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Brazil

BRAZIL

HLB DBI_Brazil.qxd:DBI Channel Islands Booklet A5 2013 4/9/14 12:43

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doing businessin Brazil


1 Doing Business in Brazil

forewordThis booklet has been prepared for the use of

clients, partners and staff of HLB International

member firms. It is designed to give some

general information to those contemplating

doing business in Brazil and is not intended to

be a comprehensive document. You should

consult us, therefore, before taking further

action. HLB International and member firms

cannot be held liable for any action or

business decision taken on the basis of

information in this booklet.

Laws in Brazil that regulate businesses and

taxes are numerous and complex. Therefore

we would advise you to consult an HLB

International member firm in Brazil before

taking any specific action.

HLB Brazil, May, 2014


Formed in 1969, HLB International isa world-wide network of independentprofessional accounting firms andbusiness advisers. The networkcomprises member firms in morethan 110 countries who, collectively, have16.000 staff in 500 offices . Member firmsprovide clients with a comprehensive andpersonal service relating to auditing,taxation, accounting and general andfinancial management advice.

Up-to-date information and generalassistance on international matters canbe obtained from any of the memberfirm partners listed in this booklet orfrom the Executive Office in London.

HLB InternationalExecutive Office21 Ebury StreetLondon SW1W 0LDUK

Telephone +44 (0)20 7881 1100Fax +44 (0)20 7881 1109Email: [email protected]: www.hlbi.com

© HLB International is a world-wide network ofindependent professional accounting firms andbusiness advisers, each of which is a separate andindependent legal entity and as such has noliability for the acts and omissions of any othermember. HLB International Limited is an Englishcompany limited by guarantee which co-ordinatesthe international activities of the HLB Internationalnetwork but does not provide, supervise ormanage professional services to clients.Accordingly, HLB International Limited has noliability for the acts and omissions of any memberof the HLB International network, and vice versa.

about HLB International

2Doing Business in Brazil


GENERAL INFORMATION 5Geography and Climate 5Population 5Languages 6Religion 6Education 6Living Standards 6Social and Cultural life 6Considerations for Investors 7ECONOMIC STRUCTURE AND 8BUSINESS ENVIRONMENTGeneral Description 8Mineral Resources and Energy 9Agriculture, Fishing and Silviculture 9Manufacture 9Technology 9Transport and Communication 9Advice for the Business Traveler 10Currency 10Economic Development Strategy 10FOREIGN INVESTMENT AND 11BUSINESS OPPORTUNITIESForeign Exchange controls 11Remittance of Interest 11Remittance of Royalties and Fees 11Repatriation of Capital 11Structure of Business Entities 12Salaries and Wages 12Restrictions on Foreign Investment 12Taxpayer Identification Number 12Investment Incentives 13Tax Incentives in the Northeast States 13and the States of Amazonas andEspirito SantoIndustrial and Agriculture 13Technology ProgrammesREPES e RECAP – Tax Incentives 14on ExportsREPETRO – Tax Incentives for the Oil 15and Gas SectorREIDI – Special Regime for Investments 15in the Infrastructure SectorREPORTO – Special Regime for 15Investments in the Port Facilities

PADIS e PATVD – Programme for the 15Development of the Semiconductorsand Digital Transmission IndustriesManaus Free Trade Zone (MFTZ) 16Import Duties (II) 16Federal Value Added Tax (IPI) 16Income Tax (IR) 16Turnover Taxes (PIS e Cofins) 16Value Added Tax on Sales and 16Services (ICMS)Municipal Incentives 17

Special Free Trade Zones 17Other Special Benefits for 17Export CompaniesSources of Funding for Foreign Investors 17Restriction and Controls 19Import Licenses 19Export Registration 19Custom Taxes 20Government Regulations for 20Foreign InvestmentInvestment Opportunities 20National Privatization Programme 21REGULATORY ENVIRONMENT 22Business Regulations 22FINANCIAL SECTOR 23Banking System 23Investment Institutions 23Financial Market 23LABOR RELATIONS 24Considerations for Investors 24Labor Supply and Relations 24Nationality Requirements 24Wages 24Executive Compensation 24Termination of Employment 25

Labor Legislation 25Labor Union Organization 26Other Payroll Taxes and 26Employee BenefitsPensions 26Vacation 26Work Terms and Overtime Pay 26Bonus 27Incentives 27Profit Sharing 27

contents



Special Requirements for Foreigners 27Entry Visas and Work Permits 27

TAXATION 28Considerations for Investors 28Legislative Framework 28Sources of Tax Law 28Jurisprudence 28Anti-Evasion 28Clearance Procedures 29

Transfer Pricing 29Who are intended to observe 29these rulesRelationship possibilities 29Concept with Tax 29Favorable CountryPrivileged Tax Regime 29Tax adjustment 30Brazilian Transfer Pricing 30Rules for ImportsBrazilian Transfer Pricing 31Rules for ExportsSafe Harbor Provisions for Exports 32

Main Taxes 32Federal Government Tax 32State Tax 32Municipal Tax 32

Social Contribution Tax 32CIT and SCT systems 32Capital Gains 32Withholding Tax 32Interest and Penalties 33Tax Net Operating Losses (NOLS) 33Import Duties (II) 33Value Added Tax on Sales 33and Services (ICMS)Excise Tax (IPI) 34Gross Receipt Tax (PIS and COFINS) 34Municipal Service Tax (ISS) 35OTHER TAX OBLIGATIONS 36Taxes Administration – Main Federal 36Tax Accessory ObligationsCorporate Income Tax Return (DIPJ) 36PIS and COFINS Tax Return (DACON) 36Federal Tax Debt and Credit 36Return (DCTF)Withholding Income Tax Return (DIRF) 37Transition Tax Account Control (FCONT) 37Tax Offsetting Return (PER/ Decomp) 37Public Digital Bookkeeping 37System (SPED)GEFIP/ SEFIP 38

General Database of Employment 38and Unemployment (CAGED)Annual Report of Social 38Information (RAIS)TYPES OF BUSINESS ORGANIZATIONS 39Companies 39Corporations 39Capital of a Corporation 39Payment of dividendas 39Shares 40Shareholders rights 40Management of a Corporation 40Financial Statements 41

Limited Liabilities Companies 41HLB IN BRAZIL 43How to contact us



general informationGeography and climate

Brazil, officially known as RepúblicaFederativa do Brasil is the largest countryin South America and the fifth-largestcountry in territorial area (equivalent to47% of the South American continent) andthe number of inhabitants according to the2010 census is 190,7 million. Having itseast side bordered by the Atlantic Ocean,Brazil has a shoreline of 7,491 km. To theNorth, Brazil is bordered by Venezuela,Guiana, Suriname and by the Frenchdepartment of French Guiana; to theNortheast by Colombia; to the West byBolivia and Peru; to the Southeast byArgentina and Paraguay and to the Southby Uruguay.

Several archipelagos form part of theBrazilian territory, such as Fernando deNoronha, Atol das Rocas, Archipelagos ofSão Pedro and São Paulo, Trindade andMartim Vaz. Brazil shares borders with allSouth American countries except Ecuadorand Chile.

Brazil’s current constitution signed in 1988defines Brazil as a Federal PresidentialRepublic, formed by the union of the FederalDistrict and its 26 states.

Brazil’s climate is very diverse with a varietyof weather conditions in most of the countryand a varied topography but most of thecountry is mainly tropical. As per theKoppen Climate classification system, Brazilhas the following climatic subtypes:tropical, equatorial, subtropical, semiarid,temperate and highland tropical. Thedifferent climatic conditions provideenvironments that vary from equatorialforests in the North and semiarid regions inthe Northeast to temperate coniferousforests in the South and tropical savannahs.

Several regions have totally differentmicro climates.

The equatorial climate characterizes aconsiderable large area in the North ofBrazil. There is not an actual dry seasonbut there are several periods with heavyrainfall. The average temperature is 25°C,with more drastic climate variations fromday to night than from season to season.The rains in the Midwest of Brazil aremore seasonal, typical of a savannahclimate.

Population

The number of inhabitants according tothe 2010 census is 190,7 million.. Itspopulation growth is at a rate of 1.6% ayear.

The population is densely concentrated inthe Southeast region of Brazil (about 43%of the population) and in the Northeast(about 28% of the population) while thetwo most extensive regions, the Midwestand the North together account for 64.12%of all Brazil’s territory but are sparselypopulated with only 29% of the country’speople.

The largest metropolitan areas of Brazil areSão Paulo, Rio Janeiro and Belo Horizonte– all in the Southeast – with 11.2, 6.3 and2.4 million people respectively, accordingto the 2010 census.

Almost every capital in the country is thelargest city in its own state with theexception of Vitoria, the capital of EspiritoSanto and Florianopolis, the capital ofSanta Catarina.

The majority of Brazilians descend fromindigenous people, Portuguese colonists,



European immigrants and African slaves.Since the arrival of Portuguese colonists inthe country in the 1500’s a considerablenumber of marriages have occurredamong these 3 groups of people. Around 5million people from more than 60countries have migrated to Brazil mostlybetween 1808 and 1972, with themajority of the immigrants coming fromPortugal, Italy, Spain, Germany, Japan andthe Middle East.

Languages

The official language of Brazil is Portuguesewhich is spoken by the majority of thepopulation and it is basically the onlylanguage used in newspapers, radio,television and for business andadministrative purposes.

Brazil is the only Portuguese speakingcountry in America, making the language areally important part of the country’snational identity and helping set its uniqueculture apart from its Spanish speakingneighboring countries. Brazilian Portuguesehas developed into a unique language of itsown, influenced by African and Amerindianlanguages. As a result the language is verydifferent, especially phonologically from thePortuguese spoken in Portugal and otherlusophone countries. These differences inlanguage are comparable to differencesbetween American and British English.

Religion

The constitution guarantees freedom ofreligion and State and Religion areofficially separate, making Brazil officially alay state. The law prohibits any form ofreligious intolerance; however, theCatholic church is still the majorityaccounting for 64.6% of the population in2010.

Education

The federal constitution and the NationalEducation Law determine that the Federalgovernment, the States, the Federal Districtand their respective cities must generateand organize their own educational system.Each one of these public educationalsystems is responsible for their ownmaintenance that generates funds as wellas mechanisms and sources of funding.The new constitution designates 25% of thestate budget and 18% of the federal andmunicipal taxes to Education.

The higher education system starts withundergraduate studies and coursesoffering several options of specialization indifferent academic and professionalcareers. Depending on the choice made,the students have the option to improvetheir educational achievements withgraduate studies and courses.

Living Standards

The living standards of a large proportionof the population are very low, while onthe other hand, the living standards of asmaller part of the population is very high.This discrepancy in revenue between therich and the poor has been a constantworry for the government. The GDP percapita of Brazil is US$ 12,181 according toGDP and census of 2010, placing thecountry in the 75th position accordingwith the data of the World Bank Group.

Cultural and Social Life

The culture is heavily influenced by theAfrican, European and indigenouscultures. The Amerindians influencedlanguage, cuisine, music, dance andreligion. Brazilian art has been developedsince the XVI century in styles that varyfrom the Baroque (the dominant style untilthe beginning of the XIX century) toromanticism, modernism, expressionism,cubism, surrealism, and abstract style.




The Brazilian cinema goes back to thebirth of the media at the end of the XIXcentury and has gained since theninternational recognition.

Considerations for Investors

• Brazil is the fifth largest country in theworld with a population of 190,7million people (census of 2010) and itis also the fifth most populated countryin the world, trailing behind China,India, United States and Indonesia.

• Brazil is the biggest economy in LatinAmerica (and the second biggest in theAmericas, behind the United Statedonly), the sixth largest economy in theworld in the exchange market and theseventh biggest in the purchasingpower parity (PPC) according to theIMF and the World Bank Group.

• Brazil has a very rich biodiversity.• Abundant agriculture and a greatpotential for energy generation.

• High potential for growth.• Wide industrial base in infrastructureand a very diverse economy.

• Industrial policy clearly defined.• Ever-evolving technological development.• Audacity and aggressiveness in themaking of new business.

• Favorable systems for micro and smallbusinesses.

• Foreign investments are generallywell welcomed.

• There is a big consumermarket potential.

• Exporting is generally preferred.• Foreign investors are eligible for themajority of the incentives available.

