Doing Business 2019 Brazil Economy Profile Brazil Page 1 Doing Business 2019 Brazil Economy Profile of Brazil Doing Business 2019 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 post-filing 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 Labor market regulation Flexibility in employment regulation and aspects of job quality Page 2 Doing Business 2019 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 labor market regulation. Although Doing Business does not present rankings of economies on the labor market regulation 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 reports, which exhaustively cover business regulation and reform in different cities and regions within a nation. These reports 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 report, published in 2003, covered 5 indicator sets and 133 economies. This year’s report 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. More about Doing Business (PDF, 5MB) Page 3 Doing Business 2019 Brazil Ease of Doing Business in DB 2019 Rank Region Latin America & Caribbean 190 1 Brazil Income Category Upper middle income 109 DB 2019 Ease of doing business score Population 209,288,278 0 100 City Covered São Paulo , Rio de Janeiro 60.01 DB 2019 Ease of Doing Business Score 0 100 73.64: China (Rank: 46) 72.09: Mexico (Rank: 54) 71.81: Chile (Rank: 56) 60.01: Brazil (Rank: 109) 58.97: Regional Average (Latin America & Caribbean) Note: The ease of doing business score captures the gap of each economy from the best regulatory performance observed on each of the indicators across all economies in the Doing Business sample since 2005. An economy’s ease of doing business score is reflected on a scale from 0 to 100, where 0 represents the lowest and 100 represents the best performance. The ease of doing business ranking ranges from 1 to 190. Rankings on Doing Business topics - Brazil 1 28 40 48 48 55 77 82 Rank 99 106 109 140 137 136 163 175 184 190 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 Ease of Doing Business Score on Doing Business topics - Brazil 100 84.37 80.23 80 69.85 65.00 66.00 Score 60 49.86 51.94 50.00 48.48 40 34.40 20 0 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 Page 4 Doing Business 2019 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 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally start and formally operate To make the data comparable across economies, several assumptions about the a company (number) business and the 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 - Is a limited liability company (or its legal equivalent). If there is more than one type city of limited liability company in the economy, the most common among domestic firms • Postregistration (for example, social security is chosen. Information on the most common form is obtained from incorporation registration, company seal) lawyers or the statistical office. - Operates in the economy’s largest business city. For 11 economies the data are • Obtaining approval from spouse to start a business or to leave the home to register the also collected for the second largest business city. company - The entire office space is approximately 929 square meters (10,000 square feet). - Is 100% domestically owned and has five owners, none of whom is a legal entity; • Obtaining any gender specific document for has a start-up capital of 10 times income per capita and has a turnover of at least company registration and operation or national 100 times income per capita. identification card - Performs general industrial or commercial activities, such as the production or sale of goods or services to the public. The business does not perform foreign trade Time required to complete each procedure activities and does not handle products subject to a special tax regime, for example, (calendar days) liquor or tobacco. It does not use heavily polluting production processes. • Does not include time spent gathering - Leases the commercial plant or offices and is not a proprietor of real estate and the information amount of the annual lease for the office space is equivalent to the income per capita. • Each procedure starts on a separate day (2 procedures cannot start on the same day) - Does not qualify for investment incentives or any special benefits. - Has at least 10 and up to 50 employees one month after the commencement of • Procedures fully completed online are recorded operations, all of whom are domestic nationals. as ½ day - Has a company deed that is 10 pages long. • Procedure is considered completed once final document is received The owners: • No prior contact with officials - Have reached the legal age of majority. If there is no legal age of majority, they are assumed to be 30 years old. Cost required to complete each procedure (% of - Are sane, competent, in good health and have no criminal record. income per capita) - Are married and the marriage is monogamous and registered with the authorities. - Where the answer differs according to the legal system applicable to the woman or • Official costs only, no bribes man in question (as may be the case in economies where there is legal plurality), the • No professional fees unless services required by answer used will be the one that applies to the majority of the population. law or commonly used in practice Paid-in minimum capital (% of income per capita) • Funds deposited in a bank or with third party before registration or up to 3 months after incorporation Page 5 Doing Business 2019 Brazil Starting a Business - São Paulo Standardized Company Legal form Sociedade Limitada Paid-in minimum capital requirement BRL 0 City Covered São Paulo Indicator São Paulo Latin America OECD high Best Regulatory & Caribbean income Performance Procedure – Men (number) 11 8.2 4.9 1 (New Zealand) Time – Men (days) 18.5 28.5 9.3 0.5 (New Zealand) Cost – Men (% of income per capita) 3.9 37.8 3.1 0.0 (Slovenia) Procedure – Women (number) 11 8.2 4.9 1 (New Zealand) Time – Women (days) 18.5 28.5 9.3 0.5 (New Zealand) Cost – Women (% of income per capita) 3.9 37.8 3.1 0.0 (Slovenia) Paid-in min. capital (% of income per capita) 0.0 1.5 8.6 0.0 (117 Economies) Figure – Starting a Business in São Paulo and comparator economies – Ranking and Score DB 2019 Starting a Business Score 0 100 93.52: China (Rank: 28) 89.08: Chile (Rank: 72) 85.94: Mexico (Rank: 94) 80.28: São Paulo 80.16: 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 2019 Brazil Figure – Starting a Business in São Paulo – Procedure, Time and Cost Time (days) Cost (% of income per capita) 1.6 18 16 1.4 Cost (% of income per capita) 14 1.2 12 Time (days) 1 10 0.8 8 0.6 6 0.4 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 2019 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 Less than one day no charge location (online procedure) Agency : Municipality (Prefeitura de São Paulo) Business founders can check the availability of the company name online at: www.jucesponline.sp.gov.br. 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 Agency : Commercial Bank (online procedure) procedure 3 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 7 days R$141.35 + R$21.00 registration with the Federal and State Tax Authorities (CNPJ and ICMS), for registration + Social Security (INSS) and the Companies Registry (NIRE) R$128.50 (service Agency : Commercial Registry (Junta Comercial do Estado de São Paulo - fee) 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. Page 8 Doing Business 2019 Brazil 5 Register with the Municipal Taxpayers’ Registry (Secretaria Municipal de 1 day no charge Finanças) Agency : Municipal Taxpayers’ Registry (Secretaria Municipal de Finanças) 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/). After filling and sending the electronic form, an appointed will be booked and the applicant will receive a receipt ("Protocolo de Atendimento"). A visit must be made to the Municipality (at "Praça de Atendimento da Secretaria de Finanças"), to complete the Municipal tax registration. 6 Obtain a digital certification (token) for the use of e-invoices 2 days Varies from R$ Agency : Serasa Experian 450.00 to R$ 580.00 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 7 Obtain an operations license (Auto de Licença de Funcionamento) from the 2 days no charge Municipality 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 Register and pay the Municipal Establishments Inspection Fee (Taxa de 1 day (simultaneous R$ 470.87 (for Fiscalização de Estabelecimentos - TFE) with previous retailing business, Agency : Municipal Taxpayers’ Registry (Secretaria Municipal de Finanças) procedure) may vary in According to the Municipality of São Paulo's rules, the annual cost of the TFE fee accordance with the is based both on the company's activities as well as on the company's number of company’s activities) employees (www.prefeitura.sp.gov.br). Once the company has been registered with the Municipal Tax Authorities (Secretaria Municipal de Finanças), it shall pay an annual fee for the control and compliance with municipal laws. This payment is due on the tenth day of the second month following commencement of company operations. 9 Register the employees in the social integration program (Programa de 1 day (simultaneous no charge Integração Social - PIS) with previous Agency : Federal Savings Bank (Caixa Econômica Federal) 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. Page 9 Doing Business 2019 Brazil Notify the Ministry of Labor (Cadastro Geral de empregados e Less than one day no charge 10 desempregados, CAGED) (simultaneous with Agency : Ministry of Labor (Cadastro Geral de empregados e desempregados, previous procedure) CAGED) Pursuant to Law No. 4.923 of December 23, 1965, the employer must inform the Ministry of 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. Registration with the Employers' Union and with the Employees' Union 1 day (simultaneous no charge 11 Agency : Employers' Union and with the Employees' Union with previous The requirements for company registration with the Employers' Union and procedure) 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 10 Doing Business 2019 Brazil Starting a Business - Rio de Janeiro Standardized Company Legal form Sociedade Limitada Paid-in minimum capital requirement BRL 0 City Covered Rio de Janeiro Indicator Rio de Latin America OECD high Best Regulatory Janeiro & Caribbean income Performance Procedure – Men (number) 10 8.2 4.9 1 (New Zealand) Time – Men (days) 23.5 28.5 9.3 0.5 (New Zealand) Cost – Men (% of income per capita) 6.6 37.8 3.1 0.0 (Slovenia) Procedure – Women (number) 10 8.2 4.9 1 (New Zealand) Time – Women (days) 23.5 28.5 9.3 0.5 (New Zealand) Cost – Women (% of income per capita) 6.6 37.8 3.1 0.0 (Slovenia) Paid-in min. capital (% of income per capita) 0.0 1.5 8.6 0.0 (117 Economies) Figure – Starting a Business in Rio de Janeiro and comparator economies – Ranking and Score DB 2019 Starting a Business Score 0 100 93.52: China (Rank: 28) 89.08: Chile (Rank: 72) 85.94: Mexico (Rank: 94) 80.28: São Paulo 80.16: 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 11 Doing Business 2019 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 2 15 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 12 Doing Business 2019 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 2 days no charge location 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 Agency : Bank (Banco Bradesco) (online procedure) procedure 3 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 7 days R$387 (company registration with the Federal and State Tax Authorities (CNPJ and ICMS), registration) + R$21 Social Security (INSS) and the Companies Registry (NIRE) (DREI fee) + Agency : Commercial Registry of Rio de Janeiro (Junta Comercial do Estado do R$185.73 (ICMS tax Rio de Janeiro - JUCERJA) registration) 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), with the State sales tax (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 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 5 days no charge de Fazenda) 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 The cost may vary Agency : Serasa Experian from R$282 to R$600 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. Page 13 Doing Business 2019 Brazil 7 Obtain an operations license (Alvará de Licença para Estabelecimento) 4 days R$826.23 from the 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/). 