Specific tax incentives can reduce your operation cost and improve your result
Part of the selection process of the location is to check which Cities are able to negotiate temporary tax incentives.
Depending on the town, companies can obtain exemption for City taxes up to 5 years. City taxes means: ISS (taxes for services), usually 5% over the invoiced services; IPTU (land property tax), usually 1,2% of the land value once a year and propaganda tax (according to the plates area). Depending on the social and economic interest, the City can exceptionally offer subsidies as public transportation.
In all cases, it is important to establish a direct line of negotiation with the city authorities in order to leverage the maximum of benefits.
Important: State and Federal taxes (ICMS, PIS COFINS, IPI, Duty tax, Income etc.) are not allowed for temporary exemption.
On some City websites it is possible to obtain a brief overview.
City size and infrastructure
Big cities are better prepared to offer qualified workers, public transportation services, hotels, restaurants and support for emergencies at the expense of a higher investment and payroll costs.
Smaller towns, where plot of lands are offered by quite lower prices, infrastructure and trained workers availability are usually limited, but can also be an interesting option.
Some other items such as security services, emergency assistance and firefighters should be taken in consideration. In all cases, a realistic analysis must be developed to support the best choice.
Main items associated to the location that impacts on indirect costs are:
- Capital cost (Investment)
- Travel expenses
- Professional services
Most Cities supply their Master Plan (“plano diretor”) showing the trends for future development of the different neighborhoods (as industrial). Also is possible to obtain maps for road plans, public transportation services and information about IDH (human development index) that is helpful to estimate the workers qualification average and its costs.
Does the weather impact in your production process?
In Brazil, weather can be different even among short distances. If relative humidity, temperature or atmospheric pressure impacts your processes, is important to check local weather conditions.
Ministry of Agriculture and each state maintain local information about weather conditions.
As an example, see below the Average Temperature Map of São Paulo State.