• There is a restriction of foreignhomeship in certain strategic sectors.

• Exchange controls are extensive.• Bank and financialinstitution regulations

• Income per capita growth• Inflation and interest under target



economic structure andbusiness environmentGeneral description

Brazil is one of the top 10 biggesteconomies in the world and the countrykeeps on growing becoming veryattractive to foreign investors, due to itsgrowth potential and its big andcompetitive market and political stability.This business environment has beenbenefited from measures adopted by theBrazilian government in past decadesaiming to promote a competitive economy,controlling inflation through very strictmonetary policies.

An overhaul of Brazil’s economy gave thecountry a brand new internationalrecognition nationwide and globally. Thecountry is one of the founding members ofthe United Nations UN, G20, Community ofPortuguese Language Countries, LatinUnion, Organization of American States(OAS), Organization of Ibero-AmericanStates (OEI) , Mercosul - CommonMarket ofthe South and of the Union of SouthAmerican Nations, in addition to being oneof the countries of the BRIC (Brazil, Russia,India and China). Brazil is also home fora great diversity of wild animals, naturalenvironments, and vast natural resourcesand an immense variety of preservedhabitats.

Basically, there still is a considerableparticipation of the State in strategicsectors, such as transport and publicservices. The oil industry is a governmentmonopoly, except when it comes todistribution. Specific legislation waspromulgated a few years ago to privatizecompanies where the presence of the Statewas not considered essential.

Brazil has a large and dynamic privatesector, which includes sizable foreigninvestments. In 2009, the manufacturingsector accounted for approximately 28% of

GDP, the services sector accounted forapproximately 65.3% and agricultureaccounted for approximately 6.7%. In 2009,Brazil’s work force consisted ofapproximately 21 million people (accordingto IBGE, considering the six main Braziliancities). At the last IBGE employment surveyin May 2009, 8.8% of the Brazilian workforce was not officially employed, that is,it is made up of workers that do not holdwork cards.

Natural resources and agriculture have beenthe mainstay of the economy, supported byabundant human resources. Since 1960,however, emphasis has been put onindustrial development financed for themost part by loans and investments.Therefore, today’s exports reflect a balancedmixture of commodities and manufactureditems. The import profile became a lot moreregulated during the 1970’s and 1980’s dueto the scarcity of foreign money. Thissituation has changed since the opening upof the growing economy to globalization.

The southeastern and southern remains asa major hub of industries, services andagribusiness. However northeast region hasbeen highlighted in recent years as a majorhub for service companies, and especiallymany industrial footwear, automotive,agriculture and fishing due to infrastructuredevelopment in ports and airports, and evenby tax incentives developed by statesand federal governments. In addition, thefederal government has been motivate deeconomy and improving the income of theNortheastern population. The North regiondominated by the Amazon forest has alow population density and it remainsvirtually unexplored.



Mineral and Energy Resources

Brazil is very rich in mineral resources andalso one of the biggest manufacturers ofquartz, tin and niobium of the world, andone of the 3 biggest manufacturers of iron,manganese and tantalum.

The Brazilian iron and steel industry is oneof the seven biggest industries of theworld. Several other minerals and preciousstones are also extracted on a growingscale.

Natural resources in Brazil also include oiland hydropower generated electricity.Most of the electricity in Brazil comes fromhydroelectric power plants. The Itaipudam in the Southeast is the biggest in theworld. The wind energy through has beenencouraged through investment, and thistime has been developed mainly in thenorthern regions.

Brazil has come up with very successfulinitiatives when it comes to sources ofrenewable energy. Through the expansionof the ethanol sector with a focus onefficiency and productivity, Brazil is knownas the world leader in bioenergy. Theproduction of alcohol from the sugar caneis an example of success for the entireworld and there is also the opportunityto repeat the same feat with other typesof biomass.

Agriculture, fishing and sivilculture.

Vast areas of land are adequate or adaptableto agriculture. The country invested in longterm research and technology for tropicalagriculture. That allowed for thedevelopment of agribusiness and hasincreased production and export.

Brazil is currently considered the biggestManufacturer of the following products:coffee, sugar and orange juice. Brazil hasa notable production of soya beans, about25% of the world production.

In export terms, Brazil is the main exporter ofthe following products: soya, coffee, sugar,orange juice, ethanol and bovine meat.

Other important agricultural productsinclude maize, cacao, tobacco andbananas.

Agribusiness performance has improvedin the past five years, propelled mostly bysoya, meat, pork and poultry exports.

Cattle’s rearing has been expandingcontinuously and has made severaladvances in productivity. The cost of themeat production in Brazil is one of thelowest in the world, which makes itextremely competitive.

Brazil is the centerpiece of the biofuel andbioenergy sector, with the capacity toproduce the greenest renewable worldenergy matrix. The sector is stimulated byother competitive advantages, such ashighly qualified human resources, publicand private research institute initiatives withinternational recognition and agriculturalcredit offer.

Manufacture

The main industries include petrochemical,steel, automobile, mineral, cement, paper,aircraft and products related to agribusinessand food processing. There is a greatpotential of growth in all sectors.

Technology

The high technology sector encompassesmainly the assembly of components andpieces. Multinational companies dominatethe market but there are very largeBrazilian groups as well.

Transport and Communication

Since the inclusion of the railway systemcontrolled by the government in the NationalPrivatization Programme, there has beensignificant investment in the developmentand modernization of the railway network.This network is located predominantly in theSoutheast and in the South regions, eventhough there are plans to extend the railnetwork in the North and the Midwestregions. Almost all transportation companieshave been privatized.



Advice for the Business Traveler

A foreign resident must obtain either apermanent or a temporary visa to startworking in Brazil.

A person who has a temporary visa issubject to taxation in Brazil if he/shealready has a work contract upon arrival inthe country. If the person does not possessa work contract, taxation will apply if theperson stays in the country for more than183 days, independent of whether thedays were consecutive or otherwise in anyperiod of 12 months. A person who has apermanent visa is subject to taxation fromthe date of arrival in Brazil. In the case ofa Brazilian subsidiary director from aforeign company, he/she must have apermanent visa.

The permanent visa is valid for a periodof five years. A work contract is not apre requirement for obtaining a temporarybusiness visa, which is valid for 90 daysand it is renewable for an extra 90 days.

To be registered as an employee in Brazil,foreigners must obtain an ID (ForeignerIdentification Card or RNE) issued by thelocal authorities and a work card by theMinistry of Labor.

Currency

The currency in Brazil is the REAL (R$),which is divided in 100 units calledcentavos. Even though participation isrestricted to authorized importers andexporters, the Central Bank of Brazil doesnot set a fixed exchange rate, which inturn fluctuates freely in the market.Notwithstanding the Central Bank of Brazilintervenes when there are signs ofspeculative operations.

Plans of Economic Development

There is a necessity in Brazil to reduce socialdisparities, to reorganize the urbanstructure, fiscal balance and formanagement modernization. Besides that, itis also necessary to improve the basicconditions of life for workers in order toguarantee adequate living, health care

assistance and access to food withreasonable prices. As a consequence, recentspecific government targets were asfollows:

• Workforce improvement, boostingeducation, health and wellnessprogrammes.

• Accomplish a more uniform revenuedistribution.

• Reduce inflation to manageable levelsthrough government budget cuts andmonetary policy control.

• Negotiation of the external debt.• An energy expansion programme.• Agricultural sector development.• Market strengthening in local capitals,attracting personal savings andforeign capital.

• The privatization of some companies inthe public sector.

Below follows comprehensive data onthe economic evolution of recent years.

• Revenue disparity tends to fall overtime. The welfare programme Bolsa-familia turned 9 in 2012 and aims toeradicate poverty in Brazil. Theprogramme resulted in higher schoolattendance among children andteenagers, prenatal exams and inbreastfeeding. During this period theBolsa-familia became a model forrevenue distribution programmesaround the world and is still amongthe programmes most recommendedby the UN.

• Better access to basic needs, suchas water supply.

• Computers with internet access weregoods whose presence in the marketincreased rapidly. They went from27.3% in 2009 to 36.5% in 2011.

• Credit volume keeps on expanding inthe country. The volume has increased16.6% in the last 12 months. Theexpansion occurred concomitantly withthe reduction of interest rates tonatural persons as well as to legalpersons. In the past 12 monthsinterest rates dropped 10.2%


foreign investment andbusiness opportunitiesExchange Controls

Despite the intention of more flexibleregulation, the Central Bank of Brazil stillimposes strict controls on internationaltransactions. That is a really importantissue to national and foreign investorswho wish to invest internationally or inBrazil. In theory the approval of the CentralBank of Brazil should not be a problemprovided the operations are supported bylegal documentation. The intention is tomake transactions a little less bureaucraticand stimulate the inflow and the outflowof funds in Brazil. In reality, however, thecontrol on the inflow and outflow offoreign money was passed on to privateBrazilian banks that are nowresponsiblefor the enforcement of theexchange rate policy. In general, foreigninvestment are still subject to theelectronic information system of theCentral Bank of Brazil (SISBACEN), whilethe remittance of funds abroad aretransferred using specific routes orregulated codes by the Central Bank ofBrazil through the Regulations forInternational Foreign Exchange and CapitalMarkets (RMCCI).

Noncompliance with exchange regulationsis subject to serious sanctions, especiallyin the case of tax evasion, falsestatements, money laundering and privatecompensation operations.

Remittance of Interest

There is no restriction to the amount ofdividends distributed to foreignstockholders as long as the contract issigned under market conditions and that itis properly registered with the BACEN.Paid or credited interest under loancontracts signed by parties abroad and

that are not registered with the CentralBank of Brazil must comply with transferpricing policy.

Remittance of Royalties and Other Fees.

Royalty payments are allowed anddeductible provided the underlyingintangible is duly registered in both thecountry of origin and in Brazil. Remittancesof royalties abroad for trademarks, patentsand technical assistance that involve thetransfer of know-how are subject to priorregistration with and approval fromthe Brazilian Industrial Property Agency(INPI). They must be also registered withthe BACEN.

The deduction of royalty expenses isgenerally limited to an amount between1% and 5% of the net receipts derived fromthe product manufactured or sold(excluding software and similarcopyrights). The same limitation may alsobe imposed on the amount of the royaltythat may be effectively remitted abroad.

The payment of royalties and technicalassistance fees is generally subject to 15%withholding tax (or 25% of payments madeto a low-tax jurisdictions) and a 10%special contribution called CIDE. CIDE ischarged on royalty payments includingfees for technical assistance and technicalservices.

Repatriation of Capital

The repatriation of share capital is notgenerally restricted if the investor registersthe original investment and any capitalincreases or capitalized earnings with theBACEN Central Bank of Brazil. Generally,repatriation is accomplished after the saleof the shares to a local resident, by a



capital reduction or liquidation ofthe company. Commercial law containsspecific rules on share redemptionsand on companies re-acquiring theirown shares.

Capital is most commonly repatriatedthrough the sale or redemption of shares.Any capital gain recognized as the resultof a sale transaction is subject towithholding tax in Brazil at a general 15%rate unless otherwise provided by taxtreaties signed with Brazil. Capital gainsare generally computed as the positivedifference between the sales price and thecost of acquisition of the investment. If theseller is a non resident entity, somecontroversy exists as to whether the costbasis should be the original investment inforeign currency (as registered with theBrazilian Central Bank) or the originalinvestment in local currency plusinflationary adjustments.Share capital may also be repatriatedthrough a capital reduction, which mayalso trigger withholding tax providedcertain conditions are met. If a Braziliancompany has accumulated losses, it maybe required to first offset such lossesbefore implementing the capital reductionLiquidations are audited by the taxauthorities and they may take a long timeto be finalized. They are taxed similarly toa sale of shares. Repatriated funds inexcess of the amount of foreign capitalregistered with the BACEN are subject to a15% withholding tax.

Structure of Business Entities

Laws governing the organization ofbusiness entities in Brazil are the same forBrazilian residents and for foreigners.

Wages and Salaries

Brazilian companies are authorized toremit salaries and wages taxed via a localpayroll to a foreign bank account held bythe employee. Such a possibility used tobe limited only to engineering companiesand is now authorized for all industries.

Restrictions on Foreign Investment.