8 Update employees' information with Social Security (Programa de 1 day (simultaneous no charge Integração Social - PIS) with previous Agency : Federal Savings Bank (Caixa Econômica Federal) 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 Less than one day no charge desempregados, CAGED) (online, Agency : Ministry of Labor (Cadastro Geral de empregados e desempregados - simultaneous with CAGED) previous procedure) Pursuant to Law No. 4.923 of December 23, 1965, the employer must inform the Ministry of 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 no charge 10 Agency : Employers' Union and Employees' Union with previous The requirements for company registration with the Employers' Union and procedure) 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 14 Doing Business 2019 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 2018. See the methodology for more information What the indicators measure Case study assumptions Procedures to legally build a warehouse To make the data comparable across economies, several assumptions about the (number) construction company, the warehouse project and the utility connections are used. • Submitting all relevant documents and obtaining The construction company (BuildCo): all necessary clearances, licenses, permits and certificates - Is a limited liability company (or its legal equivalent) and operates in the economy’s largest business city. For 11 economies the data are also collected for the second • Submitting all required notifications and receiving largest business city. all necessary inspections - Is 100% domestically and privately owned; has five owners, none of whom is a • Obtaining utility connections for water and legal entity. Has a licensed architect and a licensed engineer, both registered with sewerage the local association of architects or engineers. BuildCo is not assumed to have any other employees who are technical or licensed experts, such as geological or • Registering and selling the warehouse after its completion topographical experts. - Owns the land on which the warehouse will be built and will sell the warehouse Time required to complete each procedure upon its completion. (calendar days) The warehouse: • Does not include time spent gathering information - Will be used for general storage activities, such as storage of books or stationery. - Will have two stories, both above ground, with a total constructed area of • Each procedure starts on a separate day— approximately 1,300.6 square meters (14,000 square feet). Each floor will be 3 though procedures that can be fully completed meters (9 feet, 10 inches) high and will be located on a land plot of approximately online are an exception to this rule 929 square meters (10,000 square feet) that is 100% owned by BuildCo, and the • Procedure is considered completed once final warehouse is valued at 50 times income per capita. document is received - Will have complete architectural and technical plans prepared by a licensed architect. If preparation of the plans requires such steps as obtaining further • No prior contact with officials documentation or getting prior approvals from external agencies, these are counted Cost required to complete each procedure (% of as procedures. income per capita) - Will take 30 weeks to construct (excluding all delays due to administrative and regulatory requirements). • Official costs only, no bribes The water and sewerage connections: Building quality control index (0-15) - Will be 150 meters (492 feet) from the existing water source and sewer tap. If there • Quality of building regulations (0-2) is no water delivery infrastructure in the economy, a borehole will be dug. If there is • Quality control before construction (0-1) no sewerage infrastructure, a septic tank in the smallest size available will be installed or built. • Quality control during construction (0-3) - Will have an average water use of 662 liters (175 gallons) a day and an average • Quality control after construction (0-3) wastewater flow of 568 liters (150 gallons) a day. Will have a peak water use of 1,325 liters (350 gallons) a day and a peak wastewater flow of 1,136 liters (300 • Liability and insurance regimes (0-2) gallons) a day. • Professional certifications (0-4) - 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 15 Doing Business 2019 Brazil Dealing with Construction Permits - São Paulo Standardized Warehouse Estimated value of warehouse BRL 1,534,065.80 City Covered São Paulo Indicator São Paulo Latin America OECD high Best Regulatory & Caribbean income Performance Procedures (number) 20 15.4 12.7 None in 2017/18 Time (days) 404 199.0 153.1 None in 2017/18 Cost (% of warehouse value) 0.8 3.2 1.5 None in 2017/18 Building quality control index (0-15) 9.0 8.9 11.5 15.0 (3 Economies) Figure – Dealing with Construction Permits in São Paulo and comparator economies – Ranking and Score DB 2019 Dealing with Construction Permits Score 0 100 75.90: Chile (Rank: 33) 68.62: Mexico (Rank: 93) 65.16: China (Rank: 121) 51.30: Rio de Janeiro 48.94: 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. Figure – Dealing with Construction Permits in São Paulo – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 400 0.45 0.4 350 Cost (% of warehouse value) 0.35 300 0.3 Time (days) 250 0.25 200 0.2 150 0.15 100 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 * 19 * 20 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 2019 Brazil Figure – Dealing with Construction Permits in São Paulo and comparator economies – Measure of Quality 15 13.0 11.7 11.1 Index score 10 9.0 9.0 8.9 5 0 São Paulo Chile China Mexico Rio de Janeiro Latin America & 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 51 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 51.21 2 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. 3 Obtain Technical Term of Responsibility -ART 0.5 days BRL 215 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) According to Plenary Decision N. 1096/2016 (September 22, 2016), for contracts or works of more than BRL 15,000.00, the fee is BRL 214.82 4 Request and obtain proof of land tax payment from the Treasury 0.5 days no charge Department of the 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. 5 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 Page 17 Doing Business 2019 Brazil 6 Request and obtain construction approval permit and construction 274 days BRL 4,200 execution permit 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. 7 Request and obtain equipment operating permit 60 days BRL 75 Agency : Municipality Article 34 of São Paulo's Municipality Decree No. 57,776/17 states which equipment operating permit is needed. The permit allows the use of construction equipment. 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. 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 130 Agency : Fire Department This certificate is only given when the Fire Department has already conducted its inspection. Page 18 Doing Business 2019 Brazil 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 obtain operation license 60 days BRL 25 Agency : Municipality Upon completing the construction and receiving the Fire Department inspection, BuildCo must apply for the relevant operation license at the Municipality and show evidence that the company can develop the specific business at the site. To obtain this license, the company must present all warehouse project documentation. If the warehouse is to be sold after completion, this procedure might be done by the buyer and not BuildCo. However, in order to do so, the occupancy permit must be issued. Request and connect to water and sewage 30 days no charge 19 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 1,273 20 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 19 Doing Business 2019 Brazil Details – Dealing with Construction Permits in São Paulo – 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; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly specified in the building List of required 1.0 regulations or on any 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 Licensed 1.0 compliance with existing building regulations? (0-1) architect; 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? Unscheduled 0.0 (0-2) 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) 3.0 Is there a final inspection required by law to verify that the building was built in accordance Yes, final 2.0 with the approved plans and regulations? (0-2) inspection 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 Architect or 1.0 once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) engineer; Professional in charge of the supervision; Construction company. Which parties (if any) are required by law to obtain an insurance policy to cover possible No party is 0.0 structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance required by law or Decennial Insurance)? (0-1) to obtain insurance . Professional certifications index (0-4) 2.0 Page 20 Doing Business 2019 Brazil What are the qualification requirements for the professional responsible for verifying that the University degree 1.0 architectural plans or drawings are in compliance with existing building regulations? (0-2) in 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 University degree 1.0 on the ground? (0-2) in engineering, construction or construction management; Being a registered architect or engineer. Page 21 Doing Business 2019 Brazil Dealing with Construction Permits - Rio de Janeiro Standardized Warehouse Estimated value of warehouse BRL 1,534,065.80 City Covered Rio de Janeiro Indicator Rio de Latin America OECD high Best Regulatory Janeiro & Caribbean income Performance Procedures (number) 18 15.4 12.7 None in 2017/18 Time (days) 481 199.0 153.1 None in 2017/18 Cost (% of warehouse value) 0.6 3.2 1.5 None in 2017/18 Building quality control index (0-15) 9.0 8.9 11.5 15.0 (3 Economies) Figure – Dealing with Construction Permits in Rio de Janeiro and comparator economies – Ranking and Score DB 2019 Dealing with Construction Permits Score 0 100 75.90: Chile (Rank: 33) 68.62: Mexico (Rank: 93) 65.16: China (Rank: 121) 51.30: Rio de Janeiro 48.94: 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. Figure – Dealing with Construction Permits in Rio de Janeiro – Procedure, Time and Cost Time (days) Cost (% of warehouse value) 0.25 400 Cost (% of warehouse value) 0.2 Time (days) 300 0.15 200 0.1 100 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 22 Doing Business 2019 Brazil Figure – Dealing with Construction Permits in Rio de Janeiro and comparator economies – Measure of Quality 15 13.0 11.7 11.1 Index score 10 9.0 9.0 8.9 5 0 Rio de Janeiro Chile China Mexico São Paulo Latin America & 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 75 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 Technical Term of Responsibility -ART 0.5 days BRL 219 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. 4 Request and obtain proof of land tax payment from the Treasury 0.5 days no charge Department of the 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. 5 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. 6 Request and obtain construction approval permit and construction 365 days BRL 805 execution permit 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 23 Doing Business 2019 Brazil 7 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. 8 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. 9 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. 10 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. 11 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. 12 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) 13 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. 14 Receive final inspection from Municipality 1 day no charge Agency : Municipality This inspection is conducted upon BuildCo.'s request. 15 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. 16 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. Page 24 Doing Business 2019 Brazil Register building with the Real Estate Registry 30 days BRL 1,129 17 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. Request and obtain operation license 7 days BRL 826 18 Agency : Municipality Upon completing the construction and receiving the Fire Department inspection, BuildCo must apply for the relevant operation license at the Municipality and show evidence that the company can develop the specific business at the site. To obtain this license, the company must present all warehouse project documentation. If the warehouse is to be sold after completion, this procedure might be done by the buyer and not BuildCo. Takes place simultaneously with previous procedure. Page 25 Doing Business 2019 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; 1.0 Free of charge. Which requirements for obtaining a building permit are clearly specified in the building List of required 1.0 regulations or on any 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 Licensed 1.0 compliance with existing building regulations? (0-1) architect; 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? No inspections 0.0 (0-2) are 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 Yes, final 2.0 with the approved plans and regulations? (0-2) inspection 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 Architect or 1.0 once it is in use (Latent Defect Liability or Decennial Liability)? (0-1) engineer; 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 No party is 0.0 structural flaws or problems in the building once it is in use (Latent Defect Liability Insurance required by law or Decennial Insurance)? (0-1) to obtain insurance . Professional certifications index (0-4) 2.0 What are the qualification requirements for the professional responsible for verifying that the University degree 1.0 architectural plans or drawings are in compliance with existing building regulations? (0-2) in architecture or engineering; Being a registered architect or engineer; Passing a certification exam. Page 26 Doing Business 2019 Brazil What are the qualification requirements for the professional who supervises the construction University degree 1.0 on the ground? (0-2) in engineering, construction or construction management; Being a registered architect or engineer; Passing a certification exam. Page 27 Doing Business 2019 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 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to obtain an electricity connection To make the data comparable across economies, several assumptions about the (number) warehouse, the electricity connection and the monthly consumption are used. • Submitting all relevant documents and obtaining The warehouse: all necessary clearances and permits - Is owned by a local entrepreneur and is used for storage of goods. • Completing all required notifications and - Is located in the economy’s largest business city. For 11 economies the data are receiving all necessary inspections also collected for the second largest business city. • Obtaining external installation works and possibly - Is located in an area where similar warehouses are typically located and is in an purchasing material for these works area with no physical constraints. For example, the property is not near a railway. - Is a new construction and is being connected to electricity for the first time. • Concluding any necessary supply contract and obtaining final supply - Has two stories with a total surface area of approximately 1,300.6 square meters (14,000 square feet). The plot of land on which it is built is 929 square meters Time required to complete each procedure (10,000 square feet). (calendar days) The electricity connection: • Is at least 1 calendar day - Is a permanent one with a three-phase, four-wire Y connection with a subscribed • Each procedure starts on a separate day capacity of 140-kilo-volt-ampere (kVA) with a power factor of 1, when 1 kVA = 1 • Does not include time spent gathering kilowatt (kW). information - Has a length of 150 meters. The connection is to either the low- or medium-voltage distribution network and is either overhead or underground, whichever is more • Reflects the time spent in practice, with little common in the area where the warehouse is located and requires works that involve follow-up and no prior contact with officials the crossing of a 10-meter road (such as by excavation or overhead lines) but are all Cost required to complete each procedure (% of carried out on public land. There is no crossing of other owners’ private property because the warehouse has access to a road. income per capita) - Does not require work to install the internal wiring of the warehouse. This has • Official costs