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American Multinational Companies Are Investing Less In Brazil

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American Multinational Companies Are Investing Less In Brazil

Trump's tax policy and electoral uncertainty are among the main issues responsible

PR Newswire

WASHINGTON, Aug. 8, 2018 /PRNewswire/ -- The investment of American multinational companies in Brazil has fallen drastically. From 2017 to the present, total investment dropped from 15.7% to 6.6%. Historically, US multinational companies have always been the largest investors in the Brazilian economy, accounting for about 22% of all foreign investment in the country.

(PRNewsfoto/Hayman-Woodward)

"The decline in investment began in earnest in 2014, when Brazil entered a recession, but intensified after the US tax policy implemented by the current administration, which reduced its companies' domestic income tax from 35% to 21%. In Brazil, the tax rate remains at 34%," noted Leonardo Freitas, Managing Business Partner and founder of HAYMAN-WOODWARD.

In addition, as a form of incentive, the new US legislation has allowed multinational companies to repatriate their assets in the US with a lower income tax burden. "This option has become extremely attractive to foreign investors unable to expand their operations in Brazil, and have now decided to reallocate their capital to the US or to other countries," added Freitas. Among the companies that have left Brazil in recent years are banking market giants, such as Citibank and HSBC.

Another determining factor for the fall in foreign investment is due to political and economic uncertainty that surrounds the upcoming presidential elections in Brazil, in October. "There is a great deal of concern among US investors regarding issues related to the fate of tax reform and privatization in the Brazil, regardless of which candidate is elected," concluded Freitas.

The fall in investments in Brazil occurs in a moment where the stock of foreign direct investment (FDI) in the United Sates has broken a new record, totaling more than $3 trillion in 2017 (up to $260.4 billion from 2016). The latest data from the Bureau of Economic Analysis (BEA) shows that the United States continues to be the best place in the world to do business.

HAYMAN-WOODWARD CORP is a holding group of a variety of companies, including business advisory, compliance, business development intelligence consulting, banking and wealth management, family office, aviation, and others. The group is present in 6 offices around the world and has more than twenty years of experience in supporting companies and individuals in their challenges to build value across borders.

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SOURCE Hayman-Woodward

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