The Impact of Brazil’s New Foreign Exchange Framework on the Country’s Technology Balance

The modernization of Brazil’s foreign exchange framework, introduced by Law No. 14,286/2021, has been presented as a regulatory advancement. However, behind the discourse of simplification and international alignment lies a serious risk: the deepening of Brazil’s technological dependence on core economies. Rather than strengthening national economic sovereignty, the new law further opens the door to the outflow of foreign currency and the unrestricted transfer of knowledge and intellectual property abroad.

The Brazil's new foreign exchange framework, proposed under the previous administration, significantly expanded the possibilities for transferring funds overseas. Expenses related to royalties, technical assistance, software licensing, know-how, and other technological services can now be paid without the previous limitation of 1% to 5% of net revenue established by Ordinance No. 436/58.

When these expenses are made by Brazilian subsidiaries to their foreign parent companies, the impact is twofold: they reduce the corporate income tax base (as deductible expenses) while increasing the outflow of hard currency. In practice, this becomes a profit remittance disguised as royalty payments.

In technologically advanced countries, with active industrial policies and strong innovation ecosystems, such liberalization might make sense. But in Brazil, which ranks only 52nd in the 2025 Global Innovation Index and still struggles to translate science into products and services, the result is the opposite: the country effectively relinquishes protection of its most valuable asset, its scientific knowledge, which places it among the world’s 15 largest producers of research.

While the Nova Indústria Brasil policy seeks to restore a path of autonomous development, the country still bears the costs of liberalizing measures inherited from the previous cycle. The asymmetry is striking: while the United States, China, Germany, and South Korea maintain strategic barriers to protect sensitive sectors, Brazil continues to deregulate and outsource its foreign exchange policy.

Since December 2022, the new rules of the foreign exchange law have allowed billions of dollars in transfers abroad without requiring any local content, technology transfer, or productive investment commitments. This openness has direct consequences for Brazil’s innovation ecosystem.

Deep tech startups, especially those in biotechnology and life sciences, risk becoming springboards for foreign conglomerates. In search of capital, many end up partnering with international groups, with their technologies registered as patents abroad. When these operations culminate in mergers or acquisitions, the profits are again remitted overseas, often disguised as royalties. Instead of curbing this dynamic, the new law institutionalizes it.

The effects are visible in Brazil’s technology balance. According to the Central Bank, expenses with royalties, licenses, and technical services rose from US$8 billion in 2020 to US$10 billion in 2024, while revenues have remained virtually stagnant. The technological deficit continues to widen, and the country keeps importing knowledge and exporting currency. Today, more than 80% of patent applications filed with Brazil’s INPI come from foreign residents—reinforcing our peripheral status.

See also:

• Patents, GLP-1, and the Public Interest: A Litmus Test for Health Innovation in Brazil

• Building Global Power: A National Strategy for Deeptech Health Startups in Brazil

  
  

If Brazil truly intends to build an industry rooted in science, technology, and sustainability, as proposed by the Nova Indústria Brasil policy, it must tie foreign remittances to real investments and technology transfer. It is urgent to establish safeguards that protect our innovative companies, especially health-sector deep techs, which remain vulnerable to predatory acquisitions that threaten our pharmaceutical autonomy.

As long as the current model persists, Brazil will remain trapped in a perverse cycle: exporting commodities and importing knowledge. And that is not development. Law No. 14,286/2021, far from modernizing the country, may instead represent a political surrender disguised as a technical reform, a step backward at a time when Brazil strives to assert its scientific and technological sovereignty, as embodied by the Nova Indústria Brasil.

Fernando Peregrino In collaboration with the

Brazilian Health Innovation Institute - IBIS

Pro-Rector for Management and Governance, Federal University of Rio de Janeiro (UFRJ)Vice President, Engineering Club of Brazil

Fernando Peregrino, D.Sc., is Pro-Rector for Management and Governance at UFRJ and holds a Ph.D. in Production Engineering from COPPE/UFRJ. With nearly four decades of experience in public policy and the management of scientific and technological institutions, he has served as Chief of Staff at FINEP and Executive Director at the Coppetec Foundation. He led CONFIES for four terms, actively contributing to the development of legal frameworks that shaped Brazil’s National Innovation System, including Law No. 13.243/2016 and Decree No. 9.283/2018. His career combines strategic vision, institutional leadership, and a strong commitment to debureaucratization and the strengthening of applied research in Brazil.