Professional and business services

Professional and business services

1. Overview

   1. 
      Brazil has a trade surplus in professional and business services. Exports of professional and business services totalled US$3.72 billion in 2002, or some 36% of total exports of services, while imports were US$1.56 billion.²⁴⁶ Further, but less up-to-date, disaggregation shows that the bulk of export revenue came from engineering and architectural services, which expanded from US$235 million in 1995 to US$1.5 billion in 2000.²⁴⁷
      
   2. 
      Article 22 of the Constitution give the Union the exclusive power to legislate on the practice of professions. Although for some professions registration requirements on Federal or Regional Councils is mandatory, this does not apply to all professions. The authorities note that no professions are reserved for nationals, but that foreigners must meet certain requirements established by law to exercise in Brazil. The recognition and validation of diplomas, titles, and certificates issued by schools or educational institutions outside of Brazil is regulated by Resolution No. 3 of 10 July 1980, which is implemented by the Federal Education Council, the body responsible for issuing Resolutions and Directives governing the educational system in Brazil. Resolution No. 3 has been notified to the WTO under Article VII:4 of the GATS (on recognition measures). There are currently no mutual recognition agreements on professional services with bodies of other countries.
      
   3. 
      Under Article 207 of the Constitution, each university, once fully recognized by the Ministry of Education, has complete autonomy in the assessment and validation of a foreign degree, diploma or title. A person with foreign qualification must therefore request revalidation of such title from a university, by producing an official copy of the original document, accompanied by a transcript. The degree is assessed by a commission of specialists from the university.
      
   4. 
      In its GATS Schedule of Specific Commitments, Brazil left unbound in general the cross-border provision and consumption abroad of professional services.²⁴⁸ Commercial presence was bound for some services under certain conditions. For accounting, auditing, and bookkeeping, commercial presence is bound only if a foreign supplier cedes its name to Brazilian professionals, to constitute and exercise full participation in a new legal person within Brazil. Participation of non-residents in legal persons controlled by Brazilian nationals is not allowed. Also, Brazil's Schedule refers to special registration requirements for accountants who wish to audit such companies as financial institutions and savings and loans associations, and Brazilian accounting and auditing standards must be followed. For architectural and various engineering services, commercial presence depends on foreign service suppliers joining Brazilian service suppliers in a specific type of legal entity (consórcio), where the Brazilian partner must maintain the leadership.
      
   5. 
      Commercial presence limitations apply to other sectors included in the Schedule. For example, foreign participation in production of advertising services is limited to one third of the footage of advertising films; larger participation is conditional on the use of Brazilian nationals and domestic production-house facilities. Also, advertising films must be in Portuguese, unless the use of a foreign language is required by the subject of the film. In addition to these conditions, foreign participation is limited to 49% of the capital of companies established in Brazil, and leadership must remain with Brazilian partners. Movement of natural persons was left unbound, except for highly qualified professionals and foreign specialized technicians.
      

2. Legal services

   1. 
      Law No. 8,906 of 1994 regulates the practice of law in Brazil.²⁴⁹ The Brazilian Bar Association (BBA), an autonomous non-governmental institution, regulates and sets the norms of conduct for the legal profession at the federal level. The Federal Council of the Brazilian Bar Association is empowered to create rules, regulations, and codes of conduct for the legal profession. The Federal Council is a federation of the sectional councils and has jurisdiction over the respective territories of the country's states and the Federal District. The BBA has 27 sectional councils headquartered in each capital of the Brazilian federative units. There are over 800 BBA subsections throughout Brazilian cities and municipalities. Some 500,000 lawyers are registered with the BBA.
      
   2. 
      Access to the Brazilian market for foreign lawyers requires accreditation, revalidation of professional title, and registration in Brazil, except for consultants on foreign law (see below). Law No. 8,906 of 1994 states that exercising the attorney's profession in the Brazilian territory and the denomination of attorney are exclusive to those registered at the BBA. The practice of the profession also requires residence. This applies to both Brazilians and foreigners who have qualified outside of Brazil and wish to practice law in Brazil. Qualification to practice law in Brazil is essentially a two-tier process in which applicants must first apply to have their degrees revalidated and pass the Bar exam. The second step is to register with the BBA. An attorney's main registration must be at the Sectional Council in the territory where the attorney intends to establish professional domicile.
      
   3. 
      The BBA has noted that, while revalidation is relatively objective and there is no impediment in Brazilian law for foreign-trained attorneys to practice in Brazil, the process is time-consuming, at times lasting years.²⁵⁰ This lengthy process has been seen as inconvenient for the provision of consultancy services to foreign firms established in Brazil, or for Brazilian firms dealing with foreign law. In this respect, and to make up for this shortcoming, the BBA's Federal Council introduced Provision No. 91 of 13 March 2000 (Provision No. 91/2000) to facilitate the provision of these services by foreign-trained lawyers.²⁵¹
      
   4. 
      Provision No. 91/2000 allows a foreign lawyer who is allowed to practice in his/her country of origin to establish a consultancy or a consultant partnership in foreign law in Brazil and, by licensing his/her foreign credentials, be eligible for practice in Brazil. However, the process is not automatic: BBA authorization and registration are required to exercise the functions of foreign law consultant; authorizations are granted for renewable periods of three years.
      
