With a series of incentives and programs, entrepreneurship in Brazil is becoming a true highlight. In recent years, the government has been committed to creating a conducive environment for the growth of startups and the development of innovative businesses.

Get to know some of the initiatives driving entrepreneurial success:

Startup Brasil Program

The Program was an initiative of the Ministry of Science, Technology, Innovations, and Communications (MCTI), launched in 2012, with the aim of promoting the development of the startup ecosystem in the country. The program aimed to support innovative startup companies by providing them with financial resources, training, and connections with investors and mentors.

Decree No. 7,819/2012 was responsible for instituting the Program and establishing its guidelines and general conditions. It described the objectives, management structure, selection criteria for startups, and the obligations of the parties involved.

The Startup Brasil Program executed five acceleration cycles – from 2013 to 2019 – supporting 229 startups distributed among five classes, originating from 19 states and 13 countries. By 2019, MCTI had invested R$ 42,672,000.00 in research, development, and innovation (R&D) projects of information and communication technology (ICT) startups. The initiative leveraged approximately R$ 392 million (almost 80 million dollars) in external investments (public and external investment factor of 9.2x – meaning for every R$1.00 invested by the government, startups in the Program raised R$9.20 in private investment) and generated over 2,832 direct jobs.

Lei do Bem (Good Law)

It is the common nickname given to Law No. 11,196/2005, which aims to stimulate technological innovation and scientific development in Brazil. It was created to encourage companies to invest in research, development, and technological innovation, providing tax benefits and tax reductions. The law establishes the possibility of deducting or reducing Corporate Income Tax (IRPJ) and Social Contribution on Net Income (CSLL) for companies that carry out technological research and development (R&D) activities. Companies can deduct up to 60% of the amount invested in R&D as an operating expense, provided that these activities are approved by MCTI.

The “Lei do Bem” applies to companies in any economic sector that engage in technological R&D activities. Activities may involve the creation or improvement of products, processes, systems, and services, with the aim of achieving technological advances and improvements in quality or productivity.

To enjoy the benefits of the “Lei do Bem“, companies must meet certain requirements, such as maintaining accounting and documentary control of R&D activities, presenting a detailed research project, and submitting it for approval by MCTI. In addition, it is necessary to demonstrate tax regularity and comply with labor obligations.

Open Innovation

This is a concept that involves collaboration among companies, research institutions, government organizations, and other actors to drive innovation through the exchange of knowledge, resources, and ideas.

It is an approach that seeks to leverage the skills and competencies of different stakeholders to stimulate the development of new solutions and technologies. In Brazil, there are different legal instruments and government programs that encourage innovation and collaboration among stakeholders. Some of them include:

• Law of Technological Innovation (Law No. 10,973/2004): This law establishes incentives for innovation and scientific and technological research in the country. It seeks to promote interaction between universities, companies, and the government, encouraging technology transfer and the creation of environments conducive to innovation.
• Legal Framework for Science, Technology, and Innovation (Law No. 13,243/2016): This legal framework aims to stimulate cooperation between public and private entities, simplify procedures for contracting research and innovation projects, and encourage the participation of the business sector in research and development activities.
• Research funding agencies: Brazil has several research funding agencies, such as the National Council for Scientific and Technological Development (CNPq) and the Coordination for the Improvement of Higher Education Personnel (CAPES), which offer resources and programs to support innovation and research projects. In addition, there are initiatives for collaboration between companies and research institutions, such as Innovation Promoting Arrangements (APIs) and Technological Innovation Centers (NITs), which aim to promote interaction between the productive sector and research and development institutions.

Startup Legal Framework

It is a set of measures and legal provisions created to foster and regulate the environment of innovation and entrepreneurship in Brazil. It was established by Complementary Law No. 182/2021, also known as the Startup Law, which came into force on August 1, 2021.

The legal basis of the Startup Legal Framework focus in creating a favorable environment for the emergence and growth of startups, facilitating their development, attracting investments, and stimulating job creation and technological advancement. The law seeks to promote innovation, competitiveness, and sustainability of technology-based nascent companies by simplifying processes and offering support mechanisms.

These government initiatives and incentives demonstrate a commitment to creating a conducive environment for entrepreneurship and innovation in Brazil, attracting investments, and driving the growth of startups in the country.

It is important to note that these are somewhat more complex legal instruments, and their practical application requires detailed analysis and specialized legal assistance. Therefore, it is advisable to consult a specialized lawyer for up-to-date and specific information on current legislation.

Talk to our specialists and learn how legal advice can help you to undertake in Brazil.