In general, Brazil does not restrict foreignownership of national enterprises.However, foreign individuals andcompanies are not permitted to controlinvestments in certain sectors, includingthe news media, where the participationof foreign investors is allowed only up to alimit of 30% of a company’s capital. Othersectors, such as transportation, aresubject to specific operational restrictions.Non-resident individuals and companieswith headquarters abroad are notauthorized to acquire it directly.

Taxpayer Identification Number

The Brazilian Federal Revenue demandsthat foreign investors obtain a tax ID inorder to perform any of the followingactivities: owning real estate, owning avehicle, vessel or airplane; holding aninterest in a Brazilian company; holding abank account; holding investments in theBrazilian financial market or the Braziliancapital market; purchasing intangibleassets with payment terms exceeding 360days; executing a loan operation;executing an import finance transaction;executing a leasing operation or leasing orrenting of equipment or undertaking avessel freightage transaction; importingassets for capitalization in a Braziliancompany; and lending funds to a Brazilianresident or investing funds in Brazil.

After October 1st of 2002, foreign residententities need to register with the NationalRegister of Legal Entities (CNPJ). A localresident lawyer should be assigned forthis propose and also have the power tomanage assets of the foreign entity inBrazil. Furthermore, copies of the foreignentity’s bylaws or articles of incorporationor equivalent, notarized and certified at theconsulate, must be filed with the FederalRevenue Service at the same time.

The regulations do not specify a penaltyfor not obtaining a tax ID number;however, a foreign entity that does notcomply with this requirement is subject toadministrative penalties, including the



denial of the approval of its corporatedocumentation (archived in the CRRE or inthe Central Bank of Brazil). In practice, thiskind of sanction could lead to otherdifficulties, such as the inability torepatriate earnings, participate in publicbids, or in entities liquidation in Brazil.

Investment Incentives

For the past 15 years the government hasbeen increasing foreign investment andthe incentive to export. State andmunicipal governments will provide othertax incentives to investments in their ownregions. Several local governments,especially in the North and in theNortheast of Brazil, offer significantincentives to attract business to theirregions.

Tax Incentives in the Northeast Statesand the States of Amazonas andEspirito Santo

Brazil offers a variety of tax incentivesmeant to attract business of meaningfulimportance and promote development incertain underdeveloped regions.

The following incentives are offered by theSuperintendence for the Development ofthe Northeast (SUDENE), and by theSuperintendence of Development for theAmazon (SUDAM):

• Reduction of 75% of the income taxand non-refundable;

• Stepwise reduction of 12.5% in theincome tax and non-refundable;

• Deposits for reinvestment. UntilDecember 31, 2018, legal entities thathave projects in operation in the areaof SUDENE and SUDAM and fallingwithin the economic sectorsconsidered as priorities for regionaldevelopment, may deposit in Banco doNordeste do Brazil S / A - BNB orBanco da Amazônia S / A, respectively,for reinvestment in new machinery andequipment, 30% (thirty percent) of theamount of income tax payable by suchassets, calculated on the operatingincome, plus 50% (fifty percent) ownresources;

• Accelerated depreciation for purposesof computing income tax;

• Discount, within 12 (twelve) monthsfrom the acquisition of investments inthe credits of PIS / COFINS and PASEP;

• Exemption from the freight surchargefor renewal projects related to theMerchant Marine;

• Exemption from income tax and theadditional calculated based onoperating profit for companiesmanufacturers of machinery,equipment, instruments and devices,based on digital technology, focusedon the digital inclusion program.

Industrial and AgriculturalTechnology Programmes

Projects that operate under the Industrial andAgricultural Technology DevelopmentProgrammes (Programa de DesenvolvimentoTecnológico Industrial e Agropecuário orPDTI and PDTA) and that are approved bythe Industrial Development Council(Conselho de Desenvolvimento Industrial orCDI) are entitled to a withholding tax crediton the remittance of royalties abroad,technical assistance and specialized servicesfees. These credits are equivalent to thefollowing decreasing percentages:

20% from January 1, 2006to December 31, 2008;

10% from January 1, 2009to December 31, 2013.

The following additional benefits arecurrently available under the PDTI and PDTA.

Deduction of research and developmentexpenses (except royalty expenses paid tononresidents) invested in research anddevelopment for industrial and agriculturetechnology during the fiscal year. Thisdeduction is an incentive calculated on thetotal income tax due limited to 4%.

Accelerated depreciation (twice theapplicable depreciation rate, withoutjeopardizing normal depreciation) formachinery, equipment, and newinstruments used in research anddevelopment of industrial and agriculturaltechnology.



Accelerated amortization, for income taxpurposes, of the expenses incurred withthe acquisition of intangibles related toresearch and development of industrial andagriculture technology. The amortizationmust be recognized during the period inwhich the intangibles were acquired.

Deduction of royalties and technical orscientific assistance fees as operationalexpenses. The deduction is limited to 10% ofthe net income derived from the sale ofgoods produced with the related technologypercentage. To benefit from the 10%deduction limit for corporate income taxpurposes, the company must commit itselfto invest twice the value of the benefit inresearch and development in Brazil.

REPES e RECAP – Tax Incentiveson Exports

The Special Tax Regime for TechnologyInformation Services Export (RegimeEspecial de Tributação para a Plataformade Exportação de Serviços de Tecnologiada Informação or REPES) benefits Brazilianlegal entities engaged in the developmentof software and in supplying informationtechnology services if they have 60% ormore of their gross sales income derivedfrom exports.

The tax benefits associated with theREPES comprise the suspension of PIS andCOFINS (See chapter VII item 14 – GrossReceipt Tax) charged on imports of goodsand services destined for the developmentof software and technology informationservices, provided that the import isdirectly made by the beneficiary of theREPES. The suspension is converted tozero-rate tax after three years from thedate of the import transaction. REPES alsogrants PIS and COFINS suspension onlocal sales of goods to be incorporated inthe fixed assets of companies benefitingfrom REPES.

In addition, REPES grants IPI suspensionon the importation of certain goods listedin law which will be incorporated in thefixed assets of the beneficiary of theREPES. The suspension is converted to

exemption after three years from the dateof the import transaction.

Another special tax regime for Brazilianexporters is the Special Regime for theAcquisition of Capital Goods by ExportCompanies (Regime Especial de Aquisiçãode Bens de Capital para EmpresasExportadoras or RECAP). To benefit fromRECAP, a company must have recognizedgross revenue derived from exports in thepast year equal to or higher than 70% of itstotal annual gross income and it mustmaintain a minimum of 70% exportrevenue for the following two years (Or thefollowing three if the company does notcomply with the first requirement).

RECAP applies to certain equipment,instruments and machinery importeddirectly by the RECAP beneficiary to beincorporated as fixed assets. UnderRECAP, PIS and COFINS taxes triggered onthe import are suspended and convertedinto a zero tax rate upon compliance withthe requirements of the system. Theregime also provides for the suspension ofPIS and COFINS on local acquisitionsmade by the beneficiary of the RECAP.

The RECAP does not apply to Braziliancompanies subject to the PIS and COFINSunder the “cumulative” regime.

In addition to the conditions listed above,to benefit from both REPES and RECAP, aBrazilian legal entity must not have anydebts with the Brazilian Federal RevenueService.

The benefits are cancelled if the legal entitydoes not comply with the minimum exportrevenue of 70%; if the beneficiary does notcomply with the requirements for REPESand/or RECAP; or at the beneficiary‘srequest. A legal entity excluded from REPESor RECAP must pay interest and penaltieson the taxes suspended, calculated from thedate of acquisition of the imported productsand services or the registration of the importtransaction with the electronic Customssystem (SISCOMEX).



REPETRO - Tax Incentives for the Oiland Gas Sector

REPETRO (Regime Aduaneiro Especial deExportação e Importação de BensDestinados às Atividades de Pesquisa e deLavra das Jazidas de Petróleo e de GásNatural) is a Brazilian special customsregime which applies to the importationand exportation of goods destined to fosterthe growth of the oil and gas industry.REPETRO is applicable to a determined setof products listed in the Law, allowing theexportation of goods without physical exitfrom Brazilian Territory with subsequentimportation into Brazil through thetemporary admission regime. REPETROalso allows the importation of raw materialto be used in the industrialization processwith PIS, COFINS and IPI suspensionthrough the special customs regime.

However it should be noted that REPETROis not applicable to the importation ofgoods originated abroad under a leasingagreement with a foreign entity.

REIDI - Special Regime for Investmentsin the Infrastructure Sector

REIDI (Regime Especial de Incentivos para oDesenvolvimento da Infra-Estrutura) is aspecial regime aimed to promote investmentin the infrastructure sector by privateentities, specifically for companies interestedin investing in the transport, port facilities,energy, sanitary and irrigation sectors.

The benefits of the REIDI mainly constituteof the suspension of PIS and COFINScharged on local acquisition andimportation of new machinery, tools andequipment to be utilized or integrated ininfrastructure investments destined to beincorporated in the fixed assets of thebeneficiary. Furthermore, the material usedin the construction of infrastructure isgranted with suspension of PIS andCOFINS under the REIDI regime. Upon theuse or incorporation of such goods toinfrastructure investment the suspensionof the PIS and COFINS will be convertedinto zero rates.

Moreover, the benefits of the REIDI will bevalid by a period of five years, counted asfrom the approval of the infrastructureproject by the tax authorities.

REPORTO - Special Regime forInvestments in the Port Facilities

REPORTO (Regime Tributário paraIncentivo à Modernização e à Ampliaçãoda Estrutura Portuária) is a special regimeaimed to foster investments in themodernization and enlargement of PortFacilities by port operators, portconcessionaries, public use port lessees,companies authorized to operate portfacilities of private and public use anddredging companiesImport Duty is only suspended when theimported goods do not have anyequivalent in Brazil. The IPI and ImportDuty are converted into exemption afterfive years from the purchase of goods. Thesuspended PIS and COFINS are convertedinto zero rates after five years from thepurchase of goods.

PADIS e PATVD - Programmes for theDevelopment of the Semiconductorsand Digital Transmission Industries

Aiming at the development of thesemiconductors industry, the PADIS(Programa de Apoio ao DesenvolvimentoTecnológico da Indústria de Semicondutores)is a programme developed to promoteinvestments in this sector through theconcession of zero IPI, PIS and COFINS rates,charged on local acquisitions andimportations of goods destined to be used inthe manufacture of a specific list of productsedited by the Brazilian Ministry of Scienceand Technology. PADIS also grants CIDE zerorate upon the remittance of payments toabroad for royalties, as well as for thepayment for the supplying of technologyservices from abroad.

The PATVD (Programa de Apoio aoDesenvolvimento Tecnológico da Indústriade Equipamentos para TV Digital)programme grants the reduction to zero,PIS and COFINS rates upon the localacquisition and the importation of raw



materials, fixed assets and software to beused at the manufacture of digitaltransmission devices listed by the FederalGovernment. The PATVD also grants azero rate of CIDE due upon the remittanceof payments abroad for royalties, as wellas for the payment for the rendering oftechnology services from abroad. Inaddition, PIS, COFINS and IPI charged onthe sales transactions with productsmanufactured under the PATVD are alsozero rated. The approval of projects underthe PADIS and PATVD programmes isconditional upon the regularity of theinterested company in the payment of theFederal taxes and contributions.

Manaus Free Trade Zone (MFTZ)

The Manaus Free Trade Zone (MFTZ) is afree trade area offering special taxincentives to attract businesses to theunderdeveloped Amazonia. Foreign goodsused in the Manaus Free Trade Zone forconsumption, manufacture or assembly,and goods imported for storage and re-export, are exempt from import duties, PISand COFINS and IPI. The local governmentof the State of Amazonas may also grantan exemption and/or a reduction on theICMS. In order to enjoy these benefits, acompany must obtain prior approval fromthe Brazilian authorities (SUFRAMA).Approval is generally granted for projectsthat involve a minimum manufacturingprocess, and that meet other requirementsin Brazilian tax legislation.

Import Duties (II)

- Import Duty exemption for productsdestined for internal consumption inthe MFTZ;

- Import Duty exemption for certainproducts destined for the WesternAmazon (Amazonia Ocidental, whichincludes Amazonas, Acre, Roraimae Rondônia);

- Import Duty reduction of up to 88%for raw materials that are importedthrough the MFTZ and subsequentlyused in the manufacturing process ofproducts that are destined for theBrazilian market. The reductionpercentage depends on the valueadded to the products manufactured.

