Defense cooperation with Turkey

Brazilian Decree 6.411 was enacted this Monday (25/3). The norm ratifies a treaty celebrated with Turkey in 2003 to cooperate in defense subjects.

To read the text, in Portuguese, click here.

Higher taxes in Brazil: February

On February were collected US$ 28,320 million in taxes in Brazil. The announcement was made last Thursday (20). This represents 9.98% more than on February 2007, confirming the increase tendency.

Understanding Brazilian law: Part IV – Declaratory statutes

Declaratory statute literally translated from Portuguese should be called “complementary law”, because its function is to complement some constitutional commands, not to declare them.

In this site we decided to use the substantive “declaratory statute” in order to make easier for common law countries’ readers to understand. Although, readers must be aware that Brazil is a Civil Law Country. Therefore, we do not have “statues” as in Common Law (reading the previous posts is recommended in order to understand that).

Declaratory statutes are just used when the Constitution itself literally requires them. For example, general rules on taxes must be defined by a declaratory statue (Constitution, article 146). If a general tax rule is in an ordinary law, it shall be declared unconstitutional.

However it is possible that a declaratory statute may be sometimes enacted to rule a regular subject. The Constitutional Court does not consider this unconstitutional because there is no prejudice. In fact, a declaratory statue must be approved by the majority of all congressmen. For an ordinary law to be approved it is only necessary the majority of the present ones.

As you may think, only some important issues are ruled by declaratory statutes.

Bending the law for doing business

Doing business in Brazil is sometimes an incomprehensive subject to foreigners, due to cultural differences. Bureaucracy, taxes and labor law are the main challenges for entrepreneurs. In this week’s edition of The Economist there is a quite interesting article about these issues. We quote the magazine:

Starting a business takes 152 days and requires 18 different procedures, according to the IFC's annual worldwide “Doing Business” study. It takes 2,600 hours for a medium-sized business to keep up with its taxes each year. The same hypothetical business would pay 69% of its second-year profits in tax, if it played by the rules and did not receive special tax breaks.

Brazilian entrepreneurs show an unsurprising willingness to bend the law. “Essentially what determines good entrepreneurship in Brazil is the ability to navigate around the bureaucracy,” suggests Mr. Djankov.

These opinions may sound too exaggerated, but the reality is very close to them.

To read the full article, click here.

Understanding Brazilian law: Part III - Constitution

Brazil's Constitution dates from 1988. When military dictatorship ended in 1985, elections were convened to create a Constitution adapted to that new era.

Before this, there were six other constitutions, cited by date:

· 1824 (Imperial one, with 179 articles);

· 1891 (First Republican, with 91 regular articles plus 8 transitory ones. Inspired in United States Constitution);

· 1934 (This constitution lasted for just one year. After that it was suspended. With 187 regular articles pus 26 transitory ones, it was based on democratic ideas, with German inspiration);

· 1937 (New State Era - Dictatorship inspired in Fascism. The Constitution was called "Polaca" because it was based on Poland's Constitution, with 187 articles.);

· 1946 (A Constitution based on 1934s ideas. It is considered a very good and progressive one. It had 218 articles.);

· 1967 (Military Dictatorship. This Constitution gave most of Republic powers to the Executive. It had 189 articles. In 1969 most of it was changed. After that it had 217 articles).

When 1988 Constitution started ruling, former President José Sarney said that “with this Constitution it is impossible to govern Brazil”. His point of view was based on the amount of new obligations that the state started having. For example: health care is free for all in Brazil, even those who do not contribute to maintain it. Certainly, the money to complete the budget must be taken from other sources.

Liberal former deputy Roberto Campos refused to sign the 1988 Constitution. He though it was made with no attention to state budget and would become a source of higher taxes. In the end, another former deputy, Ulisses Guimarães, convinced Campos to sign. “We can fix things latter”, Guimarães was supposed to say. Two decades latter, taxes burden 37 percent of Brazilian GDP.

Even so, there have been no significant claims to bring Constitution rules to a more acceptable standard to a poor country.

New minimum wages

On February 29th, President Lula enacted a provisional executive act raising minimum wages in Brazil. (We will explain provisional executive acts on next days.)

From now on, no employee shall receive less than US$ 244.00 per month. The Brazilian working routine consists in eight hours of daily work, five days per week, plus four hours on Saturdays.

With this money a family is expected to pay for their food, education, transport, healthcare… As many people in the world know, it is impossible to do it. Just to give an idea, a Combined Number 1 (Big Mac, French fried and Coke) in Brazil is worth US$ 6.74.

Government usually says minimum wages are low due to retired persons, which receive this amount of money monthly from a compulsory fund maintained by workers and companies taxes. Therefore, there are supposedly few people contributing and to many receiving.

Minimum wages are received by just a few employees. Most of them work in residences.


To read the provisional executive act’s text (in Portuguese), click here.

Understanding Brazilian law: Part II - General Rules

There are three main kinds of statues that must be approved by the Legislative in the Brazilian Legal System. For each there is a different legislative process.

As in Kelsen's theory, there is hierarchy among laws (term used in general sense). Constitution is the most important. The others – declaratory statute, ordinary law and provisional executive act – cannot rule against Constitution.

Between declaratory statue and ordinary law there is no hierarchy, since each one has a specific function.

Provisional executive act is in the same place as the ordinary law. They differ because the first one is enacted by the President. It starts ruling for some time and is voted by the Congress during that period. If the Congress does not vote it within a 60 days period, it stops ruling. But if such a thing happens the President is able to enact once more the provisional execut5ive act for other 60 days.

Each kind of law (general sense) must be voted accordingly to certain rules.

Higher taxes in Brazil

Brazilian government collected US$ 37,039 million in taxes last January. This is 20 percent more than it was in January 2007.

Although tax authorities affirm this increase is a result of economic growth, economists say that every year more money from private sector is taken by the state.

According to Veja Magazine, in 2007, tax burden reached more than 36 percent of GDP (Gross Domestic Product). In 2006, it was 34,23 percent.

Understanding Brazilian law

Brazil is a civil law country. This means abstract rules are created by the Legislative - and, sometimes, by the Executive. When a person files a case, judges apply abstract rules to a specific situation.

In most of the times, a case decision just matters to the people involved in it. But there are exceptions, such as some actions to argue unconstitutionality. These actions - named "ADIns" and "ADCs" - create abstract rules by changing ordinary laws to adapt them to constitutional command.

So why is it important to know about general court decisions in this system? Because decision made by the court are usually reached the same way, although they are not obliged to do it forever.


CODES

As many civil law countries, Brazil also has several codes.

The civil code contains 5 parts: general part, law of obligations, property law, family law and law of succession. Together they reach more than two thousand articles.

Other Brazilian legal codes: tax code, criminal code, labor code and others.


CONSTITUTION

Constitution is the most important law, as in Kelsen's theory. If other laws are not in accordance with it, the Constitutional Court can declare them out of the legal system. In this case, nobody would be allowed to follow such rule and lower courts would not judge based on it.



Further reading:

Civil Law (click here)
Comparative Law (click here)
Curpus Juris Civilis (click here)

Inheritance cases

The Brazilian law determines local jurisdiction for inheritance matters when the decedent owned property in Brazil.

In order to receive their share, heirs must file a case in Brazil, even if they or decedent are foreigners.

Of course, these rules may be applied only to property in Brazilian soil.


CASE: SEC 843-LB.