   5. 
      Before being authorized for a consultancy practice in Brazil under Provision No. 91/2000, the applicant must show proof of permanent residency in Brazil, a licence to practise law, an effective admission at the Bar in the country of qualification, proof of good conduct including an affidavit by three BBA-registered Brazilian lawyers, and proof that there is an instrument for reciprocity for Brazilian attorneys wishing to practice law in the applicant's country of origin.²⁵² Provision No. 91/2000 forbids the offering of consultancy services or counselling in Brazilian Law and the exercise of the function of an attorney-at-law. Provision No. 99 of 2002 created a Registry for Foreign Law Consultants.²⁵³ Consultancy firms that provide foreign-law services must be constituted and registered in Brazil with the sole purpose of providing this type of services, and all its lawyers must be authorized by the BBA to provide foreign-law consultancy services.
      

3. Accounting and auditing services

   1. 
      Accountancy in Brazil is regulated by the Federal Accounting Council (CFC), which is responsible for issuing the Directives that govern the profession as well as professional conduct. The CFC, created by Decree-Law No. 9,295 of 27 May 1946 and regulated by Resolution CFC No. 960/03, of 6 May 2003, is a private law institution providing a public service.²⁵⁴ The Regional Accounting Councils (CRCs) are subordinate to the CFC, and responsible for the administration of the Directives issues by the Federal Council, as well as for the registration of accountants and general supervision of the profession.²⁵⁵
      
   2. 
      The work of the CFC is complemented by a number of other bodies, which also exercise regulatory functions. For instance, public companies, companies that benefit from tax exemptions, investment funds, and other securities market participants must follow accounting rules issued by the Securities Exchange Commission (CVM). Financial institutions and credit unions must follow the Central Bank's definition of applicable rules. Likewise, the Private Insurance Superintendence (SUSEP) establishes rules for insurance companies, while health insurance companies are regulated by the National Health Agency (ANS). Also, and in addition to the work developed by the CFC, complementary guidelines on accounting activity are issued by the Institute of Independent Auditors of Brazil (IBRACON); these guidelines are referred to by the various regulators in their market segments.
      
   3. 
      Brazilian law recognizes two kinds of accounting professionals: accountants, requiring university study, and accounting technicians.²⁵⁶ Registration of the respective diploma at the CRC is compulsory. Accountants and auditors must be registered in their corresponding CRC, in accordance with Resolution CFC No. 496 of 5 October 1979. This applies to both nationals and foreigners. One of the stated objectives of the compulsory registration is to assure the protection of accounting services companies names. To obtain this registration it is necessary to pass a sufficiency exam.²⁵⁷ Auditors wishing to act in the area of securities must also register at the CVM, in accordance with Law No. 6,385/76). There are two different categories of registration at the CVM: independent auditors/natural persons, for accountant registered in their respective CRC and considered autonomous workers; and independent auditors/juridical persons, for firms constituted by accountants with the purpose of exercising accounting activities and registered in their respective CRC.
      
   4. 
      Brazil recognizes two sets of accounting principles for companies: the principles of the corporate law itself, issued by the National Congress, which include the rules issued by each respective regulator, and the Brazilian General Principles, set by the CFC. Brazil has no mutual recognition agreements in accounting. Although the international standards developed by IFAC (International Education Standards and Guidelines, International Standards on Auditing) and IASC (International Accounting Standards) are recognized in Brazil, national standards issued by the CFC and the IBRACON are used. There are also the general standards set by the CVM to be adopted by public companies and other securities market participants, which are also used by private companies. These standards, although harmonized in principle with international standards, do not strictly correspond to them. In this respect, the authorities note that, when issuing rules, domestic regulators base them on the internationally adopted rules of the International Accountant Standards Board (IASB). The authorities also note that a bill is currently being discussed in Parliament, aimed at modifying the accounting section of the Corporate Act (Law No. 6,404/76) to better reflect international accounting standards and principles.
      
   5. 
      A breach of accounting standards is subject to penalties by the competent CRC or the CFC. In addition, independent auditors that do not comply with professional rules are subject to penalties by the CVM or the Central Bank. Furthermore, administrators of public companies are also subject to administrative sanctions for not complying with accounting rules issued by the regulators (CVM, Central Bank, SUSEP); these range from the imposition of a fine to the temporary disqualification or even suspension of the authorization or registration for the execution of activities covered by the Securities Act (Law No. 6,385/76).
      

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