Industrialized Product Tax (IPI)

- IPI Exemption for goods enteringthe MFTZ and an exemption ofImport Duties;

- IPI exemption for goods leaving theMFTZ, for products that haveundergone the minimum basicproduction process as determined inthe Federal Law dealing with theMFTZ incentive, called BasicProductive Process (PPB). However,requirements must be met in order tobenefit from this incentive, such asthe products are being listed in thelaw. If a specific product is notmentioned in the PPB list, thecompany interested in manufacturingin the MFTZ may file a request withSUFRAMA requesting its inclusion inthe PPB list;

- Exemption of IPI for productsmanufactured outside the MFTZ anddestined for the MFTZ;

- Exemption of IPI for manufacturedgoods destined for internalconsumption, either in the MFTZ or inthe western Amazon region

Income Tax

- An income tax reduction of up to 75%on the profit.

Social Contributions on Turnover(PIS e COFINS)

- Special rates of PIS and COFINSranging from combined rates of 0%,to 3.65% and 7.3%, depending on theactivity and the transaction;

- PIS and COFINS suspension upon theacquisition from outside the MFTZand importation of goods to beconsumed in a manufacturingprocess approved by SUFRAMA;

- Reduction of PIS and COFINS uponsupply of goods within MFTZ, if suchgoods are destined to a manufacturingprocess approved by SUFRAMA.



State Incentives (ICMS)

- ICMS credit equal to the amount thatwould generally be charged on theinterstate sale of industrial products.

- Other ICMS credits may be availabledepending on where goods are sold(that is, an ICMS credit may beobtained even on a sales transaction);

- ICMS deferment for certain importedraw materials;

- ICMS exemption on goods destinedfor the MFTZ.

Municipal Incentives

- Exemption for ten years from IPTU –Tax on Urban Real Estate;

- Exemption for ten years from the feecharged on business licenses.

Special Free Trade Zones

Foreign companies that invest inmanufacturing goods for export mayestablish industrial ventures in ExportProcessing Zones (Zonas de Processamentode Exportaçao or ZPEs), which are createdby Federal decree. ZPEs are special freetrade zones that are not considered to beBrazilian territory for the purposes ofcustoms control. A maximum of 20% of theproducts manufactured in ZPEs may bedestined to the Brazilian market.

The following tax and customs exemptionsare offered for a period of 20 years tocompanies operating in ZPEs:

- Suspension of the Import duty, IPI,PIS, PIS-import, COFINS, COFINS-import and AFRMM;

- Exemption from customs andadministrative restrictions andcontrols (for example, export andimport licenses) for certain goodsimported or exported;

- Exemption from withholding tax dueon payments for services rendered byforeign entities, and

- Exemption of the income tax during aperiod of 5 year.

It is important to note, however, that noZPEs are currently operating in Brazil.

Other Special Benefits forExport Companies

Companies that have at least 70% of theirrevenues originating from exports qualifyfor the incentives granted to“preponderantly exporter companies”.Preponderantly exporter companies aregranted the suspension of the IPI, and thecontributions to PIS and COFINS, upon theimportation of raw material, intermediateproducts and packing materials. Inaddition, producers of certain goodsdefined in Law (i.e. leather wallets, shoesand harvesting equipment) may obtain thesame benefits by obtaining of 60% of itsrevenues originated from exportations.

Sources of Funding for Foreign Investors

Brazil has obtained trade surpluses in thelast couple of years and the country stillplays an important role in worldwide tradeas one of the largest exporters ofagricultural products. The trade surplushas arisen from several economic andpolitical factors, mainly associated withthe devaluation of the local currencyagainst the US dollar and the measuresintroduced by the Brazilian governmentto improve exports (such as the increasein the financial and tax incentives forexporters).

Brazil has attempted to make import andexport transactions less bureaucratic. Onthe other hand, the Brazilian foreignexchange rules may present an issue forimporters because of the registrationrequirements relating to financing importtransactions (if payments exceed a 360day period).

Foreign investors that operate in Brazilthrough a subsidiary or a branch generallyhave access to the funding sources thatare available to Brazilian companies.Generally, the instruments available aresimilar to those used in most developedcountries. Hard currency hedges againstinflation are available at reasonable cost.

As a result of Brazil’s historically inflationaryeconomic environment, most creditinstruments are reimbursed in the short- ormedium-term. The financial instruments



structure changes frequently because ofconstantly changing market conditions thatmake banks change their sources of funding.The Central Bank of Brazil regulations alsochange from time to time. Depending onspecific monetary policy needs, the CentralBank of Brazil may issue treasury bondsdenominated in dollars. Because of therapidly changing nature of financialinstruments, prospective investors shouldtry to obtain the most up-to-date informationavailable before investing in Brazil.

Contracts between Brazilian residents maynot be denominated in foreign currency. Ahedge against inflation is generallyprovided by investments that have aclause for monetary correction based onan official inflation index or by acquiring aspecific commodity within the Futures andCommodities Market (Bolsa Mercantil eFuturos or BM&F).

Export revenue may be used for newinvestments, for financial transactions andfor the settlement of obligations abroad.

Medium-term loans are generally fundedthrough certificates of deposit thatcompensate investors for inflation plusinterest.

Long-term financing is generally availablethrough transfer loans, that are long-termloans made to local banks by foreign banksin foreign currency, which the local bankpasses on to final borrowers for shorterterms (generally one year) Long-termfinancing is generally available throughtransfer loans, that are long-term loansmade to local banks by foreign banks inforeign currency, which the local bankpasses on to final borrowers for shorterterms (generally one year). The finalborrower assumes the foreign currencyrisk and pays the interest, the withholdingtax and a transfer fee. Another long-termfinancing source is the Special Agency forIndustrial Financing (Agencia Especial deFinanciamento Industrial), which makesfunds available for the purchase of capitalgoods produced in Brazil.

Export financing may be available from the

following additional sources:- ACC (Adiantamento sobre Contrato deCâmbio) – an advance on exporttransactions which allows a Braziliancompany to receive an advancepayment equal to the exporttransaction to be effected. This exportfinancing may be obtained from anyprivate bank duly authorized tooperate in the foreign currencyexchange market.

- ACE (Adiantamento Sobre CambiaisEntregues) – an advance onpreviously-made export transactionswhich are generally used after an ACCtransaction and after the shipment ofthe goods. This financing may also beobtained from a private bank dulyauthorized to operate in the foreigncurrency exchange market.

- Bonus bonds issued in theinternational financial market forlong-term financing ofexport contracts.

- Long-term financing for exporttransactions available under theExport Finance Programme (Programade financiamento às exportações orPROEX). Managed by Banco do Brasil,this financing is divided into two mainprogrammes:

a) PROEX Financing, which is a directfinancing programme available to theBrazilian exporter with resources fromthe Brazilian National Treasury; and

b) PROEX Equalization, under whichBrazilian exports are financed by localor foreign financial institutions, whilefinancial expenses charged by privatebanks are equalized by the Braziliangovernment to bring them into linewith international market conditions.

- Long-term financing for exports ofmanufactured products, granted bythe National Bank of Social andEconomic Development (BNDES),which comprises the financing of theentire export chain (the manufacturing,shipment and trade of the finishedproducts abroad) and aims to improvethe competitiveness of Brazilianproducts exported and traded abroad.



Restrictions and Controls

Import and export transactions are subjectto control by the Chamber of Foreign Trade(Secretaria de Comércio Exterior or SECEX)an agency of the Ministry of Development,Industry and Foreign Trade. Brazilianimporters and exporters are required toregister with the SECEX to obtain anExporter and Importer Registration(Registro de Importadores e Exportadoresor REI), before they may enter into crossborder trade transactions.

In order to import and export goods, it isalso necessary to register with RADAR, anelectronic system operated by the BrazilianFederal Revenue Service.

This registration requires a specificapplication form and the presentation of alist of documents to the Brazilian customsauthorities. Once registered with RADAR,Brazilian importers and exporters must bequalified by the Federal Revenue Services tooperate through the SISCOMEX electronicsystem that deals with all customsoperations (imports and exports of goods).

To the extent that both import and exporttransactions represent outflows andinflows of funds from and into Brazil, allexchange contracts must be registered inthe electronic system maintained by theBrazilian Central Bank (RDE-ROF).

Few imports and exports are forbidden orrestricted. Exports of certain types ofproducts require special procedures suchas obtaining prior approval from theBrazilian government (this procedureapplies to products of animal origin, oil,gas and other products). Prior license mayalso be required for transactions involvingused goods (including capital goods) andfor products related to human and animalhealth. In general, the importation of usedconsumer goods for commercial purposesis forbidden.

Import Licenses

Generally, no prior import licenses arerequired for an import transaction. The

transaction must be registered in theSISCOMEX electronic system to obtain animport declaration (DI) for the goods toclear through customs.

If a prior import license is required, thismust be obtained before the shipment ofthe goods to Brazil; the license is generallyvalid for 90 days after shipment of thegoods to Brazil. The need for a prior licensemust be verified based on the tariff code ofthe goods to be imported.

Importers may also obtain an importlicense for drawback operations or importoperations destined for the Manaus FreeTrade Zone.

Certain products, such as human blood,medicinal, weapons and ammunition,nuclear material, petrochemicals,herbicides and pesticides, also requireauthorization from special agencies as acondition for the issue of an import license.

After obtaining the import license, theimporter must complete an ImportDeclaration and register the import in theSISCOMEX electronic system to getcustoms clearance.

Export Registration

Export transactions must also beregistered in the SISCOMEX electronicsystem. An Export Registration (Registrode Exportação – RE) must be obtained forthe goods to clear customs.Export transactions must occur within 60days after the RE is obtained.

The following export operations requirespecial procedures:- Transactions involving anon-convertible currency;

- Transactions withoutcurrency coverage;

- Sale or return of goods;- Goods that are scarce in theinternal market; and

- Goods containing nuclear andradioactive materials, weaponsand ammunition.



Exports of timbo, animals and other pre-determined products are either specificallyprohibited or severely restricted.

The Ministry of Agriculture regulates theexport of certain goods of animal origin andcertain vegetables (including beans, coffeeand potatoes). The Ministry of Healthregulates the export of medicine, and theMinistry of Defense controls the export ofweapons and ammunition. A license mustbe obtained prior to the exportation of anyof these goods.

Customs Duties

Import duty (Imposto de Importação - II) ischarged on imported goods based on thecustoms value of the goods. The customsvalue is generally based on the cost plusinsurance and freight value of the goods.The applicable customs duty rate may varydepending on the tariff classification code ofthe goods, according to the CommonExternal Tariff for non-Mercosul members(TEC), but the average rate is 15%. Importduty is a non-recoverable tax, thus, a costfor the importer.

Import transactions are also subject tofederal and state taxes (IPI and ICMSrespectively). IPI is calculated on theCIF value of the goods, plus import duty of15%. If the imported goods are used in amanufacturing process in Brazil, theBrazilian importer may recover these importtaxes.

PIS-Import and COFINS-Import are bothsocial contribution taxes charged on theimportation of goods and services,generally they are charged at a combinedrate of 9.25%. The tax base for PIS-Importand COFINS-Import on imported productsis the customs value plus ICMS and PISand COFINS, which leads to an effectivetax rate of around 13.45%. The BrazilianImporter may compute a PIS and COFINStax credit for inputs acquired under thenon-cumulative PIS and COFINS regime.Exemptions may apply to certain imports.

The Additional Freight charge for theRenovation of the Merchant Navy (AFRMM)

is a federal fee created to fundthe improvement of Brazil’s aquatictransportation system; therefore, this feedoes not apply to imports made by land orair. AFRMM is charged at a rate of 25%based on the international freight value onentry of a shipment into national harbors.An exemption from AFRMM may apply toshipments made through ports located inthe North and Northeast of Brazil, toallow for development, modernization,enlargement or diversification of these ports.

Exemption may be obtained following aspecific request made to either theSuperintendence for the Development of theAmazon (Sudam) or to the Superintendencefor the Development of Northeast (Sudene),depending on the project’s location.

Government standards forforeign investment

The Constitution establishes that foreigninvestment should be of national interestand these investments are welcomed, atthe same time that it represents a long-term commitment to contribute toeconomic development, particularly in theareas listed as priority by the government.These include the development ofagriculture, technology, manufacturing ofproducts that are currently imported andthose that boost the amount of exports.

