Chapter 1

The General Principles of the Economic Activity


Article 170. The economic order, founded on the appreciation of the value of human work and on free enterprise, is intended to ensure everyone a life with dignity, in accordance with the dictates of social justice, with due regard for the following principles:

  1. national sovereignty;
  2. private property;
  3. the social function of property;
  4. free competition;
  5. consumer protection;
  6. environment protection, which may include differentiated treatment in accordance with the environmental impact of goods and services and of their respective production and delivery processes;
  7. reduction of regional and social differences;
  8. pursuit of full employment;
  9. preferential treatment for small enterprises organized under Brazilian laws and having their head-office and management in Brazil.

Free exercise of any economic activity is ensured to everyone, regardless of authorization from government agencies, except in the cases set forth by law.

Article 172. The law shall regulate, based on national interests, the foreign capital investments, shall encourage reinvestments and shall regulate the remittance of profits.

Article 173. With the exception of the cases set forth in this Constitution, the direct exploitation of an economic activity by the State shall only be allowed whenever needed to the imperative necessities of the national security or to a relevant collective interest, as defined by law.

Paragraph 1. The law shall establish the legal system of public companies, joint-stock companies and their subsidiary companies engaged in economic activities connected with the production or trading of goods, or with the rendering of services, providing upon:

  1. their social function and the forms of control by the State and by society;
  2. compliance with the specific legal system governing private companies, including civil, commercial, labour, and tax rights and liabilities;
  3. bidding and contracting of works, services, purchases, and disposal, with due regard for the principles of government services;
  4. the establishment and operation of boards of directors and of boards of supervisors, with the participation of minority shareholders;
  5. the terms of office, the performance appraisals, and the liability of administrators.

Paragraph 2. The public companies and the mixed-capital companies may not enjoy fiscal privileges which are not extended to companies of the private sector.

Paragraph 3. The law shall regulate the relationships of public companies with the State and society.

Paragraph 4. The law shall repress the abuse of economic power that aims at the domination of markets, the elimination of competition and the arbitrary increase of profits.

Paragraph 5. The law shall, without prejudice to the individual liability of the managing officers of a legal entity, establish the liability of the latter, subjecting it to punishments compatible with its nature, for acts performed against the economic and financial order and against the citizens’ monies.

Article 174. As the normative and regulating agent of the economic activity, the State shall, in the manner set forth by law, perform the functions of control, incentive and planning, the latter being binding for the public sector and indicative for the private sector.

Paragraph 1. The law shall establish the guidelines and bases for planning of the balanced national development, which shall embody and make compatible the national and regional development plans.

Paragraph 2. The law shall support and encourage cooperative activity and other forms of association.

Paragraph 3. The State shall favour the organization of the placer-mining activity in cooperatives, taking into account the protection of the environment and the social-economic furthering of the placer-miners.

Paragraph 4. The cooperatives referred to in the preceding paragraph shall have priority in obtaining authorization or grant for prospecting and mining of placer resources and deposits in the areas where they are operating and in those established in accordance with article 21, XXV, as set forth by law.

Article 175. It is incumbent upon the Government, as set forth by law, to provide public utility services, either directly or by concession or permission, which will always be through public bidding. The law shall provide for:

  1. the operating rules for the public service concession- or permission- holding companies, the special nature of their contract and of the extension thereof, 128 as well as the conditions of forfeiture, control and termination of the concession or permission;
  2. the rights of the users;
  3. tariff policy;
  4. the obligation of maintaining adequate service.

Article 176. Mineral deposits, under exploitation or not, and other mineral resources and the hydraulic energy potentials form, for the purpose of exploitation or use, a property separate from that of the soil and belong to the Union, the concessionaire being guaranteed the ownership of the mined product.

Paragraph 1. The prospecting and mining of mineral resources and the utilization of the potentials mentioned in the head paragraph of this article may only take place with authorization or concession by the Union, in the national interest, by Brazilians or by a company organized under Brazilian laws and having its head-office and management in Brazil, in the manner set forth by law, which law shall establish specific conditions when such activities are to be conducted in the boundary zone or on Indian lands.

Paragraph 2. The owner of the soil is ensured of participation in the results of the mining operation, in the manner and amount as the law shall establish.

Paragraph 3. Authorization for prospecting shall always be for a set period of time and the authorization and concession set forth in this article may not be assigned or transferred, either in full or in part, without the prior consent of the conceding authority.

Paragraph 4. Exploitation of a renewable energy potential of small capacity shall not require an authorization or concession.

Article 177. The following are the monopoly of the Union:

  1. prospecting and exploitation of deposits of petroleum and natural gas and of other fluid hydrocarbons
  2. refining of domestic or foreign petroleum
  3. import and export of the products and basic by-products resulting from the activities set forth in the preceding items
  4. ocean transportation of crude petroleum of domestic origin or of basic petroleum by-products produced in the country, as well as pipeline transportation of crude petroleum, its by-products and natural gas of any origin
  5. prospecting, mining, enrichment, reprocessing, industrialization, and trading of nuclear mineral ores and minerals and their by-products, with the exception of radioisotopes whose production, sale, and use may be authorized under a permission, in accordance with letters b and c of item XXIII of the head paragraph of article 21 of this Federal Constitution.

Paragraph 1. The Union may contract with state-owned or with private enterprises for the execution of the activities provided for in items I through IV of this article, with due regard for the conditions set forth by law.

Paragraph 2. The law referred to in paragraph 1 shall provide for:

  1. a guarantee of supply of petroleum products in the whole national territory;
  2. the conditions of contracting;
  3. the structure and duties of the regulatory agency of the monopoly of the Union.

Paragraph 3. The law shall provide with respect to the transportation and use of radioactive materials within the national territory.

Paragraph 4. The law which institutes a contribution tax of intervention in the economic domain regarding activities of importation or sale of petroleum and petroleum products, natural gas and its by-products, and fuel alcohol shall include the following requirements:

  1. the contribution rate may be: a) different for each product or use; b) lowered and restored to its original level by an act of the Executive Branch, and the provision of Article 150, III, b, shall not apply thereto;
  2. the proceeds from the collection of the contribution shall be allocated: a) to the payment of price or transportation subsidies for fuel alcohol, natural gas and its by-products, and petroleum products; b) to the financing of environmental projects related to the petroleum and gas industry; c) to the financing of transportation infrastructure programs.

Article 178. The law shall provide for the regulation of air, water and ground transportation, and it shall, in respect to the regulation of international transportation, comply with the agreements entered into by the Union, with due regard to the principle of reciprocity.

In regulating water transportation, the law shall set forth the conditions in which the transportation of goods in coastal and internal navigation will be permitted to foreign vessels.

Article 179. The Union, the states, the Federal District and the municipalities shall afford micro-enterprises and small enterprises, as defined by law, differentiated legal treatment, seeking to further them through simplification of their administration, tax, social security and credit obligations or through elimination or reduction thereof by means of law.

Article 180. The Union, the states, the Federal District and the municipalities shall promote and further tourism as a factor of social and economic development.

Article 181. Compliance with request for a document or for information of commercial nature, made by a foreign administrative or judicial authority to an individual or legal entity residing or domiciled in the country shall depend upon authorization from the competent authority.


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