It’s been almost a month since the beginning of the Jair Bolsonaro administration—and it has been an uphill struggle trying to work out what exactly is going on. Members of the Brazilian government have sent messages in different directions, and the number of U-turns and retractions seems to be unprecedented. Many feel that Mr. Bolsonaro’s strategy is to create controversy in order to turn our attention to one way—so we won’t pay attention to what he is really up to, much like Donald Trump in the United States.
So we ask: what is this administration really doing so far?
To answer that question, we at The Brazilian Report have created a brand new newsletter service: Brazil On The Record. Every 15 days, we will publish the most important laws, decrees, administrative acts, and executive orders approved by the Brazilian government — and published on the Federal Register (the Diário Oficial da União).
If something has not been published on the Federal Register, it doesn’t exist, as far as the Brazilian government is concerned.
Acess our first issue here — or read it below.
To inquire about subscription fees, please contact our Communications Officer Laura Quirin ([email protected])
Why you should subscribe to this service
Brazil’s Federal Register is published on a daily basis — and is the only space in which the federal government can’t lie. But what multiple administrations do is try to camouflage potentially controversial subjects under a thick layer of legalese.
And that’s where we come in. We will break down precisely what you should be paying attention to—sorting the content by subject, to optimize your reading.
You will realize that most of what you will receive in your inbox won’t make headlines in the press. But that doesn’t mean these subjects are not important — or that they aren’t impactful. As you know, newsrooms are getting smaller and most can’t follow what is published on the Federal Record. But we can.
We will not focus on the information that you have seen in the press. What we want to do is bring you what you won’t find in your daily newspaper.
January 1 – January 18
BUSINESS AND INVESTMENTS
Endowment funds
To the core: Jair Bolsonaro sanctioned a bill approved by Congress in late December that allows for the creation of endowment funds in order to finance projects of NGOs and public institutions. Projects in various areas can be supported, from sports and security, to environment and education. Anything of “public interest” can be covered by the earnings of these funds.
Potential loopholes
- The donor must state that the donation doesn’t have illicit origins, but the law does not prevent convicted individuals or companies involved in scandals from making donations. Furthermore, the legality of the origins is self-declared.
- Funds must publish reports on their websites, including details on “resource management and application,” every year, at least. It’s also mandatory to detail construction jobs, projects and services executed with the fund’s resources. But there is no requirement for the fund donors to be identified. Actually, the general rule in funds is that the identity of shareholders is concealed.
Other issues to bear in mind
- The fund may receive donations from foreign companies and governments and from multilateral organizations. There is no requirement to declare money coming from abroad.
- An endowment fund can put money into another endowment fund, which can make it harder to track the money backing a given project.
- Funds can be provided with cash as a result of plea bargains and consent decrees from prosecutors.
- Only donations with the specific purpose to support cultural projects can be deducted from income tax. Other tax breaks, considered very important for companies to donate, were vetoed by Bolsonaro.
- “Non-restricted” donations allow the fund manager to withdraw the principal, not just the proceeds. In that case, the limit for use in the same fiscal year is 20 percent of the donation.
- The endowment funds can directly support public construction works, equipment, materials, scholarships, training for public officers, among other actions.
- If a supported public institution is privatized or subject to a merger, the resources continue to be applied to the succeeding institution.
Source: Lei nº 13.800, de 4 de janeiro de 2019
Removal of shareholders
To the core: Law sanctioned by Jair Bolsonaro facilitates the dismissal of CEOs and members of limited companies. Previously, to remove a member from the status of company administrator, two-thirds of voting shares were needed. Now, a simple majority will suffice. In the case of companies with only two partners, the minority shareholder may be excluded when he/she is “jeopardizing the continuity of the company due to acts of undeniable seriousness”.
Source: Lei nº 13.792, de 3 de janeiro de 2019
Tax benefits
To the core: In another of the laws sanctioned by Jair Bolsonaro as soon as he took office, companies were given five more years to submit projects applying for 75 percent discounts on income tax in the areas of operation of the Northeast Development Superintendency and Amazon Development Superintendency, offices responsible for development initiatives in those regions.
Other issues to bear in mind
- Mr. Bolsonaro vetoed a paragraph that extended the same benefit to companies located in the zone of influence of the Central-Western Development Superintendence (which englobes states which are important for agribusiness such as Goiás, Mato Grosso and Mato Grosso do Sul).
Source: Lei nº 13.799, de 3 de janeiro de 2019
Central government representatives in companies
To the core: Ordinance signed by the Minister of Economy, Paulo Guedes, defines that it will be up to the Special Treasury Secretary, Waldery Rodrigues, to decide votes in the companies where the federal government holds a seat, including in those where it holds golden shares (for example, Embraer), besides practicing other acts related to companies where the federal government is a shareholder.
Other issues to have in mind
- The Secretaries of Treasury and Privatization will jointly appoint the representatives of the government on the boards of directors and fiscal board of state companies. That is, the person in charge of the processes of privatizations of Brazilian state-owned companies will have a greater influence over the members of the boards.
Source: Portaria nº 5, de 9 de janeiro de 2019 (Ministério da Economia)
Loans for companies in debt
To the core: A law sanctioned by Jair Bolsonaro prohibits banks in general, including private banks, from providing loans, financing and...
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