Some restrictions to foreign property areimposed mainly for the reason of nationalsecurity, in the areas of defense,communication, air transport, and oilprospecting and refinement. There are alsosome other restrictions on participationin the computing, financial and ruralproperty sector (The term computingencompasses hardware and software,industrial automation and electronicsin general).

Opportunities for Investment

In general Brazil offers excellent investmentopportunities given the following:

- There is a considerable potential inthe local market. There are still plenty



of unsatisfied consumers.- Abundance of raw material andnatural resources.

- Considerable and growing workforce.- Manufacturing of items that arecurrently imported.

- Using Brazil as a production base forexports, especially when it comes toMercosul opportunities.

- Improving the infrastructure isconsidered a priority, includingrailways, roads, port facilities,airports, water treatment andresidues and energy generation.

- Taking the opportunity of theenormous investments that areexpected in relation to the currentfindings from Petrobras, can meanreserves of over 50 million barrels ofoil, a volume four times greater thanthe current national reserve. Also the2014 World cup and the 2016Olympic Games.

National Privatization Programme

The BNDES is responsible for theadministration of this governmentprogramme that started back in 1991.Foreign investors may participate in suchprivatizations through the conversion ofBrazilian external debt bonds thatoriginated from contracted obligations offederal public entities of the sector. Theconversions are regulated by the CentralBank and the funds converted mustremain in Brazil for at least 6 years. Profitsand dividends produced by investmentsderived from such conversions may beremitted abroad under the term of thecurrent tax and foreign capital legislation.

Foreign investors may also participate byregistering privatization funds integratedwith Brazilian external debt bonds uponan agreement with the DFA and otherbonds related with the external debt. Theparticipation of foreign capital in thesefunds is regulated by the Central Bank.The funds utilized for the acquisition ofquotas, as well as the reapplication ofaccumulated investments must registeredwith the Central Bank, mainly for thecontrol of foreign capital and to permit a

future profits remittance, the capital gainsand the return of the capital investment.The funds utilized for each investmentmust remain in Brazil for at least 6 years.



regulatory environmentBusiness Regulations

The main regulatory agencies involvedwith business activities and the stockmarket are the following:

a. Central Bank (BACEN):

Responsible for the execution of monetarypolicy, exchange controls, registration offoreign capital, profit remittances andregulation of banks and financial institutions.

b. The Securities Commission (CVM)

Responsible for the securities market andfor companies listed on the stock market.

c. Administrative Council For EconomicDefense (CADE):

Responsible for suppressing economicpower abuse, monopoly, oligopoly, carteland antitrust monitoring.

d. Brazilian Intellectual PropertyAgency (INPI):

Responsible for technological development.INPI has power over technology transferenceagreements.

e. Industrial Development Council (CDI)

Responsible for industrial developmentand for granting tax incentives to certainindustrial projects.

f. Foreign Trade Department (DECEX)of Banco do Brasil:

Responsible for Foreign Trade administrationand for export and import licenses control.



National Banking System

The national banking system is governed bythe following government institutions:

• The National Monetary Council (CMN):

The CMN supervises the financial system aswhole. The members of the Council are theMinister of Finance (CMN) and EconomicPlanning and Budget Minister.

• Central Bank (BACEN):

BACEN performs the traditional duties of aCentral Bank and implements policies ofthe CMN

• Superintendence of PrivateInsurance (SUSEP):

SUSEP is responsible for the privateinsurance sector.

• Complementary Department ofPensions (SCP):

SCP is responsible for the supervision of thecomplementary pension plans industry.

• The Securities Commission (CVM):

CVM is responsible for capital markets andfor the assets management sector.

The Brazil Bank is the entity responsible for thecontrol andmonitoring of the following: capitaland loan limits, compulsory deposit levels,interest rate, accounting procedures, foreigninvestment and exchangemarket amongotheractivities. The entities that operate in thefinancial market may be controlled bygovernment or private institutions. The maingovernment institutions are the following:

• National Bank for Economic and SocialDevelopment (BNDES):

The BNDES executes government investmentpolicy, the concession of loans and thesupervision of financing plans of thegovernment and it is also responsible for theNational Privatization Programme.

• Brazil Bank:

The Brazil Bank is a government financialagency that deals with all revenues andfederal payments. It is also a commercialand an agricultural bank.

• Federal Savings Bank (CEF):

The Federal Savings Bank controls theretirement programme and the nationallotteries.

The largest banks of the private sector havebeen organized as financial conglomerates,able to offer a variety of services. Thesebanks are also considered to besophisticates and competitive and offer arange of financial services.

Investment Institutions

Investment Institutions that are notinvestment banks include insurancecompanies, pension funds and of mutualinvestment. The insurance industrycontinues to be regulated and there arestrict controls on investment policy.However, insurance premiums charged andtypes of risk are now influenced by marketconditions. Private and public pension plansare growing.

Financial market

After 2000, the stock markets in Brazil hadto transfer their stocks to the BM&F and tothe Stock Market of Sao Paulo (BOVESPA).In 2008 BOVESPA was created from themerger of BM&F and BOVESPA.

Together, these 2 companies are one of thelargest stock markets in the world in termsof market value and it is the second largestin America.

Among Its vast range of commercialproducts, Bovespa trades stocks, public andprivate sector securities, futures contractsbased on financial assets, indexes, interestrates, foreign exchange rates andcommodities, in addition to spot US Dollar.

financial sector




• The labor markets in Brazil are regulated.• Brazil has an adequate and growingwork force;

• Labor issues are generally resolvedthrough collective negotiation, butgovernment influence is significant;

• Labor legislation is notably favorableto the workers;

• The unions are very active.• All employees must receive anadditional salary every year as acompulsory bonus.

• Employers must contribute to federalsecurity and to institutions of socialassistance.

• Discrimination in the workplaceis prohibited

• The need to add foreign personnelwill be analyzed by authorities of thefederal government.

• The termination of an employee’scontract is regulated by thefederal government.

Labor Supply and Relations

Availability of Skilled Workers

According to figures published in 2004,Brazil’s workforce consists of approximately89 million people. Unskilled workers arereadily available, but certain regions haveshortages of skilled workers and of mid-levelworkers such as managers, supervisors andtechnicians.

Unskilled workers from regions other thanthe main metropolitan areas in the Southand Southeast often need substantialtraining before they reach a satisfactoryskill level. The government operatesprogrammes to improve the quality of theunskilled labor force, such as industrialtraining schools (the SENAI programme),commercial trade schools (the SENACprogramme) and professional educationprogramme for rural workers.

Nationality Requirements

To preserve job opportunities forBrazilians, the government generallyrequires that at least two-thirds of theemployees in any Brazilian company areBrazilian citizens, and that two-thirds ofthe total remuneration is received byBrazilians. Companies must prepare anannual report for the Ministry of Laborwith a statement showing the proportionof national to foreign employees and otherrelevant data.

A foreigner is deemed to be a Braziliancitizen if he or she has lived in Brazil for atleast ten years and the foreigner is eithermarried to a Brazilian citizen or is a parentof a Brazilian-born child or has Portuguesecitizenship.

Wages

The Brazilian Federal constitutionstipulates a minimum wage. In January of2014, the minimum wage was set at R$724 (about US$ 339). Salaries are payableat least monthly and they may not bereduced. If an employer makes certainpayments regularly, such as bonuses orovertime, these payments are treated aspart of the salary for labor law purposes.Currently, labor law does not provide formandatory salary increases, therefore anyincreases are generally a result of freenegotiations between employees andemployers.

Executive Compensation

Executive compensation in Brazil iscompetitive by international standards. Inaddition to a base salary, executives areoften entitled to fringe benefits such as ahealth insurance plan, a company car, lifeinsurance and a private pension plan.Certain benefits are considered part of thebase salary.

labor relations



Termination of Employment

An employment contract may beterminated either by the decision of theemployer or by the decision of theemployee. Dismissal may occur for justcause (such as improper conduct, orindiscipline) or without a just cause. Ifeither party terminates an indefiniteemployment contract without just cause,the party terminating the contract mustgive the other party prior notice of at least30 days.

Employees who are dismissed unfairlyhave the following rights:

• At least a 30-day prior notice period,with the salary paid in cash;

• A 13th monthly salary payment,proportional to the time worked inthe year;

• The balance of salary for the remainderof that month; and

• Proportional holiday pay.

The employer must also pay the employee40% and an additional of 10% of thetotal amount of the deposits made intothe Severance Pay Indemnity Fund(FGTS) while the employee is entitled towithdraw the total balance out of theseverance fund.

Companies may not terminate theemployment contract of any worker who isa candidate for a labor union post. If theworker is elected, the employer may notterminate the employee’s contract withinone year after the election, provided that theemployee has not committed any seriousfault. The same rules apply to employeeselected to the Internal Accident PreventionCommission (Comissão Interna dePrevenção de Acidentes or, CIPA). Apregnant worker may not be dismissedduring the period between theannouncement of the pregnancy and fivemonths after the birth, provided, that thepregnant employee has not committed anyserious fault.

Labor Legislation

Labor relations are governed by theConsolidated Labor Laws and numerouscomplementary laws and regulations. TheBrazilian Constitution guaranteesemployees a series of labor rights andbenefits. If any of these rights or benefitsis not observed, an employee may make aclaim in court for a period of up to twoyears after the termination of theemployment contract.

Employees’ basic rights may be increasedthrough collective negotiation betweenemployers and employees. Employeenegotiations are generally led by the unions.

Every worker must hold a work card whichmust record the terms of his or heremployment contract. Employers mustmaintain files containing detailedinformation about each employee andsubmit this information to the laborauthorities annually.

For temporary activities, temporary laborcontracts may be used. Labor contractsare generally concluded in writing for alimited or unlimited period of time.Although labor legislation recognizes thevalidity of verbal contracts, laboragreements for a limited period of timemust be concluded in writing. A laborcontract for a limited period of time may berenewed once and its total duration maynot exceed two years. Upon expiration ofthe contract, the employee is entitled to alllabor rights granted on dismissal, exceptfor the right to prior notice of dismissaland the 40% payment of the total amountof the deposits made to the INSS.

Another type of labor contract, called anexperience labor agreement, also exists.An experience labor agreement is used tohire a worker for a fixed term and it allowsthe employer the chance to verify whetherthe employee’s capabilities meet theexpectations for the position before theemployee is hired for an unlimited period.This type of agreement may be renewedonce and its total duration may not exceed90 days.



Civil and Labor Law Rights

Civil and labor law rights provide that allworkers must be treated equallyregardless of gender, race or age. TheFederal Constitution grants the right tostrike to workers in private sectorcompanies, and to civil servants that donot carry out activities considered to beessential. Other principal labor rightsinclude the following:

• Pregnancy leave of 120 days for themother, 28 days before birth and 92days following birth and 5 days leavefor the father. Tax benefits are availablefor companies extending the maternityleave to 180 days.

• Unemployment insurance for workersdismissed without just cause. Thisbenefit, which is financed by thegovernment, provides financialassistance to the employee for a certainperiod of time. The amount payablevaries according to the employee’ssalary; and

• Employers must supply their employeeswith transportation vouchers, whichentitle them to free transportation toand from work. Employees contribute amaximum of 6% of their monthlysalaries to the cost.

Labor Union Organization

The most powerful labor unions are theCentral Única dos Trabalhadores (CUT),the Força Sindical and the Central Geraldos Trabalhadores (CGT), which competeto obtain new members. Labor unionorganization is strongest in Brazil’sleading industrial centers, especially in thesteel, automobile and transport industriesbased in the Southeast. Not all workersjoin labor unions, but all workersregistered with a specific company mustmake an annual contribution to the unionsequal to one day’s salary, regardless ofwhether they are members. The paymentis withheld by the employer.

Other Payroll Taxes andEmployee Benefits

Pensions

Although private pension schemes fundedby contributions from employees oremployers are still rare in Brazil, they arebecoming increasingly more common. Thepublic pension scheme, controlled by theNational Institute of Social Security (INSS),is funded by contributions from activeworkers, but it generally provides very lowbenefits.

