateral registry in operation for both incorporated and non-incorporated entities, that is unified geographically and by asset type, with an No electronic database indexed by debtor's name? Does a notice-based collateral registry exist in which all functional equivalents can be registered? No Does a modern collateral registry exist in which registrations, amendments, cancellations and searches can be performed online by any interested third No party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency procedure? No Are secured creditors paid first (i.e. before tax claims and employee claims) when a business is liquidated? No Are secured creditors subject to an automatic stay on enforcement when a debtor enters a court-supervised reorganization procedure? Does the law Yes protect secured creditors’ rights by providing clear grounds for relief from the stay and sets a time limit for it? Does the law allow parties to agree on out of court enforcement at the time a security interest is created? Does the law allow the secured creditor to sell Yes the collateral through public auction or private tender, as well as, for the secured creditor to keep the asset in satisfaction of the debt? Figure – Credit Information in Rio de Janeiro and comparator economies 9 8 8 8 8 8 7 7 7 Index Score 6 5.1 5 4 3 2 1 0 Rio Chile China Mexico Russian São Latin de Federation Paulo America Janeiro & Caribbean Page 59 Doing Business 2020 Brazil Details – Credit Information in Rio de Janeiro Depth of credit information index (0-8) Credit bureau Credit registry Score Are data on both firms and individuals distributed? Yes Yes 1 Are both positive and negative credit data distributed? No Yes 1 Are data from retailers or utility companies - in addition to data from banks and Yes No 1 financial institutions - distributed? Are at least 2 years of historical data distributed? (Credit bureaus and registries No Yes 1 that distribute more than 10 years of negative data or erase data on defaults as soon as they are repaid obtain a score of 0 for this component.) Are data on loan amounts below 1% of income per capita distributed? Yes Yes 1 By law, do borrowers have the right to access their data in the credit bureau or Yes Yes 1 credit registry? Can banks and financial institutions access borrowers’ credit information online Yes Yes 1 (for example, through an online platform, a system-to-system connection or both)? Are bureau or registry credit scores offered as a value-added service to help Yes No 1 banks and financial institutions assess the creditworthiness of borrowers? Note: An economy receives a score of 1 if there is a "yes" to either bureau or registry. If the credit bureau or registry is not operational or covers less than 5% of the adult population, the total score on the depth of credit information index is 0. Coverage Credit bureau Credit registry Number of individuals 108,230,957 110,080,409 Number of firms 10,479,059 5,364,601 Total 118,710,016 115,445,010 Percentage of adult population 81.2 79.0 Page 60 Doing Business 2020 Brazil Protecting Minority Investors This topic measures the strength of minority shareholder protections against misuse of corporate assets by directors for their personal gain as well as shareholder rights, governance safeguards and corporate transparency requirements that reduce the risk of abuse. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Disclosure, review, and To make the data comparable across economies, a case study uses several assumptions about approval requirements for related-party transactions the business and the transaction. • Extent of director liability index (0–10): Ability of minority shareholders to sue and hold interested directors liable for The business (Buyer): prejudicial related-party transactions; Available legal - Is a publicly traded corporation listed on the economy’s most important stock exchange. remedies (damages, disgorgement of profits, disqualification - Has a board of directors and a chief executive officer (CEO) who may legally act on behalf of from managerial position(s) for one year or more, rescission of Buyer where permitted, even if this is not specifically required by law. the transaction) - Has a supervisory board in economies with a two-tier board system on which Mr. James appointed 60% of the shareholder-elected members. • Ease of shareholder suits index (0–10): Access to internal - Has not adopted bylaws or articles of association that go beyond the minimum requirements. corporate documents; Evidence obtainable during trial and allocation of legal expenses Does not follow codes, principles, recommendations or guidelines that are not mandatory. - Is a manufacturing company with its own distribution network. • Extent of conflict of interest regulation index (0-30): Sum of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder suits indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two directors to • Extent of shareholder rights index (0-6): Shareholders’ rights Buyer’s five-member board. and role in major corporate decisions - Mr. James also owns 90% of Seller, a company that operates a chain of retail hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-7): Governance - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Buyer’s safeguards protecting shareholders from undue board control distribution of its food products, a proposal to which Buyer agrees. The price is equal to 10% of and entrenchment Buyer’s assets and is higher than the market value. • Extent of corporate transparency index (0-7): Corporate - The proposed transaction is part of the company’s principal activity and is not outside the transparency on ownership stakes, compensation, audits and authority of the company. financial prospects - Buyer enters into the transaction. All required approvals are obtained, and all required disclosures made—that is, the transaction was not entered into fraudulently. • Extent of shareholder governance index (0–20): Sum of the - The transaction causes damages to Buyer. Shareholders sue Mr. James and the executives and extent of shareholders rights, extent of ownership and control directors that approved the transaction. and extent of corporate transparency indices • Strength of minority investor protection index (0–50): Sum of the extent of conflict of interest regulation and extent of shareholder governance indices Page 61 Doing Business 2020 Brazil Protecting Minority Investors - São Paulo Stock exchange information Stock exchange Brasil Bolsa Balcão Stock exchange URL http://www.b3.com.br Listed firms with equity securities 535 City Covered São Paulo Indicator São Paulo Latin America & OECD high Best Regulatory Caribbean income Performance Extent of disclosure index (0-10) 5.0 4.1 6.5 10 (13 Economies) Extent of director liability index (0-10) 8.0 5.2 5.3 10 (3 Economies) Ease of shareholder suits index (0-10) 4.0 6.7 7.3 10 (Djibouti) Extent of shareholder rights index (0-6) 4.0 3.0 4.7 6 (19 Economies) Extent of ownership and control index (0-7) 4.0 2.3 4.5 7 (9 Economies) Extent of corporate transparency index (0-7) 6.0 2.3 5.7 7 (13 Economies) Figure – Protecting Minority in São Paulo – Score 62.0 Score - Protecting Minority Investors Figure – Protecting Minority Investors in São Paulo and comparator economies – Ranking and Score DB 2020 Protecting Minority Investors Score 0 100 72.0: China (Rank: 28) 66.0: Chile (Rank: 51) 62.0: Rio de Janeiro 62.0: São Paulo 62.0: Mexico (Rank: 61) 60.0: Russian Federation (Rank: 72) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Page 62 Doing Business 2020 Brazil Figure – Protecting Minority Investors in São Paulo and comparator economies – Measure of Quality São Paulo 6 8 5 4 4 4 Chile 2 6 8 4 6 7 China 6 4 10 6 5 5 Mexico 3 5 8 5 5 5 Rio de Janeiro 6 8 5 4 4 4 Russian Federation 6 2 6 4 5 7 OECD high income 5.6 5.6 6.6 4.3 4.5 7.4 Latin America & Caribbean 2.5 5.4 4.4 2.5 3.2 6.5 0 5 10 15 20 25 30 35 40 Sub-Indicator Score Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10) Page 63 Doing Business 2020 Brazil Details – Protecting Minority Investors in São Paulo – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-30) Extent of disclosure index (0-10) 5.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) CEO alone 0.0 Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of all 2.0 material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 1.0 transaction only Extent of director liability index (0-10) 8.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Yes 1.0 Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2) Liable if unfair or 2.0 prejudicial Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2) Liable if negligent 1.0 Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1) Yes 1.0 Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1) Yes 1.0 Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Voidable if unfair or 2.0 prejudicial Ease of shareholder suits index (0-10) 4.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? No 0.0 (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1) No 0.0 Can the plaintiff directly question the defendant and witnesses at trial? (0-2) No 0.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) No 0.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-20) Extent of shareholder rights index (0-6) 4.0 Does the sale of 51% of Buyer's assets require shareholder approval? No 0.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders? Yes 1.0 Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Do shareholders automatically receive preemption rights every time Buyer issues new shares? Yes 1.0 Do shareholders elect and dismiss the external auditor? No 0.0 Are changes to the rights of a class of shares only possible if the holders of the affected shares approve? Yes 1.0 Extent of ownership and control index (0-7) 4.