only, no bribes already been completed up to and including the customer’s service panel or • Value added tax excluded switchboard and the meter base. The reliability of supply and transparency of The monthly consumption: tariffs index (0-8) - It is assumed that the warehouse operates 30 days a month from 9:00 a.m. to 5:00 • Duration and frequency of power outages (0–3) p.m. (8 hours a day), with equipment utilized at 80% of capacity on average and that • Tools to monitor power outages (0–1) there are no electricity cuts (assumed for simplicity reasons) and the monthly energy consumption is 26,880 kilowatt-hours (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 • Regulatory monitoring of utilities’ performance supplier. (0–1) - Tariffs effective in January of the current year are used for calculation of the price of electricity for the warehouse. Although January has 31 days, for calculation • Financial deterrents limiting outages (0–1) purposes only 30 days are used. • 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 the ranking on the ease of getting electricity. Page 28 Doing Business 2019 Brazil Getting Electricity - São Paulo Standardized Connection Price of electricity (US cents per kWh) 13.3 Name of utility AES Eletropaulo City Covered São Paulo Indicator São Paulo Latin America OECD high Best Regulatory & Caribbean income Performance Procedures (number) 4 5.5 4.5 3 (25 Economies) Time (days) 66 65.5 77.2 18 (3 Economies) Cost (% of income per capita) 54.8 946.3 64.2 0.0 (3 Economies) Reliability of supply and transparency of tariff 6 4.3 7.5 8.0 (27 Economies) index (0-8) Figure – Getting Electricity in São Paulo and comparator economies – Ranking and Score DB 2019 Getting Electricity Score 0 100 92.01: China (Rank: 14) 85.67: Chile (Rank: 36) 84.65: Rio de Janeiro 84.20: São Paulo 71.06: Mexico (Rank: 99) 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. Page 29 Doing Business 2019 Brazil Figure – Getting Electricity in São Paulo – Procedure, Time and Cost Time (days) Cost (% of income per capita) 60 60 Cost (% of income per capita) 50 50 40 Time (days) 40 30 30 20 20 10 10 0 0 1 2 3 4 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. Figure – Getting Electricity in São Paulo and comparator economies – Measure of Quality 8 7 7 7 6 6 6 6 Index score 5 4.3 4 3 2 1 0 São Paulo Chile China Mexico Rio de Janeiro Latin America & Caribbean Page 30 Doing Business 2019 Brazil Details – Getting Electricity in São Paulo – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application to AES Electropaulo and receive service layout 30 calendar days BRL 0 Agency : AES Electropaulo The customer needs to submit, online or in person, a set of documents, including the electrical project, to AES Eletropaulo. After receiving the documents, AES Eletropaulo technicians will 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 costumer. The site visit is done on the outside of the property and the customer need not be present during the site visit. 2 Sign energy supply agreement with utility 1 calendar day BRL 16,736.54 Agency : AES Electropaulo The costumer receives an invoice with the estimated value of the work, a contract and a service order. Once the contract and the service order are signed and the invoice is paid, AES Eletropaulo will make the necessary adjustments in its network. 3 Receive external works from utility 33 calendar days BRL 0 Agency : AES Electropaulo AES Eletropaulo executes the necessary adjustments to the electricity network and informs the costumer that the work is done and that a request for the external connection must be made to AES Eletropaulo 4 Receive meter installation and electricity flow from utility 2 calendar days BRL 83.19 Agency : AES Electropaulo The customer requests the external connection to AES Eletropaulo and, after no more than two days, the electricity is available at the switchboard/meter. Takes place simultaneously with previous procedure. Page 31 Doing Business 2019 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) 11.7 System average interruption frequency index (SAIFI) 6.2 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 Yes supply? 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 Yes exceed a certain cap? Communication of tariffs and tariff changes (0-1) 1 Are effective tariffs available online? Yes Link to the website, if available online https://www.aeseletr opaulo.com.br/para- seu-negocio/prazos- e- tarifas/conteudo/tarif a-de-energia-eletrica 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 32 Doing Business 2019 Brazil Getting Electricity - Rio de Janeiro Standardized Connection Price of electricity (US cents per kWh) 21.1 Name of utility Light City Covered Rio de Janeiro Indicator Rio de Latin America OECD high Best Regulatory Janeiro & Caribbean income Performance Procedures (number) 4 5.5 4.5 3 (25 Economies) Time (days) 62 65.5 77.2 18 (3 Economies) Cost (% of income per capita) 48.9 946.3 64.2 0.0 (3 Economies) Reliability of supply and transparency of tariff 6 4.3 7.5 8.0 (27 Economies) index (0-8) Figure – Getting Electricity in Rio de Janeiro and comparator economies – Ranking and Score DB 2019 Getting Electricity Score 0 100 92.01: China (Rank: 14) 85.67: Chile (Rank: 36) 84.65: Rio de Janeiro 84.20: São Paulo 71.06: Mexico (Rank: 99) 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. Page 33 Doing Business 2019 Brazil Figure – Getting Electricity in Rio de Janeiro – Procedure, Time and Cost Time (days) Cost (% of income per capita) 60 60 Cost (% of income per capita) 50 50 40 40 Time (days) 30 30 20 20 10 10 0 0 1 2 3 4 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. Figure – Getting Electricity in Rio de Janeiro and comparator economies – Measure of Quality 8 7 7 7 6 6 6 6 Index score 5 4.3 4 3 2 1 0 Rio de Janeiro Chile China Mexico São Paulo Latin America & Caribbean Page 34 Doing Business 2019 Brazil Details – Getting Electricity in Rio de Janeiro – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Submit application to Light and await estimate 30 calendar days BRL 0 Agency : Light The customer submits an application along with the following documentation: 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; Technical Responsibility - ART duly repaid (1 copies); Power of Attorney, on letterhead and notarization as attached model (1 copy) ; Charter Service Request (2 copies); Letter of no parallelism with the network of LIGHT (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; Power of Attorney with notarized, if applicable ; 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. 2 Receive internal wiring inspection by utility 3 calendar days BRL 0 Agency : Light This inspection happens within 3 business days after the request is made and is free of charge. 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. This avoids further delays. 3 Receive external works from utility 27 calendar days BRL 15,000 Agency : Light Once the internal inspection is completed, Light undertakes the necessary works to connect the warehouse to the network. 4 Receive meter installation and electricity flow from utility 2 calendar days BRL 0 Agency : Light The client or a representative has to be present for the meter to be installed. The client starts to receive energy within 1 day. Takes place simultaneously with previous procedure. Page 35 Doing Business 2019 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) 11.7 System average interruption frequency index (SAIFI) 6.5 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 Yes supply? 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 Yes exceed a certain cap? 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/para- 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 36 Doing Business 2019 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 2018. See the methodology for more information. What the indicators measure Case study assumptions Procedures to legally transfer title on To make the data comparable across economies, several assumptions about the immovable property (number) parties to the transaction, the property and the procedures are used. • Preregistration procedures (for example, The parties (buyer and seller): checking for liens, notarizing sales agreement, paying property transfer taxes) - Are limited liability companies (or the legal equivalent). - Are located in the periurban area of the economy’s largest business city. For 11 • Registration procedures in the economy's largest economies the data are also collected for the second largest business city. business city. - Are 100% domestically and privately owned. • Postregistration procedures (for example, filling - Have 50 employees each, all of whom are nationals. title with municipality) - Perform general commercial activities. Time required to complete each procedure The property (fully owned by the seller): (calendar days) - Has a value of 50 times income per capita, which equals the sale price. • Does not include time spent gathering - Is fully owned by the seller. information - Has no mortgages attached and has been under the same ownership for the past • Each procedure starts on a separate day - 10 years. though procedures that can be fully completed - Is registered in the land registry or cadastre, or both, and is free of title disputes. online are an exception to this rule - Is located in a periurban commercial zone, and no rezoning is required. - Consists of land and a building. The land area is 557.4 square meters (6,000 • Procedure is considered completed once final square feet). A two-story warehouse of 929 square meters (10,000 square feet) is document is received located on the land. The warehouse is 10 years old, is in good condition, has no • No prior contact with officials heating system and complies with all safety standards, building codes and legal requirements. The property, consisting of land and building, will be transferred in its Cost required to complete each procedure (% of entirety. property value) - Will not be subject to renovations or additional construction following the purchase. - Has no trees, natural water sources, natural reserves or historical monuments of • Official costs only (such as administrative fees, duties and taxes). any kind. - Will not be used for special purposes, and no special permits, such as for • Value Added Tax, Capital Gains Tax and illicit residential use, industrial plants, waste storage or certain types of agricultural payments are excluded activities, are required. - Has no occupants, and no other party holds a legal interest in it. Quality of land administration index (0-30) • 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 37 Doing Business 2019 Brazil Registering Property - São Paulo Indicator São Paulo Latin America OECD high Best Regulatory & Caribbean income Performance Procedures (number) 14 7.2 4.7 1 (4 Economies) Time (days) 25 63.3 20.1 1 (New Zealand) Cost (% of property value) 3.6 5.8 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 14.0 11.9 23.0 None in 2017/18 Figure – Registering Property in São Paulo and comparator economies – Ranking and Score DB 2019 Registering Property Score 0 100 80.80: China (Rank: 27) 70.90: Chile (Rank: 61) 60.42: Mexico (Rank: 103) 52.84: São Paulo 50.53: 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. Figure – Registering Property in São Paulo – Procedure, Time and Cost Time (days) Cost (% of property value) 25 3.5 3 Cost (% of property value) 20 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 38 Doing Business 2019 Brazil Figure – Registering Property in São Paulo and comparator economies – Measure of Quality 30 25 23.7 Index score 20 16.3 15 14.0 14.0 13.5 11.9 10 5 0 São Paulo Chile China Mexico Rio de Janeiro Latin America & 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 2 days BRL 129.2; (BRL de Protestos) from the Distributor of Disputes Registry 12.92 each (the total Agency : Disputes Registry (Cartórios de protesto) is BRL 129.20)) 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), 1 day BRL 58.2; (BRL 19.4 a Fiscal Executive Certificate (Certidão de Executivos Fiscais) and a (x 3 certificates) + Bankruptcy Certificate (Certidão de Falencias e Concordatas) from the City BRL 5.6 for every Court Office additional sheet Agency : Distributor of the State Courts (Tribunal de Justiça de São Paulo) (Physical These three certificates guarantee that the seller does not owe any payment as a application)) 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 retrieve online since August 2015 at 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 Less than one day, no charge the Regional 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 Less than one day, no charge de Débitos 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 Vintenária) Less than one day, BRL 51.21 Agency : Real Estate Property Registry (Cartório de Registro de Imóveis) online 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 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. Page 39 Doing Business 2019 Brazil 6 Request a Land-Tax Certificate and a Cadastral Certificate (Certidão de Less than one day, no cost if obtained Dados Cadastrais do Imovel) from City Hall online 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. 7 Acquire a Clearance Certificate from Tax Agency and a Federal Tax Less than one day, no charge Clearance Certificate (Certidão de Débitos Relativos a Créditos Tributários online Federais e à Dívida Ativa da União) 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 Less than one day, no charge do FGTS) at the 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 Less than one day, no charge Receita Federal - (Certidão de Distribuição de Ações e Execuções Cíveis, online Fiscais, Criminais e dos Juizados 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. Notary obtains company information Less than one day, no charge 10 Agency : Company Registry (Junta Comercial de Estado de São Paulo) 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 40 Doing Business 2019 Brazil 11 Pay transfer tax (ITB I) and other fees at a commercial Bank 1 day BRL 46,021.97; (3% Agency : Municipal Prefecture of Sao Paulo (Prefeitura Municipal de São Paulo) of the property value The buyer has to pay the transfer tax before the parties can sign the transfer registered with the deed. The majority of notaries prefer to receive the tax payment themselves and cadastre of the then take care of transferring it to the Municipality because they are responsible Prefecture for ITBI) for checking that the tax payment is correct. Notaries also have to file to the tax authorities a declaration of all the transactions that they were part of, given that they are jointly liable. 