Vacation

After each 12 month employment period,employees are entitled to 30 days ofvacation, to be taken in the subsequent 12month period. After 24 months if thevacation days are not taken in theprescribed period, the employer will beobliged to pay double the amount.Vacation payment should be increased by1/3 (one-third) over the base salary as acompulsory vacation allowance. Inaddition, employees may choose to receivein advance 50% of their 13th monthlysalary at the beginning of the vacationperiod.

Working Terms and Overtime Pay

Brazilian legislation establishes that themaximum working week is 44 hours,spread over five or six working days. Theworking day may not exceed ten hours,made up of eight normal work hours and amaximum of two overtime hours. A lunchperiod of one hour must be given toworkers who work more than six hours aday, and a 15 minute break is mandatedfor those who work more than fourhours a day.

Overtime work is not mandatory (unlessthere is a prior agreement between theemployer and employee) and it must bepaid at a premium rate of at least 50% ofthe normal salary, unless previouslyagreed otherwise (with the assistance ofthe union). Managers or employees in aposition of trust or who are not subject toworking time controls and other specialemployee groups are not entitled toovertime pay.



Overtime are those that go beyond thenormal hours fixed by law, collectiveagreement, normative judgment orindividual employment contract, and theemployee extent his work period up to 2hours per day. Also, the employees mustobserve the workday intervals betweenone day and the other at least 11 hours.

Bonus

Workers have the right to receive anannual bonus, referred to as the 13thmonthly salary, which is proportional tothe amount of time worked during theyear. The 13th month salary is paid in twoinstallments, the first payment in theperiod between February and November,and the second in December.

Incentives

Employees may also receive incentives inthe form of transportation and mealsubsidies. Meal vouchers may be used inrestaurants and other eatingestablishments.

The transportation subsidy is a compulsorybenefit that employers must grant to theiremployees. The meal subsidy is generallyoptional for employers, except in caseswhere this benefit is governed by a unionagreement.

Profit Sharing

The Federal Constitution expressly grantsworkers the right to participate in profitsharing schemes. Profit sharing schemesmust result from negotiations betweenlabor unions and employers and paymentsshould not occur more than twice a year.For the purpose of labor and socialsecurity legislation, profit sharing is notconsidered to be remuneration; therefore,payments are not subject to social or laborcharges.

Special Requirements for ForeignersEntry Visas and Work Permits

A foreign resident must obtain either apermanent or temporary visa to start

working in Brazil. A foreign individual willbe subject to Brazilian taxation as a localresident in the following situations:

• If the individual has a labor contractfrom the date of arrival in Brazil; or

• If the individual has no labor contract,taxation applies if the person stays inthe country for longer than 183 days,consecutive or otherwise, in any 12month period, starting from the date ofany entry into Brazil;

• A person holding a Permanent Visa issubject to taxation from the date ofarrival in Brazil. To serve as a directoror officer of a Brazilian subsidiary of aforeign company, a foreigner must holda permanent visa. A permanent visa isvalid for a period no longer thanfive years.




• Income tax is calculated based on thetaxable profit at one single tax rate,with a certain surcharge on the incomeabove a certain level.

• Net income distributed to shareholdersis not subject to witholding tax.

• Foreign earnings/income/gains of anykind are subject to taxation.

• Individual payers, including foreignresidents are taxed at progressive rates

• Non-residents are taxed exclusively bywitholding income tax

• Brazil has more than 62 taxes imposedon the activities of businesses andindividuals which result in severaldifferent and specific compliance rulesto be followed.

• The efficient administration of taxpayment is one of the greatestchallenges for Brazilian Companies.Brazil has a heavy tax burden, complexand dynamic legislation and an agileand efficient collection system, so therisks for organizations that are not ableto keep up to date with tax regulationaffecting their business are high.

• In order to avoid undue increase in taxburden, tax contingencies and otherunpleasant surprises that impair anorganization’s financial health due tolack of information, it is necessary topermanently invest in staff qualificationor seek specialized advisory services.

• The tax system results in severaldifferent Compliance activities to befollowed by corporations domiciledin Brazil.

• The fiscal year starts on January 1stand closes on December 31st.

Legislative Framework

Tax Law

The Brazilian tax system is regulated by theFederal Constitution and by the NationalTax Code (CTN) issued in 1966. This basiclegislation contains all the general

dispositions, definitions, competencies,proceedings and limitations related to thetax system. The CTN is of generalapplication and should be observed by alltax authorities within the country: federal,state and municipal. The executive branchof the Ministry of the Finance is responsiblefor implementing tax statutes. This functionis specifically carried out by the FederalRevenue of Brazil (RFB), which isresponsible for the interpretation of thestatutes in accordance with the intention ofthe CTN.

The regulations are written in general termsin order to explain the dispositions of theCTN

Jurisprudence

Judicial interpretation provides differentdegrees of precedents, depending on thenature of the problem and of the authoritythat gave the ruling. In situations whereauthorities alone do not provide a solutionfor the fiscal issue, the payer must consulta lawyer as well as the administrativeauthorities in order to settle the issue.

Records of discussions on legislation,such as academic and professionalopinions are important sources ofinterpretation. Opinions given by people ofgreat professional reputation are useful inthe development of arguments in supportof specific cases, especially in litigiousareas.

Anti-evasion

The current anti-evasion legislation is inthe 982/93 decree. Several dispositions ofthe National Tax Code prevent the taxpayer from resorting to advantageous lawdispositions in situations where the mainreason or one of the main reasons is toavoid taxation.

taxation



Clearance Proceedings

It is not necessary to obtain priorauthorization from the fiscal authoritiesbefore entering into significant transactions.However, the majority of transactions withthe public sectors require CND certificates.

Transfer Pricing

Concept: transaction prices for goods(import or export), services and / or rightsbetween companies of the same economicgroup, or in countries with o favorable taxregime.Objective of rules: to have prices controlbetween related parties considered, inorder to avoid the transfer of taxableprofits abroad via imports and / or exportsthrough price manipulation operations.Control is also exercised on interest paid orcredited on account of loans.

The matter is currently regulated by Law No.9.430/96, and regulated by RFB NormativeInstruction n º 1.312/12 and later changes.

Who are intended to observe these rules:

- Individuals or entities who carry outtransactions in Brazil with individualsor legal entities abroad, consideredto be related, even through anintermediary;- Individuals or entities that carry outoperations in Brazil with any person orentity resident or domiciled in thecountry or in a tax haven;- Individuals or entities resident ordomiciled in Brazil that carry outtransactions with related individuals orentities resident or domiciled abroad.

Relationship possibilities:

Direct relationship:

The parent Company of the Braziliancompany, when domiciled abroad;

Its subsidiary or branch domiciled abroad;The person or entity abroad, characterizedas its parent or affiliate;

The legal entity domiciled abroadcharacterized as its subsidiary or affiliateIndirect relationship:

A legal entity abroad, and when it and aBrazilian company are under commoncorporate control or administration orwhen at least 10% of the capital stock ofeach belong to the same person or entity;A person or entity abroad, which, togetherwith a Brazilian entity has ownershipinterest in the share capital of a thirdentity, characterizing them as parentcompanies or affiliates thereof;

An individual or legal entity resident ordomiciled abroad, which is associated in aconsortium or condominium, as defined inBrazilian law, in any endeavor.

Concept of Tax Favorable Country:

Income not taxed or is taxed at a ratelower than 20% (twenty percent), or;Whose legislation does not allow accessto information related to shareholdingcomposition of legal entities, theownership or the identification of thebeneficial owner of income attributed tonon-residents.

“Privileged” Tax Regime

Income not taxed or is taxed at a ratelower than 20% (twenty percent);It grants advantage of tax to a person orentity not resident:

- No requirement to carry out asubstantial economic activity in thecountry or dependency;- Conditioned on the non-exercise of asubstantial economic activity in thecountry or dependency;

Is not taxed or is taxed at a rate lower than20%, income earned outside its territory;

It does not allow access to informationrelated to shareholding composition,ownership of assets or rights or economictransactions carried out;Tax adjustment



The “Parameter” Price is calculated as oneof the methods of Transfer Pricing and the“Practiced” Price is the price usedeffectively in imports and / or exports.

It is necessary to register a tax adjustmentfor:

Imports: When Parameter Price <Practiced Price

Exports: When Parameter Price>Practiced Price

For purposes of the law on income tax andsocial contribution, the deductibility ofcosts of goods, services, and import dutiesand recognition of revenues and incomederived from export operations carried outby individuals or legal entities resident ordomiciled in Brazil, with individuals orlegal entities resident or domiciled abroad,considered to be related, should be carriedout according to the legislation that dealswith the control of transfer pricing.

Brazilian Transfer Pricing Rules for Imports

PIC

The PIC method, the prices of goods,services or rights acquired abroad from arelated company, will be compared withthe prices of goods, services or rights,which are identical or similar:

a) Sold by the same company exporting tocompanies not related;

b) Acquired by the same importer fromlegal entities not related;

c) In purchase and sale transactionsbetween parties not related.

To obtain comparable figures, the sampleused must represent at least 5% of thevalue of import transactions subject totransfer pricing control.

CPL

The average cost of production of goods,services or rights, identical or similar, inthe country where they were originally

produced, plus taxes and fees chargedthat country's exports and profit of twentyper cent (20%), calculated on the costcalculated.

PRL

Application only when the imported goodsare resold or used as input goods sold in thecountry to non-related parties. Defined asthe arithmetic average resale price of goods,services or rights less: unconditionaldiscounts granted, taxes levied on sales,commissions and brokerage fees paid; aprofit margin of 20%, 30% or 40% is applied,as shown next:

40% for:

- Pharmaceutical chemicals andpharmaceutical products;- Tobacco products;- Equipment and optical instruments,photographic and cinematographic;- Machinery and equipment for dental-medical-hospital use;- Extraction of Petroleum and NaturalGas and- Products derived from petroleum.

30% for:

- Chemicals;- Glass and glass products;- Pulp, paper and paper products, and- Metallurgy.

20% for:

- Other sectors

PCI

Applicable to the importation ofcommodities subject to trading on Futuresand Commodities Exchange - BM&F,internationally recognized.

Definition and considerationsfor application:

a) It is defined as the average daily price ofassets or rights subject to public prices oncommodity futures and internationallyrecognized.



b)Prices of goods imported and declaredby individuals or entities resident ordomiciled in the country will becompared with quotation prices of thesegoods, contained in commodities andfutures internationally recognized,adjusted for more or less averagepremium market at the transaction date.

Brazilian Transfer Pricing Rules for Exports

Revenues derived from export transactionsentered into with foreign related partiesare subject to adjustment under theBrazilian transfer pricing rules if theaverage price used for the exporttransaction is lower than 90% of theaverage price of identical or similar goods,services or rights traded by the Braziliancompany in Brazil during the same periodand under similar payment terms (theabsolute safe harbor provision).

In general, Brazilian transfer pricing rulesrequire that a minimum export revenue isrecognized by the Brazilian companywhen trading with a related party abroadbased on a parameter export price reachedby applying of one of the transfer pricingmethods provided for exports, which arebased on: resale minus; cost-plus; orcomparables. No “best method” rule alsoapplies to export transactions. If the exportprice reached by applying of one of thetransfer pricing methods is higher than theexport price effectively adopted for theexport transaction, the positive differencemust be added to the exporter’s taxableincome and is subject to corporate taxes inBrazil. The transfer pricing methodsprovided for export transactions are:

PVEX

Arithmetic average selling prices ofexports made by the company itself, toother clients, or other national exports ofgoods, rights or services identical or thathave similar conditions with similarpayment.

PVA

Average sales prices of goods in thewholesale market of the country ofdestination less the taxes included in theprice and a profit margin of 15% on theselling wholesale price.

PVV

Arithmetic average selling prices of goodsin the retail market of the country ofdestination, less the taxes included in theprice and a profit margin of 30% on theselling price at retail.

CAP

Weighted arithmetic average of the cost ofacquisition or production of goods,services or rights exported, plus the taxescharged in Brazil and a profit margin of15% on the total cost, plus taxes andcontributions.

PCEX

Applicable to the exportation ofcommodities subject to trading on Futuresand Commodities Exchange - BM&F,internationally recognized.

Definition and considerationsfor application:

It is defined as the average daily price ofassets or rights subject to Futures andCommodities Exchange - BM&F,internationally recognized.