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors? No 0.0 Must the board of directors include independent and nonexecutive board members? No 0.0 Page 64 Doing Business 2020 Brazil Can shareholders remove members of the board of directors without cause before the end of their term? Yes 1.0 Must the board of directors include a separate audit committee exclusively comprising board members? No 0.0 Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer? Yes 1.0 Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? Yes 1.0 Extent of corporate transparency index (0-7) 6.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and directorships in other Yes 1.0 companies? Must Buyer disclose the compensation of individual managers? Yes 1.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda? Yes 1.0 Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Page 65 Doing Business 2020 Brazil Protecting Minority Investors - Rio de Janeiro Stock exchange information Stock exchange Brasil Bolsa Balcão Stock exchange URL http://www.b3.com.br Listed firms with equity securities 535 City Covered Rio de Janeiro Indicator Rio de Janeiro Latin America & OECD high Best Regulatory Caribbean income Performance Extent of disclosure index (0-10) 5.0 4.1 6.5 10 (13 Economies) Extent of director liability index (0-10) 8.0 5.2 5.3 10 (3 Economies) Ease of shareholder suits index (0-10) 4.0 6.7 7.3 10 (Djibouti) Extent of shareholder rights index (0-6) 4.0 3.0 4.7 6 (19 Economies) Extent of ownership and control index (0-7) 4.0 2.3 4.5 7 (9 Economies) Extent of corporate transparency index (0-7) 6.0 2.3 5.7 7 (13 Economies) Figure – Protecting Minority in Rio de Janeiro – Score 62.0 Score - Protecting Minority Investors Figure – Protecting Minority Investors in Rio de Janeiro and comparator economies – Ranking and Score DB 2020 Protecting Minority Investors Score 0 100 72.0: China (Rank: 28) 66.0: Chile (Rank: 51) 62.0: Rio de Janeiro 62.0: São Paulo 62.0: Mexico (Rank: 61) 60.0: Russian Federation (Rank: 72) Note: The ranking of economies on the strength of minority investor protections is determined by sorting their scores for protecting minority investors. These scores are the simple average of the scores for the extent of conflict of interest regulation index and the extent of shareholder governance index. Page 66 Doing Business 2020 Brazil Figure – Protecting Minority Investors in Rio de Janeiro and comparator economies – Measure of Quality Rio de Janeiro 6 8 5 4 4 4 Chile 2 6 8 4 6 7 China 6 4 10 6 5 5 Mexico 3 5 8 5 5 5 Russian Federation 6 2 6 4 5 7 São Paulo 6 8 5 4 4 4 OECD high income 5.6 5.6 6.6 4.3 4.5 7.4 Latin America & Caribbean 2.5 5.4 4.4 2.5 3.2 6.5 0 5 10 15 20 25 30 35 40 Sub-Indicator Score Extent of corporate transparency index (0-7) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-7) Extent of shareholder rights index (0-6) Ease of shareholder suits index (0-10) Page 67 Doing Business 2020 Brazil Details – Protecting Minority Investors in Rio de Janeiro – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-30) Extent of disclosure index (0-10) 5.0 Whose decision is sufficient to approve the Buyer-Seller transaction? (0-3) CEO alone 0.0 Must an external body review the terms of the transaction before it takes place? (0-1) No 0.0 Must Mr. James disclose his conflict of interest to the board of directors? (0-2) Full disclosure of all 2.0 material facts Must Buyer disclose the transaction in periodic filings (e.g. annual reports)? (0-2) Disclosure on the 2.0 transaction and on the conflict of interest Must Buyer immediately disclose the transaction to the public? (0-2) Disclosure on the 1.0 transaction only Extent of director liability index (0-10) 8.0 Can shareholders representing 10% of Buyer's share capital sue for the damage the transaction caused to Yes 1.0 Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0-2) Liable if unfair or 2.0 prejudicial Can shareholders hold the other directors liable for the damage the transaction caused to Buyer? (0-2) Liable if negligent 1.0 Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by shareholders? (0-1) Yes 1.0 Must Mr. James repay profits made from the transaction upon a successful claim by shareholders? (0-1) Yes 1.0 Is Mr. James disqualified upon a successful claim by shareholders? (0-1) No 0.0 Can a court void the transaction upon a successful claim by shareholders? (0-2) Voidable if unfair or 2.0 prejudicial Ease of shareholder suits index (0-10) 4.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the transaction documents? No 0.0 (0-1) Can the plaintiff obtain any documents from the defendant and witnesses at trial? (0-3) Any relevant 3.0 document Can the plaintiff request categories of documents from the defendant without identifying specific ones? (0-1) No 0.0 Can the plaintiff directly question the defendant and witnesses at trial? (0-2) No 0.0 Is the level of proof required for civil suits lower than that of criminal cases? (0-1) No 0.0 Can shareholder plaintiffs recover their legal expenses from the company? (0-2) Yes if successful 1.0 Extent of shareholder governance index (0-20) Extent of shareholder rights index (0-6) 4.0 Does the sale of 51% of Buyer's assets require shareholder approval? No 0.0 Can shareholders representing 10% of Buyer's share capital call for a meeting of shareholders? Yes 1.0 Must Buyer obtain its shareholders’ approval every time it issues new shares? Yes 1.0 Do shareholders automatically receive preemption rights every time Buyer issues new shares? Yes 1.0 Do shareholders elect and dismiss the external auditor? No 0.0 Are changes to the rights of a class of shares only possible if the holders of the affected shares approve? Yes 1.0 Extent of ownership and control index (0-7) 4.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of directors? No 0.0 Must the board of directors include independent and nonexecutive board members? No 0.0 Page 68 Doing Business 2020 Brazil Can shareholders remove members of the board of directors without cause before the end of their term? Yes 1.0 Must the board of directors include a separate audit committee exclusively comprising board members? No 0.0 Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Buyer? Yes 1.0 Must Buyer pay declared dividends within a maximum period set by law? Yes 1.0 Is a subsidiary prohibited from acquiring shares issued by its parent company? Yes 1.0 Extent of corporate transparency index (0-7) 6.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and directorships in other Yes 1.0 companies? Must Buyer disclose the compensation of individual managers? Yes 1.0 Must a detailed notice of general meeting be sent 21 days before the meeting? No 0.0 Can shareholders representing 5% of Buyer’s share capital put items on the general meeting agenda? Yes 1.0 Must Buyer's annual financial statements be audited by an external auditor? Yes 1.0 Must Buyer disclose its audit reports to the public? Yes 1.0 Page 69 Doing Business 2020 Brazil Paying Taxes This topic records the taxes and mandatory contributions that a medium-size company must pay or withhold in a given year, as well as the administrative burden of paying taxes and contributions and complying with postfiling procedures (VAT refund and tax audit). The most recent round of data collection for the project was completed in May 2019 covering for the Paying Taxes indicator calendar year 2018 (January 1, 2018 – December 31, 2018). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in 2018 (number Using a case scenario, Doing Business records taxes and mandatory contributions a medium size per year adjusted for electronic and joint filing and payment) company must pay in a year, and measures the administrative burden of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of • Total number of taxes and contributions paid or withheld, filing and payments, time taken to comply with tax laws, time taken to comply with the including consumption taxes (value added tax, sales tax or requirements of postfiling processes and time waiting. goods and service tax) • Method and frequency of filing and payment To make data comparable across economies, several assumptions are used: - TaxpayerCo is a medium-size business that started operations on January 1, 2017. It produces Time required to comply with 3 major taxes (hours per year) ceramic flowerpots and sells them at retail. All taxes and contributions recorded are paid in the second year of operation (calendar year 2018). Taxes and mandatory contributions are measured • Collecting information, computing tax payable at all levels of government. • Preparing separate tax accounting books, if required • Completing tax return, filing with agencies The VAT refund process: - In June 2018, TaxpayerCo. makes a large capital purchase: the value of the machine is 65 times • Arranging payment or withholding income per capita of the economy. Sales are equally spread per month (1,050 times income per capita divided by 12) and cost of goods sold are equally expensed per month (875 times income Total tax and contribution rate (% of commercial profits) per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred • Profit or corporate income tax in June will be fully recovered after four consecutive months if the VAT rate is the same for inputs, sales and the machine and the tax reporting period is every month. Input VAT will exceed Output • Social contributions, labor taxes paid by employer VAT in June 2018. • Property and property transfer taxes The corporate income tax audit process: • Dividend, capital gains, financial transactions taxes - An error in calculation of income tax liability (for example, use of incorrect tax depreciation rates, • Waste collection, vehicle, road and other taxes or incorrectly treating an expense as tax deductible) leads to an incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. discovered the error and voluntarily notified the Postfiling Index tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax • Time to comply with VAT refund (hours) liability due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. • Time to obtain VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 70 Doing Business 2020 Brazil Paying Taxes - São Paulo Indicator São Paulo Latin America & OECD high Best Regulatory Caribbean income Performance Payments (number per year) 10 28.2 10.3 3 (2 Economies) Time (hours per year) 1501 317.1 158.8 49 (3 Economies) Total tax and contribution rate (% of profit) 64.7 47.0 39.9 26.1 (33 Economies) Postfiling index (0-100) 7.8 47.5 86.7 None in 2018/19 Figure – Paying Taxes in São Paulo – Score 88.3 0.0 41.5 7.8 Payments Time Total tax and contribution rate Postfiling index Figure – Paying Taxes in São Paulo and comparator economies – Ranking and Score DB 2020 Paying Taxes Score 0 100 80.5: Russian Federation (Rank: 58) 75.3: Chile (Rank: 86) 70.1: China (Rank: 105) 65.8: Mexico (Rank: 120) 34.4: Rio de Janeiro 34.4: São Paulo Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Page 71 Doing Business 2020 Brazil Figure – Paying Taxes in São Paulo and comparator economies – Measure of Quality 90 77.8 80 70 Index score 60 57.0 50.0 47.5 50 40.5 40 30 20 7.8 7.8 10 0 São Chile China Mexico Russian Rio Latin Paulo Federation de America Janeiro & Caribbean Page 72 Doing Business 2020 Brazil Details – Paying Taxes in São Paulo Tax or Payments Notes on Time (hours) Statutory tax Tax base Total tax and Notes on TTCR mandatory (number) Payments rate contribution contribution rate (% of profit) Employer paid - 1.0 online 255.0 20% gross salaries 22.56 Social security contributions (INSS) Corporate 1.0 online 361.0 15%+10% taxable profit 16.62 income tax (surcharge (IRPJ) applies on annual taxable income exceeding R$ 240,000) Employer paid - 0.0 online and jointly 8.8% net salaries 8.84 Payroll tax Employer paid - 1.0 online 8% net salaries 8.04 Severance contribution (FGTS) Social 1.0 online 9% taxable profit 5.98 contribution (CSLL) Property tax 1.0 1,9%- R$ Market value of 2.47 4500,00 property, with additions and discounts defined by bands of market value (for São Paulo). Tax on interest 0.0 withheld 20% interest income 0.51 not included Vehicle tax 1.0 1.5% market value of 0.13 vehicle Establishment 1.0 fee schedule type of activity 0.07 inspection fee (TFE) ICMS (similar to 1.0 online 885.0 18% value added 0.00 not included VAT) (including taxes) IPI (similar to 1.0 online 20% value added 0.00 not included VAT) (including taxes) PIS/COFINS 1.0 online 9.25% value added 0.00 not included (similar to VAT) Employee paid - 0.0 online and jointly 11% gross salaries 0.00 withheld Social security contributions (INSS) Totals 10 1501 64.7 Page 73 Doing Business 2020 Brazil Details – Paying Taxes in São Paulo – Tax by Type Taxes by type Answer Profit tax (% of profit) 22.6 Labor tax and contributions (% of profit) 39.4 Other taxes (% of profit) 2.7 Page 74 Doing Business 2020 Brazil Details – Paying Taxes in São Paulo – Measure of Quality Answer Score Postfiling index (0-100) 7.8 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? No Restrictions on VAT refund process ICIMS: in case of overpayment due to a mistake in the calculation of taxes due IPI: no IPI VAT credit on capital purchase is allowed PIS and COFINS: restricted international traders and others to ICIMS: in case of overpayment due to a mistake in the calculation of taxes due IPI: no IPI VAT credit on capital purchase is allowed PIS and COFINS: restricted international traders and others. Percentage of cases exposed to a VAT audit (%) Not applicable Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) No VAT refund per 0.0 case study scenario Time to obtain VAT refund (weeks) No VAT refund per 0.0 case study scenario Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 25% - 49% Time to comply with a corporate income tax correction (hours) 39.0 31.2 Time to complete a corporate income tax correction (weeks) 86.6 0.0 Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 75 Doing Business 2020 Brazil Paying Taxes - Rio de Janeiro Indicator Rio de Janeiro Latin America & OECD high Best Regulatory Caribbean income Performance Payments (number per year) 9 28.2 10.3 3 (2 Economies) Time (hours per year) 1501 317.1 158.8 49 (3 Economies) Total tax and contribution rate (% of profit) 65.7 47.0 39.9 26.1 (33 Economies) Postfiling index (0-100) 7.8 47.5 86.7 None in 2018/19 Figure – Paying Taxes in Rio de Janeiro – Score 90.0 0.0 39.7 7.8 Payments Time Total tax and contribution rate Postfiling index Figure – Paying Taxes in Rio de Janeiro and comparator economies – Ranking and Score DB 2020 Paying Taxes Score 0 100 80.5: Russian Federation (Rank: 58) 75.3: Chile (Rank: 86) 70.1: China (Rank: 105) 65.8: Mexico (Rank: 120) 34.4: Rio de Janeiro 34.4: São Paulo Note: The ranking of economies on the ease of paying taxes is determined by sorting their scores for paying taxes. These scores are the simple average of the scores for each of the component indicators, with a threshold and a nonlinear transformation applied to one of the component indicators, the total tax and contribution rate. The threshold is defined as the total tax and contribution rate at the 15th percentile of the overall distribution for all years included in the analysis up to and including Doing Business 2015, which is 26.1%. All economies with a total tax and contribution rate below this threshold receive the same score as the economy at the threshold. Page 76 Doing Business 2020 Brazil Figure – Paying Taxes in Rio de Janeiro and comparator economies – Measure of Quality 90 77.8 80 70 Index score 60 57.0 50.0 47.5 50 40.5 40 30 20 7.8 7.8 10 0 Rio Chile China Mexico Russian São Latin de Federation Paulo America Janeiro & Caribbean Page 77 Doing Business 2020 Brazil Details – Paying Taxes in Rio de Janeiro Tax or Payments Notes on Time (hours) Statutory tax Tax base Total tax and Notes on TTCR mandatory (number) Payments rate contribution contribution rate (% of profit) Employer paid - 1.0 online 255.0 20% gross salaries 22.56 Social security contributions (INSS) Corporate 1.0 online 361.0 15%+10% taxable profit 16.22 income tax (surcharge (IRPJ) applies on annual taxable income exceeding R$ 240,000) Employer paid - 0.0 online and jointly 8.8% net salaries 8.84 Payroll tax Employer paid - 1.0 online 8% net salaries 8.04 Severance contribution (FGTS) Social 1.0 online 9% taxable profit 5.84 contribution (CSLL) Property tax 1.0 2.8% market value of 4.15 property Tax on interest 0.0 withheld 20% interest income 0.51 not included Vehicle tax 1.0 1% market value of 0.08 vehicle Employee paid - 0.0 online and jointly 11% gross salaries 0.00 withheld Social security contributions (INSS) ICMS (similar to 1.0 online 885.0 20% value added 0.00 not included VAT) (including taxes) IPI (similar to 1.0 online 20% value added 0.00 not included VAT) (including taxes) PIS/COFINS 1.0 online 9.25% value added 0.00 not included (similar to VAT) Totals 9 1501 65.7 Page 78 Doing Business 2020 Brazil Details – Paying Taxes in Rio de Janeiro – Tax by Type Taxes by type Answer Profit tax (% of profit) 22.1 Labor tax and contributions (% of profit) 39.4 Other taxes (% of profit) 4.2 Page 79 Doing Business 2020 Brazil Details – Paying Taxes in Rio de Janeiro – Measure of Quality Answer Score Postfiling index (0-100) 7.8 VAT refunds Does VAT exist? Yes Does a VAT refund process exist per the case study? No Restrictions on VAT refund process ICIMS: in case of overpayment due to a mistake in the calculation of taxes due IPI: no IPI VAT credit on capital purchase is allowed PIS and COFINS: restricted international traders and others Percentage of cases exposed to a VAT audit (%) Not applicable Is there a mandatory carry forward period? No Time to comply with VAT refund (hours) No VAT refund per 0.0 case study scenario Time to obtain VAT refund (weeks) No VAT refund per 0.0 case study scenario Corporate income tax audits Does corporate income tax exist? Yes Percentage of cases exposed to a corporate income tax audit (%) 25% - 49% Time to comply with a corporate income tax correction (hours) 39.0 31.2 Time to complete a corporate income tax correction (weeks) 86.6 0.0 Notes: Names of taxes have been standardized. For instance income tax, profit tax, tax on company's income are all named corporate income tax in this table. The hours for VAT include all the VAT and sales taxes applicable. The hours for Social Security include all the hours for labor taxes and mandatory contributions in general. The postfiling index is the average of the scores on time to comply with VAT refund, time to obtain a VAT refund, time to comply with a corporate income tax correction and time to complete a corporate income tax correction. N/A = Not applicable. Page 80 Doing Business 2020 Brazil Trading across Borders Doing Business records the time and cost associated with the logistical process of exporting and importing goods. Doing Business measures the time and cost (excluding tariffs) associated with three sets of procedures—documentary compliance, border compliance and domestic transport—within the overall process of exporting or importing a shipment of goods. The most recent round of data collection for the project was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Documentary compliance To make the data comparable across economies, a few assumptions are made about the traded goods and the transactions: • Obtaining, preparing and submitting documents during transport, clearance, inspections and port or border handling in Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are recorded as origin economy 22×24=528 hours). If customs clearance takes 7.5 hours, the data are recorded as is. Alternatively, • Obtaining, preparing and submitting documents required by suppose documents are submitted to a customs agency at 8:00a.m., are processed overnight and destination economy and any transit