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Worldcrunch

Report: Brazil Is Most Expensive Developing Nation For Doing Business

SÃO PAULO - Brazil is the most expensive developing nation for doing business and has costs similar to developed countries, according to a study by consulting firm KPMG.

"Competitive Alternatives" is a regular KPMG report that compares the structure of costs for companies in different countries and localities, taking into account taxes, labor, rent, cost of capital and other factors.

For the first time, the 2012 edition covers the BRICS (Brazil, Russia, India, China, South Africa) along with nine industrialized countries. The study compares 19 sectors, from automotive manufacturing to food processing and video games production. In all of them, Brazil is the most expensive among the developing nations.

Taking costs in the US as a basis, the research shows that, in general, doing business in Brazil is only 7% cheaper.

China, the least expensive country for doing business in the group, costs 25.8% less than the US, followed by India (25.3%) and Mexico (24.53%). More expensive than the US are Germany (0.1%), Australia (3.7%) and Japan (9.5%).

Considering only the automotive sector, Brazil is 5.4% less costly than the US, while Mexico is 13% cheaper.

In terms of taxes and duties, Brazil is 43% more expensive than the US, occupying the 11th place.

For KPMG, the fact that Brazil is “recognized as a developing nation” and has higher taxes than more mature economies is a riddle. The Brazilian scenario is even worse when factoring in tax incentives on research and development (R&D), essential to assure industry’s future competitiveness. On this list, Brazil is at the bottom.

Considering all the costs included in R&D, including qualified employees’ wages, Brazil is the 7th most expensive country in which to do business. 

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