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 3 days BRL 4,939.49; (BRL Compra) by a Public Notary (Tabelião de Notas) 4,939.49 (according Agency : Public Notary (Tabelião de Notas do Estado de São Paulo) to scale on The notary will review all the documents obtained in the previous Procedures and http://www.cnbsp.org. proceed to notarize the sale deed. Notary fees are incurred for the notarization of br/__Documentos/Upl the sale and purchase agreement. oad_Conteudo/arquiv os/Tabela_Custas/cn b_tabela_versao_imp _2018_a4_2_capital_ iss_sobre_iss_tabmp. pdf)) 13 Register the escritura (transfer deed) at the appropriate Real Estate 15 days BRL 3,596.16; (BRL Registry with jurisdiction over the property to finalize registration and 3,596.16 (according name change to the schedule in Agency : Real Estate Registry (Cartório de Registro de Imóveis) https://www.registrad There are 18 Real Estate Registries in São Paulo. The registration of the deed at ores.org.br/Servicos/f the corresponding Real Estate Registry is required for the transfer of ownership rmTabelaCustas.aspx of the property. It can be arranged directly by the parties or by the notary if the notary offers this supplementary service. By law, the Real Estate Registry has 30 )) days to analyze the documents and register the transfer deed. Usually, the registry will come back with some issues that need to be fixed prior to registration. Update the land taxation records (IPTU – Imposto Predial e Territorial 5 days no charge 14 Urbano) to the new 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 41 Doing Business 2019 Brazil Details – Registering Property in São Paulo – Measure of Quality Answer Score Reliability of infrastructure index (0-8) 5.0 What is the institution in charge of immovable property registration? Cartórios de Registro de Imóveis de São Paulo In what format are the majority of title or deed records kept in the largest business city—in a Computer/Scann 1.0 paper format or in a computerized format (scanned or fully digital)? ed Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions Yes 1.0 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 the majority of maps of land plots kept in the largest business city—in a Computer/Fully 2.0 paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for recording boundaries, checking plans and providing Yes 1.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral Separate 0.0 or mapping agency kept in a single database, in different but linked databases or in separate databases databases? Do the immovable property registration agency and cadastral or mapping agency use the No 0.0 same identification number for properties? Transparency of information index (0–6) 3.5 Who is able to obtain information on land ownership at the agency in charge of immovable Anyone who 1.0 property registration in the largest business city? pays the official fee Is the list of documents that are required to complete any type of property transaction made Yes, online 0.5 publicly available–and if so, how? Link for online access: http://www.cnbsp. org.br/index.php? pG=X19wYWdpb mFz&idPagina=6 009 Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable 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=X190YWJlb GFzX2Vtb2x1bW VudG9z For Land Registry fees: https://www.regist radores.org.br/Se rvicos/frmTabela Custas.aspx Does the agency in charge of immovable property registration commit to delivering a legally Yes, online 0.5 binding document that proves property ownership within a specific time frame–and if so, how does it communicate the service standard? Page 42 Doing Business 2019 Brazil Link for online access: http://www.planalt o.gov.br/CCIVIL_ 03/leis/L6015com pilada.htm (capitulo III law 6015) https://api.tjsp.jus .br/Handlers/Han dler/FileFetch.as hx? codigo=101773 Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the agency in charge of immovable property registration? Contact information: Are there publicly available official statistics tracking the number of transactions at the No 0.0 immovable property registration agency? Number of property transfers in the largest business city in 2017: Who is able to consult maps of land plots in the largest business city? Freely accessible 0.5 by anyone Is the applicable fee schedule for accessing maps of land plots made publicly available— Yes, online 0.5 and if so, how? Link for online access: Free of charge (http://www.prefei tura.sp.gov.br/cid ade/secretarias/fi nancas/servicos/ certidoes/index.p hp?p=2404) Does the cadastral or mapping agency commit to delivering an updated map within a No 0.0 specific time frame—and if so, how does it communicate the service standard? Link for online access: http://www.prefeit ura.sp.gov.br/cida de/secretarias/fin ancas/servicos/c ertidoes/index.ph p?p=2404 Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 2.0 Are all privately held land plots in the economy formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the largest business city formally registered at the No 0.0 immovable property registry? Are all privately held land plots in the economy mapped? No 0.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Land dispute resolution index (0–8) 3.5 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private guarantee? No 0.0 Is there a specific 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? Does the legal system require a control of legality of the documents necessary for a property Yes 0.5 transaction (e.g., checking the compliance of contracts with requirements of the law)? If yes, who is responsible for checking the legality of the documents? Registrar; Notary; Page 43 Doing Business 2019 Brazil Does the legal system require verification of the identity of the parties to a property Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Is there a national database to verify the accuracy of identity documents? No 0.0 For a standard land dispute between two local businesses over tenure rights of a property Tribunal de worth 50 times gross national income (GNI) per capita and located in the largest business justica do estado city, what court would be in charge of the case in the first instance? de Sao Paulo How long does it take on average to obtain a decision from the first-instance court for such a Between 2 and 3 1.0 case (without appeal)? years Are there any statistics on the number of land disputes in the first instance? No 0.0 Number of land disputes in the largest business city in 2017: 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 44 Doing Business 2019 Brazil Registering Property - Rio de Janeiro Indicator Rio de Latin America OECD high Best Regulatory Janeiro & Caribbean income Performance Procedures (number) 13 7.2 4.7 1 (4 Economies) Time (days) 41.5 63.3 20.1 1 (New Zealand) Cost (% of property value) 3.5 5.8 4.2 0.0 (Saudi Arabia) Quality of the land administration index (0-30) 13.5 11.9 23.0 None in 2017/18 Figure – Registering Property in Rio de Janeiro and comparator economies – Ranking and Score DB 2019 Registering Property Score 0 100 80.80: China (Rank: 27) 70.90: Chile (Rank: 61) 60.42: Mexico (Rank: 103) 52.84: São Paulo 50.53: 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. Figure – Registering Property in Rio de Janeiro – Procedure, Time and Cost Time (days) Cost (% of property value) 3.5 40 35 3 Cost (% of property value) 30 2.5 Time (days) 25 2 20 1.5 15 1 10 0.5 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 45 Doing Business 2019 Brazil Figure – Registering Property in Rio de Janeiro and comparator economies – Measure of Quality 30 25 23.7 Index score 20 16.3 15 13.5 14.0 14.0 11.9 10 5 0 Rio de Janeiro Chile China Mexico São Paulo Latin America & Caribbean Details – Registering Property in Rio de Janeiro – Procedure, Time and Cost No. Procedures Time to Complete Associated Costs 1 Obtain a 20-year certificate (Certidão Vintenária) 7 days BRL 99.77 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. 2 Obtain the certificates of Certificates of Registries and Disputes (Certidão 4 days BRL 1,070.31; ((i) dos Cartórios de Protestos), Acquire a Civil Distributor's Certificate BRL 110.01 for each (Certidão dos Distribuidores Cívies), a Fiscal Executive Certificate Civil Distributor's (Certidão de Executivos Fiscais) and a Bankruptcy Certificate (Certidão de Certificate issued by Falencias e Concordatas) from the City Court Office the 1st, 2nd and 4th Agency : Rio Rapido Distributor's and BRL These certificates guarantee that all civil, fiscal, and commercial legal 105.84 for each settlements have been finalized and no pending sentences or legal proceedings are linked to the seller. In Rio de Janeiro, it is possible to request these certificate issued by certificates online via a centralized certification office named "Rio Rapido". the 3rd Distributor; Although they can be requested online, they need to be picked up personally. (ii) BRL 113.90 for the Fiscal Executive Additionally, since December 2017 it is possible to request and receive these Certificate; certificates online through E-Cartorios RJ (https://e- (iii) BRL 110.01 for cartoriorj.com.br/Home/View/Default.aspx#/kitcertidoes. The majority of each Bankruptcy practitioners are still using Rio Rapido as of May 1, 2018. Distributor's Certificate issued by the 1st, 2nd and 4th Distributor's and BRL 105.84 for each certificate issued by the 3rd Distributor; (iv) BRL 84.67 for the Certificate of Registries and Disputes) Page 46 Doing Business 2019 Brazil 3 Obtain a Labor Justice Certificate (Certidão da Justiça do Trabalho) from 3 days BRL 5.53 the Regional 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 Less than one day, no charge de Débitos 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 Request a Land-Tax Certificate and a Cadastral Certificate (Certidão de Less than one day, no charge Dados Cadastrais 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 Less than one day, no charge Clearance Certificate 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. 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. Page 47 Doing Business 2019 Brazil 7 Acquire a Worker’s Fund Certificate (Certidão de Regularidade de Situação Less than one day, no charge do FGTS) at the 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 Less than one day, no charge Receita Federal - (Certidão de Distribuição de Ações e Execuções Cíveis, online Fiscais, Criminais e dos Juizados 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 119 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. 10 Pay transfer tax (ITB I) at the Bank 1 day BRL 46,021.97; (3% Agency : Commercial bank of the property value) The buyer has to pay the transfer tax before the parties can sign the transfer deed. The majority of 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 also have to file to the tax authorities a declaration of all the transactions that they were part of, given that they are jointly liable. 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. Page 48 Doing Business 2019 Brazil 11 Drafting of Public Deed of Purchase and Sale (Escritura Pública de Venda e 3 days BRL 3,380.24; (BRL Compra) by a Public Notary (Tabelião de Notas) 3,235.49, based on Agency : Notary's office (Tabelião de Notas) the following fee The notary will review all the documents obtained in the previous Procedures and schedule: proceed to notarize the sale deed. Notary fees are incurred for the notarization of Public deed with a the sale and purchase agreement. declared amount up An electronic platform to issue electronic public deeds through a Notary has been to R$ 15,000.00 costs tested in several Notary offices of Rio de Janeiro, however it has not been BRL 191.38. From R$ implemented widely as of May 1, 2018. 15,000.01 to R$ 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 1,643.24. 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 Less than one day, no charge Urbano) to the new 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 49 Doing Business 2019 Brazil 13 Register the escritura (transfer deed) at the appropriate Real Estate 30 days BRL 3,384.97; (As of Registry with jurisdiction over the property to finalize registration and Jan, 2017 the fee for name change registration is BRL Agency : Real Estate Registry (Cartório de Registro de Imóveis) 3,240.22 based on There are 12 Real Estate Registries in Rio de Janeiro. The registration of the the following fee deed at the competent Real Estate Registry is required for the transfer of schedule: ownership of the property. It can be arranged directly by the parties or by the Registration of notary if the notary offers this supplementary service. By law, the Real Estate Registry has 30 days to analyze the documents and register the transfer deed. economic content to Usually, the registry will come back with some issues that need to be fixed prior R$ 15,000.00 costs to registration. BRL 191.38. From R$ 15,000.01 to R$ Since December 2017, the request to register the property transfer can be done 30,000.00 - BRL online at https://www.registradores.org.br/eProtocolo/DefaultAC.aspx 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 50 Doing Business 2019 Brazil Details – Registering Property in Rio de Janeiro – Measure of Quality Answer Score Reliability of infrastructure index (0-8) 4.0 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 the majority of title or deed records kept in the largest business city—in a Computer/Scann 1.0 paper format or in a computerized format (scanned or fully digital)? ed Is there an electronic database for checking for encumbrances (liens, mortgages, restrictions No 0.0 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 the majority of maps of land plots kept in the largest business city—in a Computer/Fully 2.0 paper format or in a computerized format (scanned or fully digital)? digital Is there an electronic database for recording boundaries, checking plans and providing Yes 1.0 cadastral information (geographic information system)? Is the information recorded by the immovable property registration agency and the cadastral Separate 0.0 or mapping agency kept in a single database, in different but linked databases or in separate databases databases? Do the immovable property registration agency and cadastral or mapping agency use the No 0.0 same identification number for properties? Transparency of information index (0–6) 4.0 