economies can be picked up at 8:00a.m. the next day. The time for customs clearance would be recorded as 24 hours because the actual procedure took 24 hours. • Covers all documents required by law and in practice, including electronic submissions of information Cost: Insurance cost and informal payments for which no receipt is issued are excluded from the Border compliance costs recorded. Costs are reported in U.S. dollars. Contributors are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. • Customs clearance and inspections Contributors are private sector experts in international trade logistics and are informed about exchange rates. • Inspections by other agencies (if applied to more than 20% of shipments) Assumptions of the case study: • Handling and inspections that take place at the economy’s port - For all 190 economies covered by Doing Business, it is assumed a shipment is in a warehouse in or border the largest business city of the exporting economy and travels to a warehouse in the largest business city of the importing economy. Domestic transport - It is assumed each economy imports 15 metric tons of containerized auto parts (HS 8708) from • Loading or unloading of the shipment at the warehouse or its natural import partner—the economy from which it imports the largest value (price times port/border quantity) of auto parts. It is assumed each economy exports the product of its comparative advantage (defined by the largest export value) to its natural export partner—the economy that is • Transport between warehouse and port/border the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while shipment is en - The mode of transport is the one most widely used for the chosen export or import product and route the trading partner, as is the seaport or land border crossing. - All electronic information submissions requested by any government agency in connection with the shipment are considered to be documents obtained, prepared and submitted during the export or import process. - A port or border is a place (seaport or land border crossing) where merchandise can enter or leave an economy. - Relevant government agencies include customs, port authorities, road police, border guards, standardization agencies, ministries or departments of agriculture or industry, national security agencies and any other government authorities. Page 81 Doing Business 2020 Brazil Trading across Borders - São Paulo Indicator São Paulo Latin America & OECD high Best Regulatory Caribbean income Performance Time to export: Border compliance (hours) 49 55.3 12.7 1 (19 Economies) Cost to export: Border compliance (USD) 862 516.3 136.8 0 (19 Economies) Time to export: Documentary compliance (hours) 12 35.7 2.3 1 (26 Economies) Cost to export: Documentary compliance (USD) 226 100.3 33.4 0 (20 Economies) Time to import: Border compliance (hours) 30 55.6 8.5 1 (25 Economies) Cost to import: Border compliance (USD) 375 628.4 98.1 0 (28 Economies) Time to import: Documentary compliance (hours) 24 43.2 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 107 107.3 23.5 0 (30 Economies) Figure – Trading across Borders in São Paulo – Score 69.8 18.7 93.5 43.4 89.6 68.8 90.4 84.7 Time Cost Time Cost Time Cost Time Cost to to to to to to to to export: export: export: export: import: import: import: import: Border Border Documentary Documentary Border Border Documentary Documentary compliance compliance compliance compliance compliance compliance compliance compliance Figure – Trading across Borders in São Paulo and comparator economies – Ranking and Score DB 2020 Trading Across Borders Score 0 100 86.5: China (Rank: 56) 82.1: Mexico (Rank: 69) 80.6: Chile (Rank: 73) 71.8: Russian Federation (Rank: 99) 69.9: Rio de Janeiro 69.9: São Paulo Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Page 82 Doing Business 2020 Brazil Figure – Trading across Borders in São Paulo – Time and Cost Time (hours) Cost (USD) 60 862 900 49 800 50 700 Time (hours) Cost (USD) 40 600 30 500 30 375 24 400 20 226 300 12 200 10 107 100 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 83 Doing Business 2020 Brazil Details – Trading across Borders in São Paulo Characteristics Export Import Product HS 12 : Oil seeds and oleaginous fruits; HS 8708: Parts and accessories of motor vehicles miscellaneous grains, seeds and fruit; industrial or medicinal plants; straw and fodder Trade partner China Argentina Border Santos port Uruguaiana border Distance (km) 84 1560 Domestic transport time (hours) 9 48 Domestic transport cost (USD) 763 1900 Details – Trading across Borders in São Paulo – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required by 7.0 232.6 customs authorities Export: Clearance and inspections required by 24.0 125.0 agencies other than customs Export: Port or border handling 47.0 504.3 Import: Clearance and inspections required by 18.0 225.0 customs authorities Import: Clearance and inspections required by 0.0 0.0 agencies other than customs Import: Port or border handling 30.0 150.0 Page 84 Doing Business 2020 Brazil Details – Trading across Borders in São Paulo – Trade Documents Export Import Bill of lading Commercial Invoice Commercial invoice Packing list Customs export declaration Conhecimento de carga CRT Export Invoice (Nota Fiscal) Bank document Packing list Certificado de Origem Digital Health certificate Nota fiscal SOLAS certificate Customs import declaration Page 85 Doing Business 2020 Brazil Trading across Borders - Rio de Janeiro Indicator Rio de Janeiro Latin America & OECD high Best Regulatory Caribbean income Performance Time to export: Border compliance (hours) 49 55.3 12.7 1 (19 Economies) Cost to export: Border compliance (USD) 862 516.3 136.8 0 (19 Economies) Time to export: Documentary compliance (hours) 12 35.7 2.3 1 (26 Economies) Cost to export: Documentary compliance (USD) 226 100.3 33.4 0 (20 Economies) Time to import: Border compliance (hours) 30 55.6 8.5 1 (25 Economies) Cost to import: Border compliance (USD) 375 628.4 98.1 0 (28 Economies) Time to import: Documentary compliance (hours) 24 43.2 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 107 107.3 23.5 0 (30 Economies) Figure – Trading across Borders in Rio de Janeiro – Score 69.8 18.7 93.5 43.4 89.6 68.8 90.4 84.7 Time Cost Time Cost Time Cost Time Cost to to to to to to to to export: export: export: export: import: import: import: import: Border Border Documentary Documentary Border Border Documentary Documentary compliance compliance compliance compliance compliance compliance compliance compliance Figure – Trading across Borders in Rio de Janeiro and comparator economies – Ranking and Score DB 2020 Trading Across Borders Score 0 100 86.5: China (Rank: 56) 82.1: Mexico (Rank: 69) 80.6: Chile (Rank: 73) 71.8: Russian Federation (Rank: 99) 69.9: Rio de Janeiro 69.9: São Paulo Note: The ranking of economies on the ease of trading across borders is determined by sorting their scores for trading across borders. These scores are the simple average of the scores for the time and cost for documentary compliance and border compliance to export and import. Page 86 Doing Business 2020 Brazil Figure – Trading across Borders in Rio de Janeiro – Time and Cost Time (hours) Cost (USD) 60 862 900 49 800 50 700 Time (hours) Cost (USD) 40 600 30 500 30 375 24 400 20 226 300 12 200 10 107 100 0 0 Export Export Import Import - - - - Border Documentary Border Documentary Compliance Compliance Compliance Compliance Page 87 Doing Business 2020 Brazil Details – Trading across Borders in Rio de Janeiro Characteristics Export Import Product HS 12 : Oil seeds and oleaginous fruits; HS 8708: Parts and accessories of motor vehicles miscellaneous grains, seeds and fruit; industrial or medicinal plants; straw and fodder Trade partner China Argentina Border Santos port Uruguaiana border Distance (km) 513 1970 Domestic transport time (hours) 16 60 Domestic transport cost (USD) 1779 2450 Details – Trading across Borders in Rio de Janeiro – Components of Border Compliance Time to Complete (hours) Associated Costs (USD) Export: Clearance and inspections required by 7.0 232.6 customs authorities Export: Clearance and inspections required by 24.0 125.0 agencies other than customs Export: Port or border handling 47.0 504.3 Import: Clearance and inspections required by 18.0 225.0 customs authorities Import: Clearance and inspections required by 0.0 0.0 agencies other than customs Import: Port or border handling 30.0 150.0 Page 88 Doing Business 2020 Brazil Details – Trading across Borders in Rio de Janeiro – Trade Documents Export Import Bill of lading Commercial invoice Commercial invoice Packing list Customs export declaration Conhecimento de carga CRT Export Invoice (Nota Fiscal) Bank document Packing list Certificado de Origem Digital Health certificate Nota fiscal SOLAS certificate Customs import declaration Page 89 Doing Business 2020 Brazil Enforcing Contracts The enforcing contracts indicator measures the time and cost for resolving a commercial dispute through a local first-instance court, and the quality of judicial processes index, evaluating whether each economy has adopted a series of good practices that promote quality and efficiency in the court system. