The first-ever Olympic Games in South America will generate many business opportunities for international companies, whether directly contracting with the Rio 2016 Organising Committee or in related areas such as hotels, merchandising and property investment. There is scope for all manner of investors and entrepreneurs to take advantage of the demand generated by Rio 2016. However, in most cases, international investors will need to establish a subsidiary or joint venture in Brazil and it will be important to work with experienced and knowledgeable advisors to enter this hugely prospective, but challenging Brazilian market.
Olympic Procurement Opportunities
A large number of contracts for the Games have yet to be awarded by the Rio 2016 Organising Committee, including in the areas of human resources, sports equipment, entertainment and merchandising.
The Brazilian Federal Constitution establishes that governmental purchases, at Federal, State and Municipal levels should be contracted through public tenders. This is regulated by the Brazilian Tender Law (Law 8.666 of 1993). However, unlike other Brazilian procurement processes, contracting for Rio 2016 has not focussed on local content requirements, as these goods and services are considered one-off purchases. For this reason, companies that are not already active in Brazil may see Rio 2016 as an ideal opportunity to gain a foothold in this important market, especially firms that have experience in supplying goods and services to previous Olympics or other major sports events.
According to Ernst & Young, Rio 2016 is set to generate more than 540 procurement processes with a total value of US$1.3bn. A total of 30 million products and services will be procured, including – 1 million components for sports equipment, 6 million meals, 48,000 towels, 88,000 lamps, 120,000 chairs, 25,000 tables, 30,000 mattresses, 12,000 PCs, 65,000 electronic scoreboards and cruise ships to accommodate guests. There will also be significant transportation and logistics demands, to bring all of this equipment to Rio, along with competitors, spectators, associated professionals and even horses for the equestrian events. The Suppliers’ Portal of the Organising Committee at http://portaldesuprimentos.rio2016.com/ provides information regarding the status and timing of bidding processes.
With sustainability as one of Rio 2016’s official pillars, the Organising Committee is giving particular consideration to sustainable development in its supply-chain management. Suppliers of raw materials need to demonstrate that their products are from sustainable sources. Products used at the Olympics will also need to support local suppliers and meet standards for water use and labour policies.
2016 Olympic Games – Tax Relief
The Brazilian federal government and a number of states and municipalities are facilitating foreign direct investment by granting special tax incentives and exemptions to suppliers to Rio 2016. Federal law 12.780 of 2013 provides broad ranging exemptions and suspensions of tax liability on the purchase and importation of goods and services in connection with the Games.
ICMS Convention 133 of 2008 allows Brazilian states to exempt suppliers of goods and services to Rio 2016 from state sales tax, which has been implemented in Rio de Janeiro and a number of other states.
It’s important to note that prospective bidders must pre-register with the Rio 2016 Organising Committee’s Supplier Development Program and request authorisation to benefit from these tax incentives pursuant to Federal Regulatory Instructions 1.335 of 2013.