Who is able to obtain information on land ownership at the agency in charge of immovable Anyone who 1.0 property registration in the largest business city? pays the official fee Is the list of documents that are required to complete any type of property transaction made Yes, online 0.5 publicly available–and if so, how? Link for online access: http://www.1sri- rj.com.br/Compra evendadoacao.p df Is the applicable fee schedule for any property transaction at the agency in charge of Yes, online 0.5 immovable property registration in the largest business city made publicly available–and if so, how? Link for online access: http://cgj.tjrj.jus.br /documents/1017 893/1415195/port aria-custas- judiciais- extrajudiciais.pdf Does the agency in charge of immovable property registration commit to delivering a legally Yes, online 0.5 binding document that proves property ownership within a specific time frame–and if so, how does it communicate the service standard? Link for online access: http://www.planalt o.gov.br/CCIVIL_ 03/leis/L6015com pilada.htm Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the agency in charge of immovable property registration? Contact information: Page 51 Doing Business 2019 Brazil Are there publicly available official statistics tracking the number of transactions at the No 0.0 immovable property registration agency? Number of property transfers in the largest business city in 2017: Who is able to consult maps of land plots in the largest business city? Freely accessible 0.5 by anyone Is the applicable fee schedule for accessing maps of land plots made publicly available— No cost 0.5 and if so, how? Link for online access: http://www2.rio.rj. gov.br/smu/acerv oimagens/princip al.asp http://www.rio.rj.g ov.br/web/smf/exi beconteudo? id=142219 http://www.rio.rj.g ov.br/web/ipp/siur b Does the cadastral or mapping agency commit to delivering an updated map within a Yes, online 0.5 specific time frame—and if so, how does it communicate the service standard? Link for online access: http://www.rio.rj.g ov.br/web/smf/exi beconteudo? id=142219 http://www2.rio.rj. gov.br/smu/acerv oimagens/ principal.asp Is there a specific and separate mechanism for filing complaints about a problem that No 0.0 occurred at the cadastral or mapping agency? Contact information: Geographic coverage index (0–8) 2.0 Are all privately held land plots in the economy formally registered at the immovable property No 0.0 registry? Are all privately held land plots in the largest business city formally registered at the No 0.0 immovable property registry? Are all privately held land plots in the economy mapped? No 0.0 Are all privately held land plots in the largest business city mapped? Yes 2.0 Land dispute resolution index (0–8) 3.5 Does the law require that all property sale transactions be registered at the immovable Yes 1.5 property registry to make them opposable to third parties? Is the system of immovable property registration subject to a state or private guarantee? No 0.0 Is there a specific 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? Does the legal system require a control of legality of the documents necessary for a property Yes 0.5 transaction (e.g., 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 Yes 0.5 transaction? If yes, who is responsible for verifying the identity of the parties? Registrar; Notary; Is there a national database to verify the accuracy of identity documents? No 0.0 For a standard land dispute between two local businesses over tenure rights of a property Tribunal de worth 50 times gross national income (GNI) per capita and located in the largest business Justiça do city, what court would be in charge of the case in the first instance? Estado do Rio de Janeiro Page 52 Doing Business 2019 Brazil How long does it take on average to obtain a decision from the first-instance court for such a Between 2 and 3 1.0 case (without appeal)? years Are there any statistics on the number of land disputes in the first instance? No 0.0 Number of land disputes in the largest business city in 2017: 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 53 Doing Business 2019 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 2018. 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 • Rights of borrowers and lenders through indicators. The depth of credit information index measures rules and practices collateral laws (0-10) affecting the coverage, scope and accessibility of credit information available • Protection of secured creditors’ rights through through a credit registry or a credit bureau. The strength of legal rights index bankruptcy laws (0-2) 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 Depth of credit information index (0–8) determined whether a unitary secured transactions system exists. Then two case • Scope and accessibility of credit information scenarios, case A and case B, are used to determine how a nonpossessory security distributed by credit bureaus and credit registries interest is created, publicized and enforced according to the law. Special emphasis (0-8) 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 In some economies the legal framework for secured transactions will allow only case credit bureau as a percentage of adult population A or case B (not both) to apply. Both cases examine the same set of legal provisions Credit registry coverage (% of adults) relating to the use of movable collateral. • Number of individuals and firms listed in credit Several assumptions about the secured borrower (ABC) and lender (BizBank) registry as a percentage of adult population are used: - 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 54 Doing Business 2019 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 5.4 6.1 12 (5 Economies) Depth of credit information index (0-8) 8 4.9 6.7 8 (42 Economies) Credit registry coverage (% of adults) 78.7 14.6 21.8 100.0 (4 Economies) Credit bureau coverage (% of adults) 80.5 44.5 65.3 100.0 (25 Economies) Figure – Getting Credit in São Paulo and comparator economies – Ranking and Score DB 2019 Getting Credit Score 0 100 90.00: Mexico (Rank: 8) 60.00: China (Rank: 73) 55.00: Chile (Rank: 85) 50.00: Rio de Janeiro 50.00: 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. Figure – Legal Rights in São Paulo and comparator economies 10 8 7 6 5.4 Index Score 5 4 4 4 3 2 2 2 1 0 São Paulo Chile China Mexico Rio de Janeiro Latin America & Caribbean Page 55 Doing Business 2019 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 No enforcement of functional equivalents 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 No requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a No specific description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and No replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be No secured between parties; 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 No asset type, with an 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 No online by any interested third party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency No procedure? 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 Yes procedure? Does the law 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 Yes the secured creditor to sell 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 8 8 8 8 8 7 7 6 Index Score 4.9 5 4 3 2 1 0 São Paulo Chile China Mexico Rio de Janeiro Latin America & Caribbean Page 56 Doing Business 2019 Brazil Details – Credit Information in São Paulo Depth of credit information index (0-8) Credit Credit Score bureau registry 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? Total Score ("yes" to either public bureau or private registry) 8 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 107,324,744 109,542,511 Number of firms 10,175,900 5,299,132 Total 117,500,644 114,841,643 Percentage of adult population 80.5 78.7 Page 57 Doing Business 2019 Brazil Getting Credit - Rio de Janeiro Indicator Rio de Latin America OECD high Best Regulatory Janeiro & Caribbean income Performance Strength of legal rights index (0-12) 2 5.4 6.1 12 (5 Economies) Depth of credit information index (0-8) 8 4.9 6.7 8 (42 Economies) Credit registry coverage (% of adults) 78.7 14.6 21.8 100.0 (4 Economies) Credit bureau coverage (% of adults) 80.5 44.5 65.3 100.0 (25 Economies) Figure – Getting Credit in Rio de Janeiro and comparator economies – Ranking and Score DB 2019 Getting Credit Score 0 100 90.00: Mexico (Rank: 8) 60.00: China (Rank: 73) 55.00: Chile (Rank: 85) 50.00: Rio de Janeiro 50.00: 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. Figure – Legal Rights in Rio de Janeiro and comparator economies 10 8 7 6 5.4 Index Score 5 4 4 4 3 2 2 2 1 0 Rio de Janeiro Chile China Mexico São Paulo Latin America & Caribbean Page 58 Doing Business 2019 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 No enforcement of functional equivalents 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 No requiring a specific description of collateral? Does the law allow businesses to grant a non possessory security right in substantially all of its assets, without requiring a No specific description of collateral? May a security right extend to future or after-acquired assets, and does it extend automatically to the products, proceeds and No replacements of the original assets? Is a general description of debts and obligations permitted in collateral agreements; can all types of debts and obligations be No secured between parties; 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 No asset type, with an 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 No online by any interested third party? Are secured creditors paid first (i.e. before tax claims and employee claims) when a debtor defaults outside an insolvency No procedure? 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 Yes procedure? Does the law 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 Yes the secured creditor to sell 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 8 8 8 8 8 7 7 6 Index Score 4.9 5 4 3 2 1 0 Rio de Janeiro Chile China Mexico São Paulo Latin America & Caribbean Page 59 Doing Business 2019 Brazil Details – Credit Information in Rio de Janeiro Depth of credit information index (0-8) Credit Credit Score bureau registry 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? Total Score ("yes" to either public bureau or private registry) 8 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 107,324,744 109,542,511 Number of firms 10,175,900 5,299,132 Total 117,500,644 114,841,643 Percentage of adult population 80.5 78.7 Page 60 Doing Business 2019 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 2018. See the methodology for more information. What the indicators measure Case study assumptions • Extent of disclosure index (0–10): Review and To make the data comparable across economies, a case study uses several approval requirements for related-party assumptions about the business and the transaction. transactions; Disclosure requirements for related- party transactions The business (Buyer): • Extent of director liability index (0–10): Ability - Is a publicly traded corporation listed on the economy’s most important stock of minority shareholders to sue and hold exchange. If there are fewer than ten listed companies or if there is no stock interested directors liable for prejudicial related- exchange in the economy, it is assumed that Buyer is a large private company with party transactions; Available legal remedies multiple shareholders. (damages, disgorgement of profits, fines, - Has a board of directors and a chief executive officer (CEO) who may legally act on imprisonment, rescission of the transaction) behalf of Buyer where permitted, even if this is not specifically required by law. • Ease of shareholder suits index (0–10): - Has a supervisory board in economies with a two-tier board system on which Mr. Access to internal corporate documents; James appointed 60% of the shareholder-elected members. Evidence obtainable during trial and allocation of - Has not adopted bylaws or articles of association that go beyond the minimum legal expenses requirements. Does not follow codes, principles, recommendations or guidelines that are not mandatory. • Extent of conflict of interest regulation index - Is a manufacturing company with its own distribution network. (0–10): Simple average of the extent of disclosure, extent of director liability and ease of The transaction involves the following details: shareholder indices - Mr. James owns 60% of Buyer, sits on Buyer’s board of directors and elected two • Extent of shareholder rights index (0-10): directors to Buyer’s five-member board. Shareholders’ rights and role in major corporate - Mr. James also owns 90% of Seller, a company that operates a chain of retail decisions hardware stores. Seller recently closed a large number of its stores. • Extent of ownership and control index (0-10): - Mr. James proposes that Buyer purchase Seller’s unused fleet of trucks to expand Governance safeguards protecting shareholders Buyer’s distribution of its food products, a proposal to which Buyer agrees. The price from undue board control and entrenchment is equal to 10% of Buyer’s assets and is higher than the market value. - The proposed transaction is part of the company’s principal activity and is not • Extent of corporate transparency index (0-10): outside the authority of the company. Corporate transparency on ownership stakes, - Buyer enters into the transaction. All required approvals are obtained, and all compensation, audits and financial prospects required disclosures made—that is, the transaction was not entered into fraudulently. • Extent of shareholder governance index (0– - The transaction causes damages to Buyer. Shareholders sue Mr. James and the 10): Simple average of the extent of shareholders executives and directors that approved the transaction. rights, extent of ownership and control and extent of corporate transparency indices • Strength of minority investor protection index (0–10): Simple average of the extent of conflict of interest regulation and extent of shareholder governance indices Page 61 Doing Business 2019 Brazil Protecting Minority Investors - 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 (Cambodia) Ease of shareholder suits index (0-10) 4.0 6.7 7.3 10 (Djibouti) Extent of shareholder rights index (0-10) 7.0 5.4 6.4 10 (Kazakhstan) Extent of ownership and control index (0-10) 6.0 3.2 5.4 None in 2017/18 Extent of corporate transparency index (0-10) 9.0 3.9 7.6 10 (6 Economies) Figure – Protecting Minority Investors in São Paulo and comparator economies – Ranking and Score DB 2019 Protecting Minority Investors Score 0 100 65.00: Rio de Janeiro 65.00: São Paulo 60.00: Chile (Rank: 64) 60.00: China (Rank: 64) 58.33: Mexico (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. Figure – Protecting Minority Investors in São Paulo and comparator economies – Measure of Quality São Paulo 9 8 5 6 7 4 Chile 2 6 8 4 9 7 China 9 1 10 4 7 5 Mexico 4 5 8 6 7 5 Rio de Janeiro 9 8 5 6 7 4 OECD high income 7.4 5.5 6.5 5.2 6.3 7.4 Latin America & Caribbean 4.2 5.4 4.4 3.5 5.6 6.5 0 5 10 15 20 25 30 35 40 45 Sub-Indicator Score Extent of corporate transparency index (0-10) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-10) Extent of shareholder rights index (0-10) Ease of shareholder suits index (0-10) Page 62 Doing Business 2019 Brazil Details – Protecting Minority Investors in São Paulo – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-10) 5.7 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 2.0 all 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 Yes 1.0 transaction caused to Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0- Liable if unfair or 2.0 2) prejudicial Can shareholders hold the other directors liable for the damage the transaction caused to Liable if negligent 1.0 Buyer (0-2) Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by Yes 1.0 shareholders? (0-1) Must Mr. James repay profits made from the transaction upon a successful claim by Yes 1.0 shareholders? (0-1) 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 2.0 or prejudicial Ease of shareholder suits index (0-10) 4.