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the courts The dispute in the case study involves the breach of a sales contract between two domestic (calendar days) businesses. The case study assumes that the court hears an expert on the quality of the goods in dispute. This distinguishes the case from simple debt enforcement. • Time to file and serve the case • Time for trial and to obtain the judgment To make the data on the time and comparable across economies, several assumptions about the case are used: • Time to enforce the judgment - The dispute concerns a lawful transaction between two businesses (Seller and Buyer), both Cost required to enforce a contract through the courts (% of located in the economy’s largest business city. For 11 economies the data are also collected for the claim value) second largest business city. - The Buyer orders custom-made furniture, then fails to pay alleging that the goods are not of • Average attorney fees adequate quality. - The value of the dispute is 200% of the income per capita or the equivalent in local currency of • Court costs USD 5,000, whichever is greater. • Enforcement costs - The Seller sues the Buyer before the court with jurisdiction over commercial cases worth 200% of income per capita or $5,000 whichever is greater. Quality of judicial processes index (0-18) - The Seller requests the pretrial attachment of the defendant’s movable assets to secure the • Court structure and proceedings (-1-5) claim. - The claim is disputed on the merits because of Buyer’s allegation that the quality of the goods • Case management (0-6) was not adequate. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. - The Seller enforces the judgment through a public sale of the Buyer’s movable assets. • Alternative dispute resolution (0-3) Page 90 Doing Business 2020 Brazil Enforcing Contracts - São Paulo Standardized Case Claim value BRL 61,363 Court name São Paulo Civil District Court City Covered São Paulo Indicator São Paulo Latin America & OECD high Best Regulatory Caribbean income Performance Time (days) 731 774.2 589.6 120 (Singapore) Cost (% of claim value) 20.7 32.0 21.5 0.1 (Bhutan) Quality of judicial processes index (0-18) 12.5 8.8 11.7 None in 2018/19 Figure – Enforcing Contracts in São Paulo – Score 49.9 76.8 69.4 Time Cost Quality of judicial processes index Figure – Enforcing Contracts in São Paulo and comparator economies – Ranking and Score DB 2020 Enforcing Contracts Score 0 100 80.9: China (Rank: 5) 72.2: Russian Federation (Rank: 21) 67.0: Mexico (Rank: 43) 65.4: São Paulo 64.7: Chile (Rank: 54) 62.0: Rio de Janeiro Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Page 91 Doing Business 2020 Brazil Figure – Enforcing Contracts in São Paulo – Time and Cost Time (days) Cost (% of claim value) 1000 32.0 33.0 911 35 Cost (% of claim value) 774.2 30 800 25.6 731 24.0 Time (days) 25 589.6 21.5 20.7 600 519 20 496 16.2 16.5 400 341 337 15 10 200 5 0 0 Chile China Latin Mexico OECD Rio Russian São America high de Federation Paulo & income Janeiro Caribbean Page 92 Doing Business 2020 Brazil Figure – Enforcing Contracts in São Paulo and comparator economies – Measure of Quality São Paulo 3 3 3 3.5 Chile 1.5 3.5 2 3 China 3 5.5 3 5 Mexico 2.5 3.3 0.5 3.8 Rio de Janeiro 3 3 3 5 Russian Federation 2.5 4 0 3 OECD high income 2.5 3.2 2.4 3.6 Latin America & Caribbean 2.4 2.2 1 3.6 0 2 4 6 8 10 12 14 16 18 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in São Paulo Indicator Time (days) 731 Filing and service 41 Trial and judgment 480 Enforcement of judgment 210 Cost (% of claim value) 20.7 Attorney fees 12.6 Court fees 7 Enforcement fees 1.1 Quality of judicial processes index (0-18) 12.5 Court structure and proceedings (-1-5) 3.5 Case management (0-6) 3.0 Court automation (0-4) 3.0 Alternative dispute resolution (0-3) 3.0 Page 93 Doing Business 2020 Brazil Details – Enforcing Contracts in São Paulo – Measure of Quality Answer Score Quality of judicial processes index (0-18) 12.5 Court structure and proceedings (-1-5) 3.5 1. Is there a court or division of a court dedicated solely to hearing commercial cases? No 0.0 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, automatic 1.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 3.0 1. Time standards 0.0 1.a. Are there laws setting overall time standards for key court events in a civil case? Yes 1.b. If yes, are the time standards set for at least three court events? No 1.c. Are these time standards respected in more than 50% of cases? No 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be granted? No 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) Yes 1.0 clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the competent court? No 0.0 5. Are there any electronic case management tools in place within the competent court for use by judges? Yes 1.0 6. Are there any electronic case management tools in place within the competent court for use by lawyers? Yes 1.0 Court automation (0-4) 3.0 1. Can the initial complaint be filed electronically through a dedicated platform within the competent court? Yes 1.0 2. Is it possible to carry out service of process electronically for claims filed before the competent court? No 0.0 3. Can court fees be paid electronically within the competent court? Yes 1.0 4. Publication of judgments 1.0 4.a Are judgments rendered in commercial cases at all levels made available to the general public Yes through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made Yes available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 3.0 1. Arbitration 1.5 1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— No that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes Page 94 Doing Business 2020 Brazil 2. Mediation/Conciliation 1.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig 2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or Yes conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 95 Doing Business 2020 Brazil Enforcing Contracts - Rio de Janeiro Standardized Case Claim value BRL 61,363 Court name Rio de Janeiro Civil Court (Vara Cível) City Covered Rio de Janeiro Indicator Rio de Janeiro Latin America & OECD high Best Regulatory Caribbean income Performance Time (days) 911 774.2 589.6 120 (Singapore) Cost (% of claim value) 24.0 32.0 21.5 0.1 (Bhutan) Quality of judicial processes index (0-18) 14.0 8.8 11.7 None in 2018/19 Figure – Enforcing Contracts in Rio de Janeiro – Score 35.2 73.1 77.8 Time Cost Quality of judicial processes index Figure – Enforcing Contracts in Rio de Janeiro and comparator economies – Ranking and Score DB 2020 Enforcing Contracts Score 0 100 80.9: China (Rank: 5) 72.2: Russian Federation (Rank: 21) 67.0: Mexico (Rank: 43) 65.4: São Paulo 64.7: Chile (Rank: 54) 62.0: Rio de Janeiro Note: The ranking of economies on the ease of enforcing contracts is determined by sorting their scores for enforcing contracts. These scores are the simple average of the scores for each of the component indicators. Page 96 Doing Business 2020 Brazil Figure – Enforcing Contracts in Rio de Janeiro – Time and Cost Time (days) Cost (% of claim value) 1000 32.0 33.0 911 35 Cost (% of claim value) 774.2 30 800 25.6 731 24.0 Time (days) 25 589.6 21.5 20.7 600 519 20 496 16.2 16.5 400 341 337 15 10 200 5 0 0 Chile China Latin Mexico OECD Rio Russian São America high de Federation Paulo & income Janeiro Caribbean Page 97 Doing Business 2020 Brazil Figure – Enforcing Contracts in Rio de Janeiro and comparator economies – Measure of Quality Rio de Janeiro 3 3 3 5 Chile 1.5 3.5 2 3 China 3 5.5 3 5 Mexico 2.5 3.3 0.5 3.8 Russian Federation 2.5 4 0 3 São Paulo 3 3 3 3.5 OECD high income 2.5 3.2 2.4 3.6 Latin America & Caribbean 2.4 2.2 1 3.6 0 2 4 6 8 10 12 14 16 18 Sub-Indicator Score Alternative dispute resolution (0-3) Case management (0-6) Court automation (0-4) Court structure and proceedings (-1-5) Details – Enforcing Contracts in Rio de Janeiro Indicator Time (days) 911 Filing and service 41 Trial and judgment 660 Enforcement of judgment 210 Cost (% of claim value) 24.0 Attorney fees 15.9 Court fees 7 Enforcement fees 1.1 Quality of judicial processes index (0-18) 14.0 Court structure and proceedings (-1-5) 5.0 Case management (0-6) 3.0 Court automation (0-4) 3.0 Alternative dispute resolution (0-3) 3.0 Page 98 Doing Business 2020 Brazil Details – Enforcing Contracts in Rio de Janeiro – Measure of Quality Answer Score Quality of judicial processes index (0-18) 14.0 Court structure and proceedings (-1-5) 5.0 1. Is there a court or division of a court dedicated solely to hearing commercial cases? Yes 1.5 2. Small claims court 1.5 2.a. Is there a small claims court or a fast-track procedure for small claims? Yes 2.b. If yes, is self-representation allowed? Yes 3. Is pretrial attachment available? Yes 1.0 4. Are new cases assigned randomly to judges? Yes, automatic 1.0 5. Does a woman's testimony carry the same evidentiary weight in court as a man's? Yes 0.0 Case management (0-6) 3.0 1. Time standards 0.0 1.a. Are there laws setting overall time standards for key court events in a civil case? Yes 1.b. If yes, are the time standards set for at least three court events? No 1.c. Are these time standards respected in more than 50% of cases? No 2. Adjournments 0.0 2.a. Does the law regulate the maximum number of adjournments that can be granted? No 2.b. Are adjournments limited to unforeseen and exceptional circumstances? No 2.c. If rules on adjournments exist, are they respected in more than 50% of cases? n.a. 3. Can two of the following four reports be generated about the competent court: (i) time to disposition report; (ii) Yes 1.0 clearance rate report; (iii) age of pending cases report; and (iv) single case progress report? 4. Is a pretrial conference among the case management techniques used before the competent court? No 0.0 5. Are there any electronic case management tools in place within the competent court for use by judges? Yes 1.0 6. Are there any electronic case management tools in place within the competent court for use by lawyers? Yes 1.0 Court automation (0-4) 3.0 1. Can the initial complaint be filed electronically through a dedicated platform within the competent court? Yes 1.0 2. Is it possible to carry out service of process electronically for claims filed before the competent court? No 0.0 3. Can court fees be paid electronically within the competent court? Yes 1.0 4. Publication of judgments 1.0 4.a Are judgments rendered in commercial cases at all levels made available to the general public Yes through publication in official gazettes, in newspapers or on the internet or court website? 