Brazil flag Alexey Novikov

Doing MRO Business In The Largest Latin Market

Going beyond regulatory requirements can bring tax and other benefits in Brazil.

With more than 200 million people, Brazil is Latin America’s largest market and the fifth largest country in the world. In other words, too important for any MRO with global ambitions to ignore.

But there are certain requirements that must be met to serve this market, and there are additional practices that can help to serve it at the lowest cost and with the greatest efficiency, according to Ricardo Bernardi of Bernardi & Schnapp, an aviation law firm based in Rio de Janeiro and Sao Paulo.

Non-Brazilian companies must have an establishment in Brazil, either a local legal entity or a subsidiary. “The process for establishing a local legal entity is less bureaucratic, so this is normally our recommendation unless a subsidiary is required for specific reasons,” Bernardi says.

Foreign maintenance companies must then obtain certificates from Brazil’s civil aviation agency, ANAC, under its Part 145 rules. These rules require suitable facilities, equipment and personnel for the various classes of aircraft, engines and other components.

This can be easier to obtain for an MRO that is based in a country that has a Technical Arrangement-Maintenance with Brazil. Even if there is no Technical Agreement, but the MRO’s home country has certification requirements that ANAC considers similar to its own, conditions found accepted by regulators in the home country may be accepted by ANAC for its certificate.

While those are requirements for doing MRO in Brazil, Bernardi urges foreign MROs to carefully plan how they are going import and warehouse components and materials to benefit from special customs regimens that bring tax benefits and incentives. “Specifically, in addition to the aeronautic regulations and customs regulations, companies must be prepared to comply with Brazilian labor and tax laws, which are complex and could bring significant exposure, if not properly understood.”

Bernardi & Schnapp can assist foreign companies interested in establishing maintenance operations in Brazil not only in setting up a legal entity and getting ANAC approval, but also in obtaining the special tax and incentive benefits form customs authorities. “Our firm is also qualified to provide legal advice on tax and labor matters for structuring the business, optimizing benefits and avoiding exposure.”

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