In the event that there is no listing of assetsin Futures and Commodities Exchange -BM&F, internationally recognized, prices forexported goods may be compared:

I - with those obtained from independentdata sources provided by researchinstitutions internationally recognizedindustry, or

II - with prices set by regulators oragencies and published in the OfficialDaily Government Newspaper/ OfficialFederal Gazette.



Safe Harbor Provisions for Exports

Brazilian transfer pricing regulations alsoprovide for two safe harbor provisions(Dispensa de Comprovação or “relief ofproof” rules), which exempt taxpayerswith relatively small export revenue orwith minimum profitability on exportsmade to related parties abroad fromcompliance with the Brazilian transferpricing rules through the use of one of themethods provided for exports. Braziliantaxpayers are entitled to demonstrate theadequacy of the export price adopted bydisclosing commercial documents thatnormally support the export transaction(and the burden of proof is shifted to theBrazilian tax authorities in the case of afuture tax audit).

The safe harbor provisions apply in thefollowing situations:

• The taxpayer’s net export revenues donot exceed 5% of total net revenuesduring the fiscal year; or

• The taxpayer demonstrates that aminimum pre-tax profit of 5% is reachedon the export transaction (for the fiscalyear analyzed and the two precedingyears).

Main Taxes

The constitutional system is based on threejurisdiction and tax collection levels. TheConstitution sets forth that FederalGovernment, States, Federal District andMunicipalities have different andindependent powers to impose and collectthe following main taxes specified therein:

Federal Government:

• Import Duty (II)• Export Duty (IE)• Income Tax (IR)• Excise Tax (IPI)• Tax on Financial Operations (IOF)• Rural Land Tax (ITR)• Tax on Personal Wealth (IGF)• Social Contributions (CSSL/PIS/COFINS)• Labor and Social Security Taxes (INSS,FGTS and Withholding Tax)

• Domain Economic InterventionContributions (CIDE)

States:

• Tax on real estate and donation ofassets or rights

• Value-added Tax on Sales andServices (ICMS)

• Vehicle Tax (IPVA)

Municipalities:

• Municipal Real Estate Tax (IPTU)• Property Transfer Tax (ITBI)• Service Tax (ISS)

Social Contribution Tax (SCT):

– Same methods as CorporateIncome Tax.

– Deemed profit rates are only 32%for service and 12% for theother activities.

– 9% flat rate on taxable income.

CIT and SCT systems

Combined tax rate of approximately 34%.

CIT and SCT may be paid quarterly basedon actual profits for the quarter oralternatively monthly in advance on anestimated basis.

Companies with gross revenue of lessthan R$48M (approx. US$27M) in theprevious year may opt into the deemed-profit regime.

Under this regime, the taxpayer’s taxableincome is determined by applying adeemed-profit margin that ranges between1.6% and 32%.

Capital gains

Capital gains of residents are taxed inBrazil at ordinary rates.b. Non-resident capital gains - 15% (25%on payments to low-tax jurisdictions).

Withholding taxes

No withholding tax on dividends sinceJanuary 1st, 1996.



Non-resident income subject to a rate of15% (25% on payments to low-taxjurisdictions)

Interest and Penalties

Voluntarily income tax paid after the duedate is subject to the following interestand penalties:

b. Interest calculated at the rate applicableto the Special System for Liquidation andCustody (SELIC) which is monthlypublished by government; and

A daily fine of 0.33% of the tax due, up to amaximum penalty of 20% of the tax due(excluding interest). Assessments resultingfrom an audit by the tax authorities aresubject to a penalty equal to 75% of theamount due in cases of insufficiency or lackof payment. The penalty is 150% when taxauthorities see intent of fraud. Thesepenalties can be reduced by 50% if thepayment is made by the last day of theappeal period (other penalty reductions areavailable during the appeal process).

Tax Net Operating Losses (NOLS)

NOLs may be carried forward indefinitelybut can only offset up to 30% of taxableincome in any given tax period.

Segregation of NOLs between operationaland non-operational will be necessaryunder certain circumstances.

Accumulated NOLs could potentially belost in the event that a Company is mergedor if a change of control and corporateobjective are in the same period.Import Duty (II)

Import duty is levied on foreign goodsentering Brazilian territory. As a generalrule, the taxable amount for Braziliancustoms purposes is the customs value inaccordance with the GATT (GeneralAgreement on Tariffs and Trade).

Brazilian import duty is not recoverableand, consequently is a cost to theimporter. The import duty tax rate may

vary depending on the product that isbeing imported, as it will depend on theirclassification in the Brazilian External TariffCode (TEC).

Value Added Tax on Sales andServices (ICMS)

As a general rule, Brazilian States chargeICMS on transactions relating to thecirculation of goods and on the rendering ofservices of interstate and inter-municipaltransportation and on communicationservices, even if services/transactions startfrom abroad. Exports are exempt.

The ICMS taxpayer is the businessman,industrialist or producer who undertakesshipment of goods, who imports it fromabroad or renders the services mentionedabove.

The basis for the calculation of the ICMS isthe value of the operation, including anyand all amounts, expenses, accessories,interest, increases, bonuses, or otherbenefits received by the taxpayer, butexcluding those related to discounts orrebates unconditionally granted. For theimport of goods into Brazil, the basis forICMS calculation is the customs value ofthe goods increased by the Import duty,IPI, PIS, COFINS and customs expenses.Also, the amount of ICMS due must begrossed up by the States. The amount ofICMS due on import operations may beincluded on its own tax basis forcalculation purposes.

ICMS rates, which may range from 3.5%to 25%, on internal operations, aregenerally levied at a rate of 18% inBrazilian States. On interstate operationsICMS rates may be 7% or 12%, asdescribed below:

i. From South and Southeast (exceptEspírito Santo State) Area to North,Northeast, Middle west and EspíritoSanto State – 7%

ii. From South and Southeast (exceptEspírito Santo State) to South andSoutheast (except Espírito SantoState) – 12%



iii. From North, Northeast, Middle westand Espírito Santo State to FromNorth, Northeast, Middle west andEspírito Santo State – 12%

ICMS is a non-cumulative value added tax,where the amount charged in eachsuccessive taxable transaction is deductedfrom current transactions, except whenthe good is destined for consumption.When a good is allocated to fixed assets,ICMS credit will be allowed at 1/48installment on the proportion of the taxedshipment and total shipment.

Excise Tax (IPI)

The IPI is charged by the Federalgovernment on finished goods (national andforeign finished goods). Pursuant to the IPIRegulation, finished goods are the result ofan industrial process even if this process isincomplete, partial or intermediary.

For IPI purposes the following taxableevents can be distinguished: (i) the customsclearance of finished goods; and (ii) theshipment of finished goods from anindustrial or similar establishment. Exportsare exempt.

IPI is a non-cumulative value-added tax,where the amount charged in eachsuccessive taxable transaction is deductedfrom current transactions. The possibilityof IPI credits must be noted as listed in thelegislation in force.

IPI rates vary according to the classificationof the goods in the IPI Tariff Table (thatincludes the same classification system asthe TEC) and may vary from 0% to 330%.The IPI taxable basis is normally the priceof the shipment (within the domesticmarket) or of the import operation (i.e.product’s customs value plus Importduty), including all the accessory expensescharged to the entity to which the productis destined, except for transport andinsurance expenditures when enteredseparately in invoice and provided theycomply with the legal requirements.

Gross Receipt Tax (PIS and COFINS)

The PIS and COFINS are social contributionslevied on legal entities for financing thesocial security system and calculated on thecompany’s monthly gross receipts from anysources, irrespective of its accountingclassification.

Nowadays, there are three methods ofcalculating PIS and COFINS due, whichwill be applicable to specific legalentities/operations, based on thelegislation in force: Non cumulative,cumulative and mono phase regime.

As a general rule PIS and COFINS arecalculated based on the non-cumulativeregime, the rates applicable are 1.65% and7.6%, respectively, and entities are allowedto offset PIS and COFINS credits, alsocalculated at the rates of 1.65% and 7.6%, inorder to deduct from PIS and COFINS due.

PIS and COFINS are calculated onexpenses such as:

i. Goods for resale;ii. Goods and services used as inputs

in manufacturing or renderingof services;

iii. Energy consumed in theestablishments of the Company;

iv. Amounts paid for the rent ofbuildings, machines andequipments used on theCompany’s activity;

v. Amounts paid forleasing operations;

vi. Goods returned, whose salesrevenue have been included inbilling of the current orprevious month;

vii. Storage of goods and freight costson the sales operation, for goods forresale or used as input when theburden is done by the seller

viii. On the depreciation or amortizationexpenses of machinery, equipmentand other fixed assets, as well as onbuildings and constructions used inthe activities of the Company.



Some specific entities, such as thosesubject to income tax on the basis ofestimated profits, financial institutions,cooperatives, are subject to PIS andCOFINS under the cumulative regime andto tax at the 0.65% and 3.0% rates,respectively, which do not allow offsettingPIS and COFINS credits.

Finally, other legal entities which carryout specific operations, such as oiland gas distributors, pharmaceuticalmanufacturer/importer and others, aresubject to PIS and COFINS mono phaseregime, the highest rates are whereapplicable and it is permissible to offsetsome credits.

On importation of goods and services PISand COFINS are also levied at rates of1.65% and 7.6%, respectively. The PIS andCOFINS on imports apply to the individualor companies that promotes the entry offoreign goods

Into the country (the importer), theindividual or company that hires servicesfrom non-residents and the beneficiary ofan imported service for which both thehiring party and service provider arelocated outside of Brazil.

The goods and services acquired abroad andsubject to PIS and COFINS importation maybe considered as PIS and COFINS credits tobe offset against PIS and COFINS due.

Service Tax (ISS)

As a general rule, Brazilian Municipalitiescharge ISS on the rendering of services,even if the rendering starts from abroad.The services taxed by ISS are set out at“ISS list” attached to Complementary Law116/03, the law that governs the ISS.ISS will also be due on the importation ofservices and the responsibility for itspayment will be of the service contractorlocated in Brazilian territory.

Exports are exempt, if the result of theservice did not occur on Brazilian territory.Simply payments in foreign currency donot define an export for ISS purposes.

The ISS taxpayer is the service provider andits tax basis is the price of the service,including any and all amounts, expenses,accessories, interests, increases, bonuses,or other benefits received by the taxpayer,including those related to discounts orrebates granted. ISS rates may range from2% to 5% and will depend on theMunicipality where the service provider islocated and the type of service.

Unlike the taxes abovementioned, ISS is acumulative tax, where the amountcharged in each successive taxabletransaction cannot be deducted fromcurrent transactions.



• Currently several companies are underenquiry due to differences in the amountof taxes disclosed in the Electronic TaxReturns required by Brazilian IRS.

• Considering that regulatory andsupervisory bodies are well equippedwith information systems, there is now ahigher potential risk of receiving taxassessments due to inconsistentinformation, which makes taxpayersspend their time in justifying differencesin the completion of such tax returns.

• The increase in tax requirements alsoincreases potential problems andtherefore the opportunities of identifyingalternative solutions for specializedprofessionals, who periodically evaluateinformation filed with the tax authorities.

Taxes Administration – Main Federal TaxAccessory Obligations

• Social Contributions Return(Demonstrativo de Apuração dasContribuições Sociais – DACON)

• Declaration of Federal Tax Debts andCredits (Declaração de Débitos eCréditos Tributários Federais – DCTF)

• Corporate Income Tax Return(Declaração de Informações Econômico-Fiscais da Pessoa Jurídica – DIPJ)

• Transition Tax Account Control (FCONT)• Withholding Tax Return (Declaração deImposto de Renda na Fonte – DIRF)

• Offsetting and Refund Request Return(Pedido Eletrônico de Restituição ouDeclaração de Compensação –PERDCOMP)

Corporate Income Tax Return (DIPJ)

Regardless of the accounting year and thetax election (payment in an estimated oractual basis), companies must file annualtax returns (Corporate Income Tax Return(DIPJ)) based on their consolidated resultsfor the calendar year. Federal consolidatedreturns covering the previous calendaryear must be filed in electronic format by

the last working day in June. Taxpayersmust prepare and submit their CorporateIncome Tax Returns annually to theBrazilian IRS. DIPJ has to be signed by theaccountant and legal representative of thecompany.