4.b. Are judgments rendered in commercial cases at the appellate and supreme court level made Yes available to the general public through publication in official gazettes, in newspapers or on the internet or court website? Alternative dispute resolution (0-3) 3.0 1. Arbitration 1.5 1.a. Is domestic commercial arbitration governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all its aspects? 1.b. Are there any commercial disputes—aside from those that deal with public order or public policy— No that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes Page 99 Doing Business 2020 Brazil 2. Mediation/Conciliation 1.5 2.a. Is voluntary mediation or conciliation available? Yes 2.b. Are mediation, conciliation or both governed by a consolidated law or consolidated chapter or Yes section of the applicable code of civil procedure encompassing substantially all their aspects (for example, definition, aim and scope of application, desig 2.c. Are there financial incentives for parties to attempt mediation or conciliation (i.e., if mediation or Yes conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 100 Doing Business 2020 Brazil Resolving Insolvency Doing Business studies the time, cost and outcome of insolvency proceedings involving domestic legal entities. These variables are used to calculate the recovery rate, which is recorded as cents on the dollar recovered by secured creditors through reorganization, liquidation or debt enforcement (foreclosure or receivership) proceedings. To determine the present value of the amount recovered by creditors, Doing Business uses the lending rates from the International Monetary Fund, supplemented with data from central banks and the Economist Intelligence Unit. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Time required to recover debt (years) To make the data on the time, cost and outcome comparable across economies, several assumptions about the business and the case are used: • Measured in calendar years • Appeals and requests for extension are included - A hotel located in the largest city (or cities) has 201 employees and 50 suppliers. The hotel experiences financial difficulties. Cost required to recover debt (% of debtor’s estate) - The value of the hotel is 100% of the income per capita or the equivalent in local currency of USD 200,000, whichever is greater. • Measured as percentage of estate value - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s real estate. • Court fees The hotel cannot pay back the loan, but makes enough money to operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to judicial • Lawyers’ fees liquidation and reorganization proceedings and the extent to which best insolvency practices have been implemented in each economy covered. • Assessors’ and auctioneers’ fees • Other related fees Outcome • Whether business continues operating as a going concern or business assets are sold piecemeal Recovery rate for creditors • Measures the cents on the dollar recovered by secured creditors • Outcome for the business (survival or not) determines the maximum value that can be recovered • Official costs of the insolvency proceedings are deducted • Depreciation of furniture is taken into account • Present value of debt recovered Strength of insolvency framework index (0- 16) • Sum of the scores of four component indices: • Commencement of proceedings index (0-3) • Management of debtor’s assets index (0-6) • Reorganization proceedings index (0-3) • Creditor participation index (0-4) Page 101 Doing Business 2020 Brazil Resolving Insolvency - São Paulo Indicator São Paulo Latin America & OECD high Best Regulatory Caribbean income Performance Recovery rate (cents on the dollar) 18.2 31.2 70.2 92.9 (Norway) Time (years) 4.0 2.9 1.7 0.4 (Ireland) Cost (% of estate) 12.0 16.8 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going concern) 1 .. .. .. Strength of insolvency framework index (0-16) 13.0 7.2 11.9 None in 2018/19 Figure – Resolving Insolvency in São Paulo – Score 19.6 81.3 Recovery rate Strength of insolvency framework index Figure – Resolving Insolvency in São Paulo and comparator economies – Ranking and Score DB 2020 Resolving Insolvency Score 0 100 70.3: Mexico (Rank: 33) 62.1: China (Rank: 51) 60.1: Chile (Rank: 53) 59.1: Russian Federation (Rank: 57) 50.4: Rio de Janeiro 50.4: São Paulo Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Page 102 Doing Business 2020 Brazil Figure – Resolving Insolvency in São Paulo – Time and Cost Time (years) Cost (% of estate) 4.5 25 22.0 4.0 4.0 4 Cost (% of estate) 3.5 18.0 20 Time (years) 2.9 16.8 3 14.5 15 2.5 12.0 12.0 2.0 2.0 2 1.7 1.8 1.7 9.3 9.0 10 1.5 1 5 0.5 0 0 Chile China Latin Mexico OECD Rio Russian São America high de Federation Paulo & income Janeiro Caribbean Page 103 Doing Business 2020 Brazil Figure – Resolving Insolvency in São Paulo and comparator economies – Measure of Quality São Paulo 5.5 2.5 3 2 Chile 4.5 2.5 3 2 China 6 3 2 2.5 Mexico 5.5 2.5 2 1.5 Rio de Janeiro 5.5 2.5 3 2 Russian Federation 5 2.5 3 1 OECD high income 5.3 2.8 2.1 1.9 Latin America & Caribbean 3.7 2.4 1.9 0.8 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in São Paulo and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 70 63.9 60 50 41.9 43.0 40 36.9 31.2 30 20 18.2 18.2 10 0 São Paulo Chile China Mexico Russian Federation Rio de Janeiro Latin America & Caribbean Page 104 Doing Business 2020 Brazil Details – Resolving Insolvency in São Paulo Indicator Answer Score Proceeding liquidation (after an The most likely procedure applicable to our case study would be a reorganization, which will then be converted into a attempt at liquidation. Mirage may use the reorganization proceeding to gain time, find a new investor, or renegotiate its debt. reorganization) Insolvency proceedings will therefore start with Mirage (debtor) filing for court-supervised reorganization (recuperação judicial) with the Bankruptcy Court of the District of São Paulo. Mirage will benefit from the automatic stay / moratorium (article 6 of the Bankruptcy Law) and Mirage’s managers will draft a plan that foresees the continuation of Mirage’s operations as a going concern, where Mirage’s management will stay in control. However, it is very likely that this plan is not approved, and that the case will be converted into liquidation, for the following reasons: (i) BizBank will most likely vote against the plan, since for BizBank the most efficient outcome is the sale of the business as a going concern, free and clear of labor and tax claims (which cannot be achieved through a reorganization), and (ii) no plan can be approved without Mirage’s consent, as it is the only creditor holding secured debt (class II claims), and holds 70% of Mirage’s total debt. Outcome going concern Yes, the hotel will continue operating as a going concern, since as a result of liquidation proceedings, Mirage is likely to be sold as a going concern, free and clear of labor and tax claims, according to article 141.II. Time (in years) 4.0 A reorganization procedure that is then converted into liquidation will approximately take 4 years in total. According to the Bankruptcy Law, the reorganization plan must be approved by the creditors within 180 days from commencement of reorganization proceedings (this is the maximum period for which the individual actions are stayed). However, this time will probably be extended several times, because the creditors are not likely to approve the reorganization plan during the first meeting. In practice, it will take almost 2 years to prepare the creditors list, draft and vote the plan, which would be rejected under our case study assumptions. The case will then be converted into liquidation (where the assets would be sold as a going concern), taking the formal conversion and the organization and execution of the sale 2 additional years (until the proceeds of the sale are finally distributed among creditors). Cost (% of estate) 12.0 The costs associated with the case would amount to approximately 12% of the value of the debtor's estate. The main components of this total cost would be the attorney's fees, which would amount to 6% of the value of the estate, and the insolvency administrator fees, which would amount to 4%, plus 2% related to court fees. Recovery rate 18.2 (cents on the dollar) Page 105 Doing Business 2020 Brazil Details – Resolving Insolvency in São Paulo – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 13.0 Commencement of proceedings index (0-3) 2.5 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may file for 1.0 both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a creditor 0.5 may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) (c) Both (a) and (b) 1.0 Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value options are available, of its assets but only one of them needs to be complied with Management of debtor's assets index (0-6) 5.5 Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the Yes 1.0 debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? Yes 1.0 Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of Yes 1.0 insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (a) Yes over all pre- 0.5 commencement creditors, secured or unsecured Reorganization proceedings index (0-3) 2.0 Which creditors vote on the proposed reorganization plan? (b) Only creditors 1.0 whose rights are affected by the proposed plan Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as No 0.0 what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote Yes 1.0 separately and are creditors in the same class treated equally? Creditor participation index (0-4) 3.0 Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency Yes 1.0 representative? Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? No 0.0 Does the insolvency framework provide that a creditor has the right to request information from the insolvency Yes 1.0 representative? Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting Yes 1.0 creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 106 Doing Business 2020 Brazil Resolving Insolvency - Rio de Janeiro Indicator Rio de Janeiro Latin America & OECD high Best Regulatory Caribbean income Performance Recovery rate (cents on the dollar) 18.2 31.2 70.2 92.9 (Norway) Time (years) 4.0 2.9 1.7 0.4 (Ireland) Cost (% of estate) 12.0 16.8 9.3 1.0 (Norway) Outcome (0 as piecemeal sale and 1 as going concern) 1 .. .. .. Strength of insolvency framework index (0-16) 13.0 7.2 11.9 None in 2018/19 Figure – Resolving Insolvency in Rio de Janeiro – Score 19.6 81.3 Recovery rate Strength of insolvency framework index Figure – Resolving Insolvency in Rio de Janeiro and comparator economies – Ranking and Score DB 2020 Resolving Insolvency Score 0 100 70.3: Mexico (Rank: 33) 62.1: China (Rank: 51) 60.1: Chile (Rank: 53) 59.1: Russian Federation (Rank: 57) 50.4: Rio de Janeiro 50.4: São Paulo Note: The ranking of economies on the ease of resolving insolvency is determined by sorting their scores for resolving insolvency. These scores are the simple average of the scores for the recovery rate and the strength of insolvency framework index. Page 107 Doing Business 2020 Brazil Figure – Resolving Insolvency in Rio de Janeiro – Time and Cost Time (years) Cost (% of estate) 4.5 25 22.0 4.0 4.0 4 Cost (% of estate) 3.5 18.0 20 Time (years) 2.9 16.8 3 14.5 15 2.5 12.0 12.0 2.0 2.0 2 1.7 1.8 1.7 9.3 9.0 10 1.5 1 5 0.5 0 0 Chile China Latin Mexico OECD Rio Russian São America high de Federation Paulo & income Janeiro Caribbean Page 108 Doing Business 2020 Brazil Figure – Resolving Insolvency in Rio de Janeiro and comparator economies – Measure of Quality Rio de Janeiro 5.5 2.5 3 2 Chile 4.5 2.5 3 2 China 6 3 2 2.5 Mexico 5.5 2.5 2 1.5 Russian Federation 5 2.5 3 1 São Paulo 5.5 2.5 3 2 OECD high income 5.3 2.8 2.1 1.9 Latin America & Caribbean 3.7 2.4 1.9 0.8 0 2 4 6 8 10 12 14 16 Sub-Indicator Score Management of debtor's assets index (0-6) Commencement of proceedings index (0-3) Creditor participation index (0-4) Reorganization proceedings index (0-3) Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Figure – Resolving Insolvency in Rio de Janeiro and comparator economies – Recovery Rate Recovery rate(cents on the dollar) 70 63.9 60 50 41.9 43.0 40 36.9 31.2 30 20 18.2 18.2 10 0 Rio de Janeiro Chile China Mexico Russian Federation São Paulo Latin America & Caribbean Page 109 Doing Business 2020 Brazil Details – Resolving Insolvency in Rio de Janeiro Indicator Answer Score Proceeding liquidation (after an The most likely procedure applicable to our case study would be a reorganization, which will then be converted into a attempt at liquidation. Mirage may use the reorganization proceeding to gain time, find a new investor, or renegotiate its debt. reorganization) Insolvency proceedings will therefore start with Mirage (debtor) filing for court-supervised reorganization (recuperação judicial) with the Bankruptcy Court of the District of Rio de Janeiro. Mirage will benefit from the automatic stay / moratorium (article 6 of the Bankruptcy Law) and Mirage’s managers will draft a plan that foresees the continuation of Mirage’s operations as a going concern, where Mirage’s management will stay in control. However, it is very likely that this plan is not approved, and that the case will be converted into liquidation, for the following reasons: (i) BizBank will most likely vote against the plan, since for BizBank the most efficient outcome is the sale of the business as a going concern, free and clear of labor and tax claims (which cannot be achieved through a reorganization), and (ii) no plan can be approved without Mirage’s consent, as it is the only creditor holding secured debt (class II claims), and holds 70% of Mirage’s total debt. Outcome going concern The hotel will continue operating as a going concern, since as a result of liquidation proceedings, Mirage is likely to be sold as a going concern, free and clear of labor and tax claims, according to article 141.II. Time (in years) 4.0 A reorganization procedure that is then converted into liquidation will approximately take 4 years in total. According to the Bankruptcy Law, the reorganization plan must be approved by the creditors within 180 days from commencement of reorganization proceedings (this is the maximum period for which the individual actions are stayed). However, this time will probably be extended several times, because the creditors are not likely to approve the reorganization plan during the first meeting. In practice, it will take almost 2 years to prepare the creditors list, draft and vote the plan, which would be rejected under our case study assumptions. The case will then be converted into liquidation (where the assets would be sold as a going concern), taking the formal conversion and the organization and execution of the sale 2 additional years (until the proceeds of the sale are finally distributed among creditors). Cost (% of estate) 12.0 The costs associated with the case would amount to approximately 12% of the value of the debtor's estate. The main components of this total cost would be the attorney's fees, which would amount to 6% of the value of the estate, and the insolvency administrator fees, which would amount to 4%, plus 2% related to court fees. Recovery rate 18.2 (cents on the dollar) Page 110 Doing Business 2020 Brazil Details – Resolving Insolvency in Rio de Janeiro – Measure of Quality Answer Score Strength of insolvency framework index (0-16) 13.0 Commencement of proceedings index (0-3) 2.5 What procedures are available to a DEBTOR when commencing insolvency proceedings? (a) Debtor may file for 1.0 both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a creditor 0.5 may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the insolvency framework? (a) (c) Both (a) and (b) 1.0 Debtor is generally unable to pay its debts as they mature (b) The value of debtor's liabilities exceeds the value options are available, of its assets but only one of them needs to be complied with Management of debtor's assets index (0-6) 5.5 Does the insolvency framework allow the continuation of contracts supplying essential goods and services to the Yes 1.0 debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome contracts? Yes 1.0 Does the insolvency framework allow avoidance of preferential transactions? Yes 1.0 Does the insolvency framework allow avoidance of undervalued transactions? Yes 1.0 Does the insolvency framework provide for the possibility of the debtor obtaining credit after commencement of Yes 1.0 insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (a) Yes over all pre- 0.5 commencement creditors, secured or unsecured Reorganization proceedings index (0-3) 2.0 Which creditors vote on the proposed reorganization plan? (b) Only creditors 1.0 whose rights are affected by the proposed plan Does the insolvency framework require that dissenting creditors in reorganization receive at least as much as No 0.0 what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, does each class vote Yes 1.0 separately and are creditors in the same class treated equally? Creditor participation index (0-4) 3.0 Does the insolvency framework require approval by the creditors for selection or appointment of the insolvency Yes 1.0 representative? Does the insolvency framework require approval by the creditors for sale of substantial assets of the debtor? No 0.0 Does the insolvency framework provide that a creditor has the right to request information from the insolvency Yes 1.0 representative? Does the insolvency framework provide that a creditor has the right to object to decisions accepting or rejecting Yes 1.0 creditors' claims? Note: Even if the economy’s legal framework includes provisions related to insolvency proceedings (liquidation or reorganization), the economy receives 0 points for the strength of insolvency framework index, if time, cost and outcome indicators are recorded as “no practice.” Page 111 Doing Business 2020 Brazil Employing Workers Doing Business presents detailed data for the employing workers indicators on the Doing Business website (http://www.doingbusiness.org). The study does not present rankings of economies on these indicators or include the topic in the aggregate ease of doing business score or ranking on the ease of doing business. The most recent round of data collection was completed in May 2019. See the methodology for more information. What the indicators measure Case study assumptions Hiring To make the data comparable across economies, several assumptions about the worker and the (i) whether fixed-term contracts are prohibited for permanent business are used. tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the maximum probationary period; (iv) minimum The worker: wage;(v) ratio of minimum wage to the average value added per - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. worker. - Is a full-time employee. - Is not a member of the labor union, unless membership is mandatory. Working hours (i) maximum number of working days allowed per week; (ii) The business: premiums for work: at night, on a weekly rest day and overtime; - Is a limited liability company (or the equivalent in the economy). (iii) whether there are restrictions on work at night, work on a - Operates a supermarket or grocery store in the economy’s largest business city. For 11 weekly rest day and for overtime work; (iv) length of paid annual economies the data are also collected for the second largest business city. leave. - Has 60 employees. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the Redundancy rules food retail sector and they apply even to firms that are not party to them. (i) whether redundancy can be basis for terminating workers; (ii) - Abides by every law and regulation but does not grant workers more benefits than those whether employer needs to notify and/or get approval from third mandated by law, regulation or (if applicable) collective bargaining agreements. party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether the law requires employer to reassign or retrain a worker before making worker redundant; (iv) whether priority rules apply for redundancies and reemployment. Redundancy cost (i) notice period for redundancy dismissal; (ii) severance payments, and (iii) penalties due when terminating a redundant worker. Data on the availability of unemployment protection for a worker with one year of employment is also collected. Page 112 Doing Business 2020 Brazil Employing Workers - São Paulo Details – Employing Workers in São Paulo Answer Hiring Fixed-term contracts prohibited for permanent tasks? Yes Maximum length of a single fixed-term contract (months) 24.0 Maximum length of fixed-term contracts, including renewals (months) 24.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 397.7 Ratio of minimum wage to value added per worker 0.4 Maximum length of probationary period (months) 3.0 Working hours Standard workday 8.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 20.0 Premium for work on weekly rest day (% of hourly pay) 0.0 Premium for overtime work (% of hourly pay) 60.0 Restrictions on night work? Yes Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 26.0 Paid annual leave for a worker with 5 years of tenure (working days) 26.0 Paid annual leave for a worker with 10 years of tenure (working days) 26.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 26.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? No Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? No Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? No Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.7 Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 6.4 Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 8.6 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 6.6 Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 1.7 Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 8.3 Page 113 Doing Business 2020 Brazil Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 16.6 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 8.9 Unemployment protection after one year of employment? Yes Page 114 Doing Business 2020 Brazil Employing Workers - Rio de Janeiro Details – Employing Workers in Rio de Janeiro Answer Hiring Fixed-term contracts prohibited for permanent tasks? Yes Maximum length of a single fixed-term contract (months) 24.0 Maximum length of fixed-term contracts, including renewals (months) 24.0 Minimum wage applicable to the worker assumed in the case study (US$/month) 396.1 Ratio of minimum wage to value added per worker 0.4 Maximum length of probationary period (months) 3.0 Working hours Standard workday 8.0 Maximum number of working days per week 6.0 Premium for night work (% of hourly pay) 20.0 Premium for work on weekly rest day (% of hourly pay) 0.0 Premium for overtime work (% of hourly pay) 50.0 Restrictions on night work? Yes Restrictions on weekly holiday? No Restrictions on overtime work? No Paid annual leave for a worker with 1 year of tenure (working days) 26.0 Paid annual leave for a worker with 5 years of tenure (working days) 26.0 Paid annual leave for a worker with 10 years of tenure (working days) 26.0 Paid annual leave (average for workers with 1, 5 and 10 years of tenure, in working days) 26.0 Redundancy rules Dismissal due to redundancy allowed by law? Yes Third-party notification if one worker is dismissed? No Third-party approval if one worker is dismissed? No Third-party notification if nine workers are dismissed? No Third-party approval if nine workers are dismissed? No Retraining or reassignment obligation before redundancy? No Priority rules for redundancies? No Priority rules for reemployment? No Redundancy cost Notice period for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 4.7 Notice period for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 6.4 Notice period for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 8.6 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 6.6 Severance pay for redundancy dismissal for a worker with 1 year of tenure (weeks of salary) 1.6 Severance pay for redundancy dismissal for a worker with 5 years of tenure (weeks of salary) 8.3 Page 115 Doing Business 2020 Brazil Severance pay for redundancy dismissal for a worker with 10 years of tenure (weeks of salary) 16.6 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure, in weeks of salary) 8.9 Unemployment protection after one year of employment? Yes Page 116 Doing Business 2020 Brazil Business Reforms in Brazil From May 2, 2018 to May 1, 2019, 115 economies implemented 294 business regulatory reforms across the 10 areas measured by Doing Business. Reforms inspired by Doing Business have been implemented by economies in all regions. The following are reforms implemented since Doing Business 2008. =Doing Business reform making it easier to do business. = Change making it more difficult to do business. DB2020 Starting a Business: Brazil made starting a business easier by making business registration faster and by decreasing the cost of the digital certificate. This reform applies to both São Paulo and Rio de Janeiro. Registering Property: Brazil made property registration easier by improving the quality of the land administration system. This reform applies to São Paulo and Rio de Janeiro. Brazil (São Paulo) also introduced online payment and Brazil (Rio de Janeiro) created an online system to obtain property certificates. DB2019 Starting a Business: Brazil made starting a business easier by launching online systems for company registration, licensing and employment notifications. This reform applies to both Rio de Janeiro and São Paulo. Getting Electricity: Brazil (São Paulo) improved the reliability of electricity by modernizing its grid network and introducing new software programs allowing better outage management and distribution planning. Registering Property: Brazil (Rio de Janeiro) made registering property more expensive by increasing the municipal property transfer tax. Getting Credit: Brazil improved access to credit information by distributing at least two years of historical data. This reform applies to both São Paulo and Rio de Janeiro. Trading across Borders: Brazil reduced the time required for import documentary compliance by introducing electronic certificates of origin. This reform applies to both Rio de Janeiro and São Paulo. Employing Workers: Brazil changed regulations pertaining to intermittent work, work scheduling, compensation, employee termination and union representation. This reform applies to both Rio de Janeiro and São Paulo. DB2018 Trading across Borders: Brazil reduced the time for documentary compliance for both exporting and importing by enhancing its electronic data interchange system. This reform applies to both Rio de Janeiro and São Paulo. DB2017 Starting a Business: Brazil reduced the time needed to start a business by implementing an online portal for business licenses in Rio de Janeiro. However, Brazil also made starting a business more difficult by shortening the opening hours of the business registry in Rio de Janeiro. Trading across Borders: Brazil made trading across borders easier by implementing an electronic system for importing, which reduced the time required for documentary compliance. This reform applies to both Rio de Janeiro and São Paulo. Enforcing Contracts: Brazil made enforcing contracts easier through a new mediation law—that includes financial incentives for parties to attempt mediation—and a new code of civil procedure. These reforms apply to both Rio de Janeiro and São Paulo. Employing Workers: Brazil expanded eligibility for unemployment benefits to employees with one year of continuous work experience. This reform applies to both Rio de Janeiro and São Paulo. DB2016 Registering Property: Brazil made transferring property in São Paulo more expensive by increasing the property transfer tax. Trading across Borders: Brazil reduced the time for documentary and border compliance for exporting by implementing the electronic SISCOMEX Portal system. This reform applies to both Rio de Janeiro and São Paulo. DB2013 Registering Property: Brazil made transferring property more difficult by introducing a new certificate on good standing on labor debts, adding to the number of due diligence procedures. Enforcing Contracts: Brazil made enforcing contracts easier by implementing an electronic system for filing initial complaints at the São Paulo civil district court. Employing Workers: Brazil increased the notice period applicable in cases of redundancy dismissal of employees. DB2012 Getting Credit: Brazil improved its credit information system by allowing private credit bureaus to collect and share positive information. Page 117 DB2011 Doing Business 2020 Brazil DB2010 Starting a Business: Brazil made starting a business easier by eliminating the requirement to obtain a fire brigade license and inspection before obtaining an operating permit from the municipality. Paying Taxes: Brazil made paying taxes less costly for companies by abolishing the tax on check transactions. DB2009 Trading across Borders: Brazil reduced the time for exporting and importing by implementing the electronic data interchange systems SISCARGA and SISCOMEX CARGA as well as a risk-based inspection system for cargo. An increase in the number of banks offering letters of credit also contributed to the reduction in time. DB2008 Trading across Borders: Brazil made trading across borders easier by updating its electronic data interchange system for customs. Enforcing Contracts: Brazil made enforcing contracts easier by updating and streamlining its civil procedure rules. Page 118 Doing Business 2020 Brazil Page 119