Filing Taxes for 80 Days: A Window Into Brazil's Bureaucracy

(Bloomberg) -- Go inside the global economy with Stephanie Flanders in her new podcast, Stephanomics. Sign up here.

For a glimpse of Brazil's bureaucracy, step inside a Rio de Janeiro accounting firm that provides tax services to some 200 companies. Loose papers and receipts fill shelves, and packets are stacked atop boxes.

It takes almost 2,000 hours per year for a medium-size company to make their tax payments in Brazil, by far the most in the world. Just as an example, Marcio Marques, a partner at the firm, opens an emailed file sent by a sushi restaurant with receipts from every sale made in February. It took seven hours for Marques' company to import all of the 7,600 transactions into its electronic system.

To read more: Elusive Economic Growth Points to Depth of Brazil's Problems

Bureaucracy plagues Latin America, but in Brazil it's one of the main issues holding back economic growth. It's especially harrowing because each Brazilian city and state have different sets of rules that shift frequently.

“The government changes something all the time. At the end of the day, the one who suffers is the entrepreneur,'' said Marques, 58.

While Brazil has made some progress in reducing red tape over the past few years, the business environment remains relatively hostile to companies.

It takes 21 days to open a business in Brazil, three times more than in investor-friendly Chile, according to the World Bank. It was even worse before the recent adoption of electronic systems, with 80 days before a new business could start. Some 1,200 processes have been digitalized in the past few years, and the government hopes for another 1,000 by end-2020, according to Gleisson Rubin, adjunct secretary of debureaucratization.

“We're cleaning up a house that has tons of furniture, where everything's a mess, and nothing matches,” Rubin said in an interview. “We're organizing.''

Meantime, those with business-building dreams -- like Joao Martins, a Portuguese man who aims to install convenience stores within gated communities in Rio -- still must enlist expert help like Marques' accounting firm to navigate the confusion.

“Unlike other countries, I see a big need to have an accountant,” said Martins, 30. “Issues are so complex and so bureaucratic.”

To contact the reporter on this story: David Biller in Rio de Janeiro at dbiller1@bloomberg.net

To contact the editors responsible for this story: Daniel Cancel at dcancel@bloomberg.net, Walter Brandimarte

©2019 Bloomberg L.P.