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the No 0.0 transaction documents? (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 No 0.0 specific ones? (0-1) 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 (0-10) 7.3 Extent of shareholder rights index (0-10) 7.0 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 Yes 1.0 shareholders? 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 Yes 1.0 shares? Must shareholders approve the election and dismissal of the external auditor? No 0.0 Page 63 Doing Business 2019 Brazil Are changes to the rights of a class of shares only possible if the holders of the affected Yes 1.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require No 0.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a Yes 1.0 meeting of members? Assuming that Buyer is a limited company, must all or almost all members consent to add a Yes 1.0 new member? Assuming that Buyer is a limited company, must a member first offer to sell their interest to Yes 1.0 the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 6.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of No 0.0 directors? Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the end Yes 1.0 of their term? Must the board of directors include a separate audit committee exclusively comprising board Yes 1.0 members? Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Yes 1.0 Buyer? 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 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve Yes 1.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender offer to No 0.0 all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute profits within a maximum No 0.0 period set by law? Extent of corporate transparency index (0-10) 9.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and Yes 1.0 directorships in other 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 Yes 1.0 agenda? 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 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on the Yes 1.0 meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual financial statements be Yes 1.0 audited by an external auditor? Page 64 Doing Business 2019 Brazil Protecting Minority Investors - Rio de Janeiro Indicator Rio de Latin America OECD high Best Regulatory Janeiro & 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 (Cambodia) Ease of shareholder suits index (0-10) 4.0 6.7 7.3 10 (Djibouti) Extent of shareholder rights index (0-10) 7.0 5.4 6.4 10 (Kazakhstan) Extent of ownership and control index (0-10) 6.0 3.2 5.4 None in 2017/18 Extent of corporate transparency index (0-10) 9.0 3.9 7.6 10 (6 Economies) Figure – Protecting Minority Investors in Rio de Janeiro and comparator economies – Ranking and Score DB 2019 Protecting Minority Investors Score 0 100 65.00: Rio de Janeiro 65.00: São Paulo 60.00: Chile (Rank: 64) 60.00: China (Rank: 64) 58.33: Mexico (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. Figure – Protecting Minority Investors in Rio de Janeiro and comparator economies – Measure of Quality Rio de Janeiro 9 8 5 6 7 4 Chile 2 6 8 4 9 7 China 9 1 10 4 7 5 Mexico 4 5 8 6 7 5 São Paulo 9 8 5 6 7 4 OECD high income 7.4 5.5 6.5 5.2 6.3 7.4 Latin America & Caribbean 4.2 5.4 4.4 3.5 5.6 6.5 0 5 10 15 20 25 30 35 40 45 Sub-Indicator Score Extent of corporate transparency index (0-10) Extent of director liability index (0-10) Extent of disclosure index (0-10) Extent of ownership and control index (0-10) Extent of shareholder rights index (0-10) Ease of shareholder suits index (0-10) Page 65 Doing Business 2019 Brazil Details – Protecting Minority Investors in Rio de Janeiro – Measure of Quality Answer Score Extent of conflict of interest regulation index (0-10) 5.7 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 2.0 all 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 Yes 1.0 transaction caused to Buyer? (0-1) Can shareholders hold Mr. James liable for the damage the transaction caused to Buyer? (0- Liable if unfair or 2.0 2) prejudicial Can shareholders hold the other directors liable for the damage the transaction caused to Liable if negligent 1.0 Buyer (0-2) Must Mr. James pay damages for the harm caused to Buyer upon a successful claim by Yes 1.0 shareholders? (0-1) Must Mr. James repay profits made from the transaction upon a successful claim by Yes 1.0 shareholders? (0-1) 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 2.0 or prejudicial Ease of shareholder suits index (0-10) 4.0 Before suing, can shareholders representing 10% of Buyer's share capital inspect the No 0.0 transaction documents? (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 No 0.0 specific ones? (0-1) 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 (0-10) 7.3 Extent of shareholder rights index (0-10) 7.0 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 Yes 1.0 shareholders? 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 Yes 1.0 shares? Must shareholders approve the election and dismissal of the external auditor? No 0.0 Page 66 Doing Business 2019 Brazil Are changes to the rights of a class of shares only possible if the holders of the affected Yes 1.0 shares approve? Assuming that Buyer is a limited company, does the sale of 51% of its assets require No 0.0 member approval? Assuming that Buyer is a limited company, can members representing 10% call for a Yes 1.0 meeting of members? Assuming that Buyer is a limited company, must all or almost all members consent to add a Yes 1.0 new member? Assuming that Buyer is a limited company, must a member first offer to sell their interest to Yes 1.0 the existing members before they can sell to non-members? Extent of ownership and control index (0-10) 6.0 Is it forbidden to appoint the same individual as CEO and chairperson of the board of No 0.0 directors? Must the board of directors include independent and nonexecutive board members? No 0.0 Can shareholders remove members of the board of directors without cause before the end Yes 1.0 of their term? Must the board of directors include a separate audit committee exclusively comprising board Yes 1.0 members? Must a potential acquirer make a tender offer to all shareholders upon acquiring 50% of Yes 1.0 Buyer? 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 Assuming that Buyer is a limited company, must Buyer have a mechanism to resolve Yes 1.0 disagreements among members? Assuming that Buyer is a limited company, must a potential acquirer make a tender offer to No 0.0 all shareholders upon acquiring 50% of Buyer? Assuming that Buyer is a limited company, must Buyer distribute profits within a maximum No 0.0 period set by law? Extent of corporate transparency index (0-10) 9.0 Must Buyer disclose direct and indirect beneficial ownership stakes representing 5%? Yes 1.0 Must Buyer disclose information about board members’ primary employment and Yes 1.0 directorships in other 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 Yes 1.0 agenda? 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 Assuming that Buyer is a limited company, must members meet at least once a year? Yes 1.0 Assuming that Buyer is a limited company, can members representing 5% put items on the Yes 1.0 meeting agenda? Assuming that Buyer is a limited company, must Buyer's annual financial statements be Yes 1.0 audited by an external auditor? Page 67 Doing Business 2019 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 2018 covering for the Paying Taxes indicator calendar year 2017 (January 1, 2017 – December 31, 2017). See the methodology for more information. What the indicators measure Case study assumptions Tax payments for a manufacturing company in Using a case scenario, Doing Business records taxes and mandatory contributions a 2017 (number per year adjusted for electronic medium size company must pay in a year, and measures the administrative burden and joint filing and payment) of paying taxes, contributions and dealing with postfiling processes. Information is also compiled on frequency of filing and payments, time taken to comply with tax • Total number of taxes and contributions paid or laws, time taken to comply with the requirements of postfiling processes and time withheld, including consumption taxes (value waiting. added tax, sales tax or 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, 2016. Time required to comply with 3 major taxes It produces ceramic flowerpots and sells them at retail. All taxes and contributions (hours per year) recorded are paid in the second year of operation (calendar year 2017). Taxes and • Collecting information, computing tax payable mandatory contributions are measured at all levels of government. • Preparing separate tax accounting books, if The VAT refund process: required - In June 2017, TaxpayerCo. makes a large capital purchase: the value of the • Completing tax return, filing with agencies machine is 65 times 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 • Arranging payment or withholding equally expensed per month (875 times income per capita divided by 12). The machinery seller is registered for VAT and excess input VAT incurred in June will be Total tax and contribution rate (% of commercial fully recovered after four consecutive months if the VAT rate is the same for inputs, profits) sales and the machine and the tax reporting period is every month. Input VAT will • Profit or corporate income tax exceed Output VAT in June 2017. • Social contributions, labor taxes paid by The corporate income tax audit process: employer - An error in calculation of income tax liability (for example, use of incorrect tax • Property and property transfer taxes depreciation rates, or incorrectly treating an expense as tax deductible) leads to an • Dividend, capital gains, financial transactions incorrect income tax return and a corporate income tax underpayment. TaxpayerCo. taxes discovered the error and voluntarily notified the tax authority. The value of the underpaid income tax liability is 5% of the corporate income tax liability • Waste collection, vehicle, road and other taxes due. TaxpayerCo. submits corrected information after the deadline for submitting the annual tax return, but within the tax assessment period. Postfiling Index • Time to comply with a VAT refund (hours) • Time to obtain a VAT refund (weeks) • Time to comply with a corporate income tax correction (hours) • Time to complete a corporate income tax correction (weeks) Page 68 Doing Business 2019 Brazil Paying Taxes - São Paulo Indicator São Paulo Latin America OECD high Best Regulatory & Caribbean income Performance Payments (number per year) 10 27.1 11.2 3 (Hong Kong SAR, China) Time (hours per year) 1958 330.0 159.4 49 (Singapore) Total tax and contribution rate (% of profit) 64.7 46.7 39.8 26.1% (32 Economies) Postfiling index (0-100) 7.80 47.04 84.41 None in 2017/18 Figure – Paying Taxes in São Paulo and comparator economies – Ranking and Score DB 2019 Paying Taxes Score 0 100 75.28: Chile (Rank: 76) 67.53: China (Rank: 114) 66.65: Mexico (Rank: 116) 34.41: São Paulo 34.38: Rio de Janeiro 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. Figure – Paying Taxes in São Paulo and comparator economies – Measure of Quality 100 80 Index score 60 57.03 50.00 47.04 40.51 40 20 7.80 7.80 0 São Paulo Chile China Mexico Rio de Janeiro Latin America & Caribbean Page 69 Doing Business 2019 Brazil Details – Paying Taxes in São Paulo Tax or Payments Notes on Time Statutory Tax base Total tax Notes on mandatory (number) Payments (hours) tax rate and TTCR contribution contribution rate (% of profit) Employer 1.0 online 335.0 20% gross salaries 22.56 paid - Social security contributions (INSS) Corporate 1.0 online 462.0 15%+10% taxable profit 16.62 income tax (surcharge (IRPJ) applies on annual taxable income exceeding R$ 240,000) Employer 1.0 online 8.8% net salaries 8.84 paid - Payroll tax Employer 0.0 online and 8% net salaries 8.04 paid - jointly Severance contribution (FGTS) Social 1.0 online 9% taxable profit 5.98 contribution (CSLL) Property tax 1.0 1,9%- R$ Market value 2.47 4500,00 of property, with additions and discounts defined by bands of market value (for São Paulo). Tax on 0.0 withheld 20% interest 0.51 not included interest income Vehicle tax 1.0 1.5% market value 0.13 of vehicle Establishment 1.0 fee schedule type of 0.07 inspection fee activity (TFE) ICMS (similar 1.0 online 1161.0 18% value added 0.00 not included to 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 0.0 online and 11% gross salaries 0.00 withheld paid - Social jointly security contributions (INSS) Page 70 Doing Business 2019 Brazil Totals 10 1958 64.7 Page 71 Doing Business 2019 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 72 Doing Business 2019 Brazil Details – Paying Taxes in São Paulo – Measure of Quality Answer Score Postfiling index (0-100) 7.80 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 0 per