International accounting firms, particularly those from Asia, are increasingly turning their attention to Brazil as their clients expand operations into Latin America.
A recent webinar hosted by MCS Markup, a PrimeGlobal member firm, offered valuable insights into the Brazilian market, covering topics ranging from cultural considerations to the country’s complex tax environment and emerging digital infrastructure.
Understanding the Brazilian Business Environment
Brazil represents the largest economy in Latin America, with a GDP exceeding USD 2.1 trillion and a consumer base of over 210 million people. The country has strong sectors in infrastructure, energy, agribusiness and technology, making it an attractive destination for foreign investment.
However, doing business in Brazil requires significant adaptability. Alexandre Bragança, Transaction Services Partner at MCS Markup, emphasized that successful investors must balance formal and informal procedures, while navigating highly bureaucratic government processes and a complex tax environment. The country’s entrepreneurial spirit is remarkable, with 60% of jobs generated by small and medium-sized enterprises, but this comes with challenges that require experienced local professionals.
Cultural factors play a crucial role in Brazilian business practices. While English is widely used in multinational companies, Portuguese remains essential for local engagement, with only 5% of Brazilians speaking English fluently. In-person meetings are prioritized to demonstrate long-term commitment, and strategic relationships with public bodies and industry associations are essential for market participation.
Sector Expansion and Infrastructure Opportunities
Marcello Salles, Corporate Finance Partner at MCS Markup, highlighted infrastructure as a particularly attractive sector for Asian investors. The federal government’s Novo PAC program has allocated approximately USD 350 billion for infrastructure investments, combining public and private financing with significant opportunities for foreign participation.
Priority areas include renewable energy, power transmission, sanitation and digital infrastructure. Brazil faces a critical gap between energy production from hydroelectric, wind and solar plants and the transmission capacity to reach urban areas, creating urgent demand for transmission lines. The country maintains one of the world’s largest privatization programs, which continues regardless of the political party in power. Accounting firms are well positioned to support due diligence, valuations, feasibility studies and investment structuring for international transactions.
Other sectors experiencing accelerated expansion include agribusiness, fintechs and logistics, all driven by digitalization and global demand for sustainable solutions. Despite current high interest rates of around 15%, inflation is under control, and the central bank signals possible cuts in 2026 as economic stability consolidates.
Accounting Standards and ESG Developments
Brazil formalized the convergence of its accounting standards with IFRS in 2007 through a national standard-setting body (Comitê de Pronunciamentos Contábeis or CPC), which translates and adapts IFRS principles for local application. This convergence has enhanced the comparability of financial information with other countries and facilitated access for international investors.
Daniele Scrivani, Audit Partner at MCS Markup, explained that while Brazil has fully adopted IFRS through the CPC framework, some practical challenges persist. Standards change frequently and local update processes can be slower. Additionally, there are differences between the IFRS accounting and tax treatment, particularly for smaller companies.
In the ESG (Environmental, Social and Governance) space, Brazil has made significant progress over the past two years. The country established the CBPS (Brazilian Sustainability Pronouncements Committee) to coordinate convergence with the ISSB’s international standards. The new technical standards NBC TDS1 and TDS2 are currently under public consultation, with voluntary adoption expected for 2025 and mandatory adoption planned for listed and large companies from 2026-2027.
Navigating Brazil’s Complex Tax System
Cristiane Pacheco, Tax Partner at MCS Markup, addressed an aspect for which Brazil is unfortunately well known internationally: an extremely complex tax system. Companies face different taxes at the federal, state and municipal levels, with more than 5,000 municipalities, each with potentially distinct legislation and rates.
Brazilian companies spend an average of 1,500 hours per year on tax and accounting reporting, three times the global average of 500 hours. This complexity was the primary driver behind Brazil’s comprehensive tax reform, which represents the most significant change to the system in 30 years.
The 2026–2033 Tax Reform: A Historic Transformation
The reform will replace the current consumption taxes (IPI, PIS, COFINS, ICMS and ISS) with three new taxes:
- CBS – A federal VAT-like tax
- IBS – A state and municipal VAT-like tax
- IS – A new selective tax on goods harmful to health or the environment
Implementation follows an eight-year transition period, with 2026 serving as a testing year in which companies must comply with new invoicing requirements without paying the new taxes.
Full implementation will occur gradually, with CBS replacing PIS and COFINS in 2027, and IBS replacing ICMS and ISS between 2029 and 2033. This transition period will be particularly challenging for Brazilian companies, requiring dual compliance with both the old and new systems simultaneously.
ESG Reporting
Brazil has recently established a national framework (CBPS) to align sustainability reporting with global ISSB standards. New sustainability disclosure standards, based on the IFRS S1 and S2 equivalents, became voluntary in 2025 and will be mandatory for publicly listed companies by 2026-2027, including independent audit requirements.
This places Brazil on a trajectory similar to Europe and other leading markets, creating new demand for ESG reporting services, quality assurance and data governance.
Technology and Digital Transformation
Felipe Rosa, Innovation and Technology Partner at MCS Markup, presented Brazil’s powerful digital infrastructure. Three major systems have transformed financial operations:
PIX: an instant payment system that processes more than BRL 2 trillion per month, reducing average days sales outstanding (DSO) and enabling real-time reconciliation.
Open Finance: more than 62 million active accounts with secure data-sharing APIs for automated cash and audit processes.
SPED: fully digital accounting, tax filing and electronic invoicing, enabling machine-readable financial data and advanced automation.
These systems reduce operational costs, accelerate reconciliation and enable real-time auditing. MCS Markup has developed software-as-a-service (SaaS) solutions that leverage this infrastructure, including tools for IFRS 16 compliance on leasing contracts, government file conversions and tax data centralization.
Brazil Offers Growth, but Requires Skill to Navigate
As Brazil modernizes its regulatory, technological and tax systems, the market becomes more accessible, yet also more complex. PrimeGlobal members who leverage local partnerships with firms such as MCS Markup to manage regulatory complexities while maintaining international standards will be well positioned for the next decade of growth.
