Local License Waiver to Benefit 10.3 Million Low-Risk Companies

RIO DE JANEIRO, BRAZIL – The complete waiver of licenses and operating permits for 289 types of low-risk economic activities is expected to benefit 10.3 million companies in Brazil, said Paulo Uebel, special secretary of Debureaucratization, Management and Digital Government of the Ministry of Economy, yesterday, January 28th.

This represents 58 percent of the total 17.73 million companies operating in the country.

The secretary presented the estimates during the introduction of the measure to the private sector and micro- and small-business representatives. According to Uebel, the abolition of this requirement will boost the business environment in the country and allow the government to target inspections on medium and high-risk operations.

Set forth in the Economic Freedom Act, the measure has been in effect since December 16th. Among the categories of benefited businesses are bars, tire shops and bakeries, homemade food manufacturers, footwear, accessories and clothing, wholesale and retail.

With the new rules, every low-risk company opened in the country will be entitled to engage in its activities immediately after obtaining the National Register of Legal Entities (CNPJ) from the federal tax authorities.

In case state and municipal laws differ from the Ministry of Economy’s list of defined low-risk categories, the local rules shall prevail. Municipalities and state governments, however, are required to refer their rules to the federal government so that local requirements may be enforced.

The risk rating – low, medium or high – considers such aspects as fire and panic prevention, as well as health and environmental safety. All activities deemed as low-risk and which do not warrant the payment of licenses and permits, are listed under Resolution 51 of the Committee for the Management of the National Network for the Simplification of Registration and Legalization of Companies and Enterprises.

The system checks the list of business activities inserted by entrepreneurs that are exempt from licenses and permits, under the terms of the resolution or state and municipal regulations referred to the Ministry of Economy. The exemption is entered in the CNPJ card, after the system has classified the activity as low-risk, with the users’ full consent.

Under the old rule, companies would register and obtain the CNPJ card and would then be subject to further review by the municipalities and licensing bodies, with the collection of fees. Only after these reviews would the enterprises be fully registered and only then could they carry out their activity, if considered low-risk. In practice, this model slowed down the opening of businesses.

Source: Agência Brasil

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