case study scenario Time to obtain a VAT refund (weeks) No VAT refund 0 per 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 31.19 Time to complete a corporate income tax correction (weeks) 86.6 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 73 Doing Business 2019 Brazil Paying Taxes - Rio de Janeiro Indicator Rio de Latin America OECD high Best Regulatory Janeiro & Caribbean income Performance Payments (number per year) 9 27.1 11.2 3 (Hong Kong SAR, China) Time (hours per year) 1958 330.0 159.4 49 (Singapore) Total tax and contribution rate (% of profit) 65.7 46.7 39.8 26.1% (32 Economies) Postfiling index (0-100) 7.80 47.04 84.41 None in 2017/18 Figure – Paying Taxes in Rio de Janeiro and comparator economies – Ranking and Score DB 2019 Paying Taxes Score 0 100 75.28: Chile (Rank: 76) 67.53: China (Rank: 114) 66.65: Mexico (Rank: 116) 34.41: São Paulo 34.38: Rio de Janeiro 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. Figure – Paying Taxes in Rio de Janeiro and comparator economies – Measure of Quality 100 80 Index score 60 57.03 50.00 47.04 40.51 40 20 7.80 7.80 0 Rio de Janeiro Chile China Mexico São Paulo Latin America & Caribbean Page 74 Doing Business 2019 Brazil Details – Paying Taxes in Rio de Janeiro Tax or Payments Notes on Time Statutory Tax base Total tax Notes on mandatory (number) Payments (hours) tax rate and TTCR contribution contribution rate (% of profit) Employer 1.0 online 335.0 20% gross salaries 22.56 paid - Social security contributions (INSS) Corporate 1.0 online 462.0 15%+10% taxable profit 16.22 income tax (surcharge (IRPJ) applies on annual taxable income exceeding R$ 240,000) Employer 1.0 online 8.8% net salaries 8.84 paid - Payroll tax Employer 0.0 online and 8% net salaries 8.04 paid - jointly Severance contribution (FGTS) Social 1.0 online 9% taxable profit 5.84 contribution (CSLL) Property tax 1.0 2.8% market value 4.15 of property Tax on 0.0 withheld 20% interest 0.51 not included interest income Vehicle tax 1.0 1% market value 0.08 of vehicle Employee 0.0 online and 11% gross salaries 0.00 withheld paid - Social jointly security contributions (INSS) ICMS (similar 1.0 online 1161.0 20% value added 0.00 not included to 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 1958 65.7 Page 75 Doing Business 2019 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 76 Doing Business 2019 Brazil Details – Paying Taxes in Rio de Janeiro – Measure of Quality Answer Score Postfiling index (0-100) 7.80 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 0 per case study scenario Time to obtain a VAT refund (weeks) No VAT refund 0 per 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 31.19 Time to complete a corporate income tax correction (weeks) 86.6 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 77 Doing Business 2019 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 2018. 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 Time: Time is measured in hours, and 1 day is 24 hours (for example, 22 days are or border handling in origin economy recorded as 22×24=528 hours). If customs clearance takes 7.5 hours, the data are • Obtaining, preparing and submitting documents recorded as is. Alternatively, suppose documents are submitted to a customs agency required by destination economy and any transit at 8:00a.m., are processed overnight and can be picked up at 8:00a.m. the next day. economies 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 Cost: Insurance cost and informal payments for which no receipt is issued are information excluded from the costs recorded. Costs are reported in U.S. dollars. Contributors Border compliance are asked to convert local currency into U.S. dollars based on the exchange rate prevailing on the day they answer the questionnaire. Contributors are private sector • Customs clearance and inspections 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: - For all 190 economies covered by Doing Business, it is assumed a shipment is in a • Handling and inspections that take place at the warehouse in the largest business city of the exporting economy and travels to a economy’s port or border warehouse in the largest business city of the importing economy. - It is assumed each economy imports 15 metric tons of containerized auto parts (HS Domestic transport 8708) from its natural import partner—the economy from which it imports the largest • Loading or unloading of the shipment at the value (price times quantity) of auto parts. It is assumed each economy exports the warehouse or port/border product of its comparative advantage (defined by the largest export value) to its • Transport between warehouse and port/border natural export partner—the economy that is the largest purchaser of this product. Shipment value is assumed to be $50,000. • Traffic delays and road police checks while - The mode of transport is the one most widely used for the chosen export or import shipment is en route product and 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 78 Doing Business 2019 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 61.9 12.5 1 (19 Economies) Cost to export: Border compliance (USD) 862 529.8 139.1 0 (19 Economies) Time to export: Documentary compliance (hours) 12 52.5 2.4 1 (26 Economies) Cost to export: Documentary compliance (USD) 226 110.4 35.2 0 (20 Economies) Time to import: Border compliance (hours) 30 62.6 8.5 0 (25 Economies) Cost to import: Border compliance (USD) 375 647.2 100.2 0 (28 Economies) Time to import: Documentary compliance (hours) 24 79.1 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 107 116.3 24.9 0 (30 Economies) Figure – Trading across Borders in São Paulo and comparator economies – Ranking and Score DB 2019 Trading Across Borders Score 0 100 82.59: China (Rank: 65) 82.09: Mexico (Rank: 66) 80.56: Chile (Rank: 71) 69.85: Rio de Janeiro 69.85: 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. 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 79 Doing Business 2019 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 miscellaneous grains, seeds and fruit; vehicles 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 7.0 232.6 by customs authorities Export: Clearance and inspections required 24.0 125.0 by agencies other than customs Export: Port or border handling 47.0 504.3 Import: Clearance and inspections required 18.0 225.0 by customs authorities Import: Clearance and inspections required 0.0 0.0 by agencies other than customs Import: Port or border handling 30.0 150.0 Page 80 Doing Business 2019 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 81 Doing Business 2019 Brazil Trading across Borders - Rio de Janeiro Indicator Rio de Latin America OECD high Best Regulatory Janeiro & Caribbean income Performance Time to export: Border compliance (hours) 49 61.9 12.5 1 (19 Economies) Cost to export: Border compliance (USD) 862 529.8 139.1 0 (19 Economies) Time to export: Documentary compliance (hours) 12 52.5 2.4 1 (26 Economies) Cost to export: Documentary compliance (USD) 226 110.4 35.2 0 (20 Economies) Time to import: Border compliance (hours) 30 62.6 8.5 0 (25 Economies) Cost to import: Border compliance (USD) 375 647.2 100.2 0 (28 Economies) Time to import: Documentary compliance (hours) 24 79.1 3.4 1 (30 Economies) Cost to import: Documentary compliance (USD) 107 116.3 24.9 0 (30 Economies) Figure – Trading across Borders in Rio de Janeiro and comparator economies – Ranking and Score DB 2019 Trading Across Borders Score 0 100 82.59: China (Rank: 65) 82.09: Mexico (Rank: 66) 80.56: Chile (Rank: 71) 69.85: Rio de Janeiro 69.85: 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. 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 82 Doing Business 2019 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 miscellaneous grains, seeds and fruit; vehicles 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 7.0 232.6 by customs authorities Export: Clearance and inspections required 24.0 125.0 by agencies other than customs Export: Port or border handling 47.0 504.3 Import: Clearance and inspections required 18.0 225.0 by customs authorities Import: Clearance and inspections required 0.0 0.0 by agencies other than customs Import: Port or border handling 30.0 150.0 Page 83 Doing Business 2019 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 84 Doing Business 2019 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 2018. See the methodology for more information. What the indicators measure Case study assumptions Time required to enforce a contract through the The dispute in the case study involves the breach of a sales contract between 2 courts (calendar days) domestic 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 • Time to file and serve the case enforcement. • Time for trial and to obtain the judgment To make the data comparable across economies, Doing Business uses several • Time to enforce the judgment assumptions about the case: Cost required to enforce a contract through the - The dispute concerns a lawful transaction between two businesses (Seller and courts (% of claim) Buyer), both located in the economy’s largest business city. For 11 economies the data are also collected for the second largest business city. • Attorney fees - The buyer orders custom-made goods, then fails to pay alleging that the goods are • Court fees not of adequate quality. - The value of the dispute is 200% of the income per capita or the equivalent in local • Enforcement fees currency of USD 5,000, whichever is greater. - The seller sues the buyer before the court with jurisdiction over commercial cases Quality of judicial processes index (0-18) worth 200% of income per capita or $5,000. • Court structure and proceedings (-1-5) - The seller requests the pretrial attachment of the defendant’s movable assets to secure the claim. • Case management (0-6) - The dispute on the quality of the goods requires an expert opinion. • Court automation (0-4) - The judge decides in favor of the seller; there is no appeal. • Alternative dispute resolution (0-3) - The seller enforces the judgment through a public sale of the buyer’s movable assets. Page 85 Doing Business 2019 Brazil Enforcing Contracts - São Paulo Standardized Case Claim value BRL 59,083 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) 731 768.5 582.4 None in 2017/18 Cost (% of claim value) 20.7 31.4 21.2 None in 2017/18 Quality of judicial processes index (0-18) 12.5 8.5 11.5 None in 2017/18 Figure – Enforcing Contracts in São Paulo and comparator economies – Ranking and Score DB 2019 Enforcing Contracts Score 0 100 78.97: China (Rank: 6) 67.01: Mexico (Rank: 43) 66.94: Rio de Janeiro 65.79: Chile (Rank: 49) 65.40: São Paulo 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. Figure – Enforcing Contracts in São Paulo – Time and Cost Time (days) Cost (% of claim value) 900 33.0 35 Cost (% of claim value) 31.4 800 768.5 731 731 30 700 25.6 24.0 Time (days) 582.4 25 600 21.2 20.7 480 496 500 20 16.2 400 341 15 300 10 200 100 5 0 0 Chile China Latin Mexico OECD Rio São America high de Paulo & income Janeiro Caribbean Page 86 Doing Business 2019 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 4.5 3 5 Mexico 2.5 3.3 0.5 3.8 Rio de Janeiro 3 3 3 5 OECD high income 2.5 3.1 2.3 3.6 Latin America & Caribbean 2.4 2.1 0.9 3.5 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 87 Doing Business 2019 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 Yes case? 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 No granted? 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 Yes 1.0 disposition report; (ii) 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 No 0.0 competent court? 5. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by judges? 6. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by lawyers? Court automation (0-4) 3.0 1. Can the initial complaint be filed electronically through a dedicated platform within the yes 1.0 competent court? 2. Is it possible to carry out service of process electronically for claims filed before the No 0.0 competent court? 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 Yes general public 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 Yes court level made 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 Page 88 Doing Business 2019 Brazil 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or 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 No order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 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 Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there financial incentives for parties to attempt mediation or conciliation Yes (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 89 Doing Business 2019 Brazil Enforcing Contracts - Rio de Janeiro Standardized Case Claim value BRL 59,083 Court name Rio de Janeiro Civil Court (Vara Cível) City Covered Rio de Janeiro Indicator Rio de Latin America OECD high Best Regulatory Janeiro & Caribbean income Performance Time (days) 731 768.5 582.4 None in 2017/18 Cost (% of claim value) 24.0 31.4 21.2 None in 2017/18 Quality of judicial processes index (0-18) 14.0 8.5 11.5 None in 2017/18 Figure – Enforcing Contracts in Rio de Janeiro and comparator economies – Ranking and Score DB 2019 Enforcing Contracts Score 0 100 78.97: China (Rank: 6) 67.01: Mexico (Rank: 43) 66.94: Rio de Janeiro 65.79: Chile (Rank: 49) 65.40: São Paulo 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. Figure – Enforcing Contracts in Rio de Janeiro – Time and Cost Time (days) Cost (% of claim value) 900 33.0 35 Cost (% of claim value) 31.4 800 768.5 731 731 30 700 25.6 24.0 Time (days) 582.4 25 600 21.2 20.7 480 496 500 20 16.2 400 341 15 300 10 200 100 5 0 0 Chile China Latin Mexico OECD Rio São America high de Paulo & income Janeiro Caribbean Page 90 Doing Business 2019 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 4.5 3 5 Mexico 2.5 3.3 0.5 3.8 São Paulo 3 3 3 3.5 OECD high income 2.5 3.1 2.3 3.6 Latin America & Caribbean 2.4 2.1 0.9 3.5 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) 731 Filing and service 41 Trial and judgment 480 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 91 Doing Business 2019 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 Yes case? 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 No granted? 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 Yes 1.0 disposition report; (ii) 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 No 0.0 competent court? 5. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by judges? 6. Are there any electronic case management tools in place within the competent court for Yes 1.0 use by lawyers? Court automation (0-4) 3.0 1. Can the initial complaint be filed electronically through a dedicated platform within the yes 1.0 competent court? 2. Is it possible to carry out service of process electronically for claims filed before the No 0.0 competent court? 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 Yes general public 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 Yes court level made 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 Page 92 Doing Business 2019 Brazil 1.a. Is domestic commercial arbitration governed by a consolidated law or Yes consolidated chapter or 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 No order or public policy—that cannot be submitted to arbitration? 1.c. Are valid arbitration clauses or agreements usually enforced by the courts? Yes 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 Yes consolidated chapter or section of the applicable code of civil procedure encompassing substantially all their aspects? 2.c. Are there financial incentives for parties to attempt mediation or conciliation Yes (i.e., if mediation or conciliation is successful, a refund of court filing fees, income tax credits or the like)? Page 93 Doing Business 2019 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 2018. 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 - The value of the hotel is 100% of the income per capita or the equivalent in local estate) currency of USD 200,000, whichever is greater. - The hotel has a loan from a domestic bank, secured by a mortgage over the hotel’s • Measured as percentage of estate value real estate. The hotel cannot pay back the loan, but makes enough money to • Court fees operate otherwise. • Fees of insolvency administrators In addition, Doing Business evaluates the quality of legal framework applicable to • Lawyers’ fees judicial liquidation and reorganization proceedings and the extent to which best • Assessors’ and auctioneers’ fees insolvency practices have been implemented in each economy covered. • 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 94 Doing Business 2019 Brazil Resolving Insolvency - São Paulo Indicator São Paulo Latin America OECD high Best Regulatory & Caribbean income Performance Recovery rate (cents on the dollar) 14.6 30.9 70.5 None in 2017/18 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 1 .. .. .. concern) Strength of insolvency framework index (0-16) 13.0 7.1 11.9 None in 2017/18 Figure – Resolving Insolvency in São Paulo and comparator economies – Ranking and Score DB 2019 Resolving Insolvency Score 0 100 70.77: Mexico (Rank: 32) 59.90: Chile (Rank: 51) 55.82: China (Rank: 61) 48.48: Rio de Janeiro 48.48: 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. 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 1.7 1.8 1.7 9.3 10 1.5 1 5 0.5 0 0 Chile China Latin Mexico OECD Rio São America high de Paulo & income Janeiro Caribbean Page 95 Doing Business 2019 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 5 3 1 2.5 Mexico 5.5 2.5 2 1.5 Rio de Janeiro 5.5 2.5 3 2 OECD high income 5.3 2.8 2.2 1.9 Latin America & Caribbean 3.7 2.4 1.9 0.8 0 2 4 6 8 10 12 14 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) 100 80 64.7 60 41.6 40 36.9 30.9 20 14.6 14.6 0 São Paulo Chile China Mexico Rio de Janeiro Latin America & Caribbean Page 96 Doing Business 2019 Brazil Details – Resolving Insolvency in São Paulo Indicator Answer Score Proceeding liquidation (after The most likely procedure applicable to our case study would be a reorganization, which will then an attempt at be converted into a liquidation. Mirage may use the reorganization proceeding to gain time, find a reorganization) new investor, or renegotiate its debt. 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 12.0 The costs associated with the case would amount to approximately 12% of the value of the estate) 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 14.6 (cents on the dollar) Page 97 Doing Business 2019 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 1.0 file for both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a 0.5 creditor may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (c) Both (a) and 1.0 insolvency framework? (b) options are available, 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 Yes 1.0 and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome Yes 1.0 contracts? 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 Yes 1.0 commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (a) Yes over all 0.5 pre- 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 No 0.0 least as much as what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, Yes 1.0 does each class vote 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 Yes 1.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial No 0.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request information Yes 1.0 from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to decisions Yes 1.0 accepting or rejecting 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 98 Doing Business 2019 Brazil Resolving Insolvency - Rio de Janeiro Indicator Rio de Latin America OECD high Best Regulatory Janeiro & Caribbean income Performance Recovery rate (cents on the dollar) 14.6 30.9 70.5 None in 2017/18 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 1 .. .. .. concern) Strength of insolvency framework index (0-16) 13.0 7.1 11.9 None in 2017/18 Figure – Resolving Insolvency in Rio de Janeiro and comparator economies – Ranking and Score DB 2019 Resolving Insolvency Score 0 100 70.77: Mexico (Rank: 32) 59.90: Chile (Rank: 51) 55.82: China (Rank: 61) 48.48: Rio de Janeiro 48.48: 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. 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 1.7 1.8 1.7 9.3 10 1.5 1 5 0.5 0 0 Chile China Latin Mexico OECD Rio São America high de Paulo & income Janeiro Caribbean Page 99 Doing Business 2019 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 5 3 1 2.5 Mexico 5.5 2.5 2 1.5 São Paulo 5.5 2.5 3 2 OECD high income 5.3 2.8 2.2 1.9 Latin America & Caribbean 3.7 2.4 1.9 0.8 0 2 4 6 8 10 12 14 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) 100 80 64.7 60 41.6 40 36.9 30.9 20 14.6 14.6 0 Rio de Janeiro Chile China Mexico São Paulo Latin America & Caribbean Page 100 Doing Business 2019 Brazil Details – Resolving Insolvency in Rio de Janeiro Indicator Answer Score Proceeding liquidation (after The most likely procedure applicable to our case study would be a reorganization, which will then an attempt at be converted into a liquidation. Mirage may use the reorganization proceeding to gain time, find a reorganization) new investor, or renegotiate its debt. 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 12.0 The costs associated with the case would amount to approximately 12% of the value of the estate) 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 14.6 (cents on the dollar) Page 101 Doing Business 2019 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 1.0 file for both liquidation and reorganization Does the insolvency framework allow a CREDITOR to file for insolvency of the debtor? (b) Yes, but a 0.5 creditor may file for liquidation only What basis for commencement of the insolvency proceedings is allowed under the (c) Both (a) and 1.0 insolvency framework? (b) options are available, 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 Yes 1.0 and services to the debtor? Does the insolvency framework allow the rejection by the debtor of overly burdensome Yes 1.0 contracts? 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 Yes 1.0 commencement of insolvency proceedings? Does the insolvency framework assign priority to post-commencement credit? (a) Yes over all 0.5 pre- 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 No 0.0 least as much as what they would obtain in a liquidation? Are the creditors divided into classes for the purposes of voting on the reorganization plan, Yes 1.0 does each class vote 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 Yes 1.0 appointment of the insolvency representative? Does the insolvency framework require approval by the creditors for sale of substantial No 0.0 assets of the debtor? Does the insolvency framework provide that a creditor has the right to request information Yes 1.0 from the insolvency representative? Does the insolvency framework provide that a creditor has the right to object to decisions Yes 1.0 accepting or rejecting 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 102 Doing Business 2019 Brazil Labor Market Regulation Doing Business presents detailed data for the labor market regulation indicators on the Doing Business website (http://www.doingbusiness.org). The report 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 2018. 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 (i) whether fixed-term contracts are prohibited for worker and the business are used. permanent tasks; (ii) maximum cumulative duration of fixed-term contracts; (iii) length of the The worker: probationary period; (iv) minimum wage. - Is a cashier in a supermarket or grocery store, age 19, with one year of work experience. Working hours - Is a full-time employee. (i) maximum number of working days allowed per - Is not a member of the labor union, unless membership is mandatory. week; (ii) premiums for work: at night, on a weekly rest day and overtime; (iii) whether there are The business: restrictions on work at night, work on a weekly rest - Is a limited liability company (or the equivalent in the economy). day and for overtime work; (iv) whether - Operates a supermarket or grocery store in the economy’s largest business city. nonpregnant and nonnursing women can work For 11 economies the data are also collected for the second largest business city. same night hours as men; (v) length of paid annual - Has 60 employees. leave. - Is subject to collective bargaining agreements if such agreements cover more than 50% of the food retail sector and they apply even to firms that are not party to them. Redundancy rules - Abides by every law and regulation but does not grant workers more benefits than (i) whether redundancy can be basis for terminating those mandated by law, regulation or (if applicable) collective bargaining workers; (ii) whether employer needs to notify agreements. and/or get approval from third party to terminate 1 redundant worker and a group of 9 redundant workers; (iii) whether 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 due when terminating a redundant worker. Job quality (i) whether law mandates equal remuneration for work of equal value and nondiscrimination based on gender in hiring; (ii) whether law mandates paid or unpaid maternity leave; (iii) length of paid maternity leave; (iv) whether employees on maternity leave receive 100% of wages; (v) availability of five fully paid days of sick leave a year; (vi) eligibility requirements for unemployment protection. Page 103 Doing Business 2019 Brazil Labor Market Regulation - São Paulo Details – Labor Market Regulation 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) 373.5 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 Whether nonpregnant and nonnursing women can work the same night hours as men 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 4.7 Notice period for redundancy dismissal for a worker with 5 years of tenure 6.4 Notice period for redundancy dismissal for a worker with 10 years of tenure 8.6 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 6.6 Severance pay for redundancy dismissal for a worker with 1 year of tenure 1.7 Page 104 Doing Business 2019 Brazil Severance pay for redundancy dismissal for a worker with 5 years of tenure 8.3 Severance pay for redundancy dismissal for a worker with 10 years of tenure 16.6 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 8.9 Job quality Equal remuneration for work of equal value? No Gender nondiscrimination in hiring? Yes Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 120.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? Yes Unemployment protection after one year of employment? Yes Minimum contribution period for unemployment protection (months)? 12.0 Page 105 Doing Business 2019 Brazil Labor Market Regulation - Rio de Janeiro Details – Labor Market Regulation 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) 361.5 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 Whether nonpregnant and nonnursing women can work the same night hours as men 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 4.7 Notice period for redundancy dismissal for a worker with 5 years of tenure 6.4 Notice period for redundancy dismissal for a worker with 10 years of tenure 8.6 Notice period for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 6.6 Severance pay for redundancy dismissal for a worker with 1 year of tenure 1.6 Page 106 Doing Business 2019 Brazil Severance pay for redundancy dismissal for a worker with 5 years of tenure 8.3 Severance pay for redundancy dismissal for a worker with 10 years of tenure 16.6 Severance pay for redundancy dismissal (average for workers with 1, 5 and 10 years of tenure) 8.9 Job quality Equal remuneration for work of equal value? No Gender nondiscrimination in hiring? Yes Paid or unpaid maternity leave mandated by law? Yes Minimum length of maternity leave (calendar days)? 120.0 Receive 100% of wages on maternity leave? Yes Five fully paid days of sick leave a year? Yes Unemployment protection after one year of employment? Yes Minimum contribution period for unemployment protection (months)? 12.0 Page 107 Doing Business 2019 Brazil Business Reforms in Brazil In the past year, Doing Business observed a peaking of reform activity worldwide. From June 2, 2017, to May 1, 2018, 128 economies implemented a record 314 regulatory reforms improving the business climate. 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. 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. Labor Market Regulation: 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. Labor Market Regulation: 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. Labor Market Regulation: 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. DB2011 Starting a Business: Brazil eased business start-up by further enhancing the electronic synchronization between federal and state tax authorities. Page 108 Doing Business 2019 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 109 Doing Business 2019 Brazil Page 110