• The following are the main schedulesof DIPJ:

– Costs of goods and/or services andProfit and loss;

– CIT calculation (15%+10%) plus SCTcalculation (9%);

– Monthly estimated CIT payments andSCT payments;

– Transfer pricing method, adjustmentand list of 50 major transactionsunder transfer pricing rules;

– List of all company locations in Brazil;– Monthly payments of Federal VAT(IPI) (The Federal VAT Return isincluded in the DIPJ);

– List of 100 major suppliers and 100major customers;

– List of 50 major raw materials and 50major transactions;

– Balance Sheet - beginning and endingbalance sheets;

– Interest and services paid / receivedabroad; and

– Profit from foreign subsidiaries.

PIS and COFINS Tax Return (DACON)

DACON is the PIS and COFINS tax returncalculation. The schedules of DACONcomprise the tax calculations and it must beprepared and submitted on a monthly basisuntil December 2013. As of January 2014the tax authorities substituted DACON toEFD (digital fiscal bookkeeping) an electronicsystem information submitted to the taxauthorities in monthly basis.

Federal Tax Debt and CreditReturn (DCTF)

DCTF (Federal Tax Debt and Credit Return)shall be filed monthly by legal entities and

other tax obligations



shall report the federal debts and credits oftaxes handled by the Brazilian IRS and alsothe taxes whose levy has been temporarilysuspended. The DCTF shall be filed nolater than the fifth business day of thesecond month after the tax triggeringevent.

• The following taxes must be notified viaDCTF:

– Corporate Income Tax (CIT);– Social Contribution Tax on NetProfit (SCT);

– Federal VAT (IPI);– Financial and Exchange OperationTax (IOF);

– Withholding Tax (IRRF);– Social Integration ProgrammeTax (PIS);

– Social Contribution Tax onRevenues (COFINS);

– Bank Account Transactions Tax(CPMF); and

– Economic Contribution Tax (CIDE).

Withholding Income Tax Return (DIRF)

The Withholding Income Tax Return (DIRF)shall be filed yearly by the following legalentities, whenever paying or usingearnings on which withholding income taxhas been levied, whether in a sole monthof the calendar year to which DIRF refers,as third party's attorneys-in-fact:

– headquarters of legal entities governedby private law domiciled in Brazil,including those tax immuneor exempt;– legal entities governed by public law;– branches, affiliates or representationoffices of legal entities based abroad;– sole proprietorships;– savings and loans institutions,associations and unions and tradeassociations;– notaries public and registrars;– residential condominiums;– individuals;– administrators of funds or investmentclubs; and–Managers of port labor.

• The DIRF shall also be filed by legal entitiesthat have withheld tax in a single month ofa calendar year to which the DIRF refers,CSLL, COFINS and PIS/Pasep contributionson payments made to legal entities.

Transition Tax Account Control (FCONT)

• FCONT is a bookkeeping, balance sheetand P&L in double entries which usesthe accounting methods for tax purposerelated to the Law 11.638/07.

• FCONT is mandatory for all actual orestimated Corporate Income Tax regimes.

• It must be submitted monthly

Tax Offsetting Return (PER/DECOMP)

• PER/DCOMP (E-Request for Federal TaxRecovery, Refund and Offset) shall befiled by companies whenever federal taxcredits handled by the Brazilian IRS areoffset against taxes due. PER/DCOMPallows tax credits subject to recovery orrefund to be used in offsetting own,overdue or current debts regarding anytax or contribution handled by theBrazilian IRS.

Public Digital Bookkeeping System (SPED)

• SPED is an electronic system of accountingand tax registration. The result of a federal,state and municipal governments initiative,consisting in the modernization of thesystematic obligations, transmitted by taxpayers to tax agencies and inspectingorganization.

• The SPED covers:• “ECD” - Digital Accounting bookkeeping;• “EFD” - Digital Fiscal bookkeeping and• “NF-e” - Electronic invoice, whose use iscompulsory from January 1,2009.

Main Objectives

• Promote integration within the diversetax levels through standardization andsharing of accounting and tax information;

• Accelerate and improve inspection/auditprocesses;

• Possibility of cross-checking accountingto tax data;



• Reduces unintentional involvement infraudulent acts;

• Strengthening of control and inspection,through exchange of information betweenthe diverse tax levels, thereby improvingthe means to fight tax evasion;

• Allows information exchange betweenTaxpayers by means of a standard layout;

GEFIP/SEFIP:

a. Reported monthly to the ministryof labor

b. Main purpose is to calculate and reportpayroll contributions: INSS and FGTS

General Database of Employment andunemployment (CAGED)

a. Reported monthly to the bureau ofstatistics

b. It is due whenever there is a change inthe number of employees: hiring ordismissals.

c. Provides information on employmentrates to the government

Annual Report on SocialInformation (RAIS)

a. Due annually by any corporate entityregardless of having or not employees.



Companies

The most common business entities inBrazil are corporation (sociedade anônima orSA) and the limited liability company(sociedade limitada or limitada). The maindifference to consider when electing for oneor the other form of business is that onlycorporations are entitled to issue shares tobe publicly traded in the stock exchange,while a limited liability company tends to bea more appropriate vehicle for structuringforeign direct investments in Brazil as themanagement and other requirements aresimpler than for a corporation. With respectto responsibility of the investors, acorporation is limited to the amountsubscribed by the individual or company,while in a limited liability company thequota holders are liable for the full amountof the company’s legal capital until it hasbeen paid in.

Corporations are similar in form to both USand European corporations. Limitadas aresimilar in form to European limited liabilitycompanies.

Corporations

The main requirements for the constitutionof a corporation are as follows:

The share capital must be subscribed byat least two original subscribers. Thesubscribers may be Brazilian or foreignindividuals or legal entities. Foreignsubscribers, who are not resident in Brazil,must be represented by a Brazilian citizenempowered to receive subpoenas.

A non-resident shareholder must obtain atax identification number from theBrazilian Internal Revenue Services (CNPJor CPF).

For publicly traded corporations, at least10% of the issue price of sharessubscribed for in cash must be paid in anddeposited in a bank authorized by theCVM. The 10% rule also applies tosubscriptions in kind (for example,machinery and products.). In thissituation, an evaluation prepared by threeexperts or a specialist firm is required.

- An application for registration andthe bylaws of the company must befiled with the local Board of Trade.

- Depending on the corporation’sintended activities, other registrationsmight be required.

- A corporation must publish itsdocuments and certificate ofregistration in the Official Gazette(Diário Oficial) and in another widecirculation newspaper within 30 daysof registration. This requirementmust be complied with, before thecorporation commences business.

- Publicly traded corporations arerequired to be audited every year forCVM purposes. Privately heldcorporations do not face thesame requirements.

a) Capital of a Corporation

In addition to the information mentionedabove, the bylaws must state the value ofthe share capital in local currency, whichmay contain a provision authorizingcapital increases independently of anyamendment to the bylaws after the initialshares have been subscribed, up to a limitexpressed as a number of shares or anamount of capital (the authorized capital).

b) Payment of Dividends

Dividends may be paid from the net profitof the company during the fiscal year or as

types of business organizations



set out in its bylaws, based on apercentage of profits, share capital or anyother criteria established in the bylaws.The law requires an annual payment ofdividends with reference to the minimumportion established in the bylaws, withminimum limit of 25% of the net profit ofthe year or, if not prescribed, half of theyear’s net profits adjusted for thefollowing items: appropriations to thelegal reserve, contingency reserves, andreserves for unrealized profits.

Payment of a minimum dividend may alsobe avoided if the payment is shown to beincompatible with the company’s financialsituation.

Payment of interim dividends out ofcurrent year profits or existing profitsreserves from previous years is alsopossible, as long as this is provided for inthe bylaws.

c) Shares

Shares must be denominated in Braziliancurrency. The bylaws must determine thenumber of shares of the corporation andwhether they are to be issued with orwithout a nominal (par) value. Common(ordinary) and preferred shares may beissued. Ordinary shares generally grantvoting rights, while preferred shares maycarry preferential rights to receivedividends, a refund of capital or both(which must also be established in thebylaws of the company). Preferred shareswithout voting rights may not exceed 50%of the total capital.

d) Shareholders’ Rights

Fundamental rights of shareholders thatmay not be denied by either the bylaws orshareholder’s agreements, include thefollowing: participation in yearly profits;participation in the net assets if theinvestment is liquidated; supervision ofthe conduct of the business; preference insubscribing for new shares, debentures to

be converted to shares and subscriptionbonuses; and withdrawal under certaincircumstances, with reimbursement ofshares.

e) Management of a Corporation

A corporation is administered by a boardof directors and, optionally, anadministrative council. An administrativecouncil is mandatory for a corporationwith authorized capital and for a publiclytraded corporation.

The board of directors must be composed ofat least two directors, who may or may notbe shareholders of the company. They areelected and dismissed by the administrativecouncil or, if there is no administrativecouncil, by the shareholders at a generalshareholders meeting. Directors must beresidents of Brazil but not necessarilyBrazilian citizens.

The board of directors is responsible forrepresenting the corporation in its dealingswith third parties, for the day-to-daymanagement of the business, and forimplementing resolutions of theadministrative council (if appropriate).

The administrative council must have atleast three members. They must beshareholders of the corporation and they areelected and dismissed by the shareholdersin a general meeting.

Unlike the directors, members of theadministrative council may be foreignindividuals who are not resident in Brazil. Anon-resident foreigner must be representedby a Brazilian citizen empowered to receivesubpoenas. Responsibilities of theadministrative council include definingthe corporation’s overall strategy, electingand dismissing directors and supervisingtheir performance, calling shareholders’meetings, and choosing and dismissing theindependent auditors, if any, among others.Another body that may be appointed at ageneral meeting of shareholders is the



fiscal council, an audit committee that mayfunction permanently or not. It musthave between three and five members.The fiscal council basically overseesadministrative acts performed on behalf ofthe corporation to ensure that they are inaccordance with the articles ofincorporation and current legislation, andprovides an analysis of the corporationbalance sheet.

f) Financial Statements

Corporations are required to prepare andpublish their financial statements with thelocal Board of Trade and publish them inthe Official Gazette (Diário Oficial) andin another wide circulation newspaper. Inaddition, the Securities ExchangeCommission may require publication in thelocalities where open corporations tradetheir securities. This requirement does notapply to privately held corporations withless than 20 shareholders and net worth ofless than R$1 million. Companies withassets greater than R$ 240 million orturnover greater than R$ 300 million arecalled "large companies" and shall havetheir financial statements audited byindependent auditors. Companies subjectto control of the Brazilian SecuritiesCommission (Comissão de ValoresMobiliários or CVM) must always havetheir financial statements audited.

IFRS from 2010 was required for financialinstitutions and public companies, alsoadoption to small and middle entities. TheAccounting Pronouncements Committee(CPC), a Body created in 2005 by the FederalAccounting Council (CFC) with assignmentsto study, prepare and exclusively promoteaccounting procedures was in-charge tolead the implementation of new accountingstandards.

Limited Liability Companies

A Limited Liability Company (limitada) is auseful corporate form for businesses withfew owners and with no intention to raisepublic funds (by issuance of shares or

bonds). Members may be foreign orresident individuals or corporate entities.Limited liability companies are regulatedby Brazilian Civil Code and they may alsobe governed by the provisions set forth inthe Corporation Law (in the absence ofproper regulations in the Civil Code). Ingeneral, a limited liability company issubject to fewer legal formalities than acorporation. The most important featuresof a limited liability company are:

- The company (limitada) must have aminimum of two shareholders (calledquota holders);

- The company’s capital is divided intoquotas (instead of shares); Anynonresident quota holder must granta power of attorney to a Braziliancitizen or resident;

- A non-resident quota holder mustobtain a tax identification numberfrom the Brazilian Internal RevenueServices (called CNPJ or CPF);

- The administration of the limitedliability company must be byBrazilian residents or citizens;

- The company name must makereference to the core business of thecompany. For example, this meansthat the company name may not besimply ABC do Brasil Ltda., but itmust mention the company’s mainbusiness purpose such as, ABC doBrasil Information TechnologyEquipment Ltda.

- In general, unanimous votes arerequired for amendments to thearticles of incorporation;

- Quota holders’ Meetings - Thearticles of association must disclosewhether approval of accounts(annual financial statements),election, removal and resignation ofcompany officers, definition ofremuneration, amendments to thearticles of association, take-over,mergers or spin-offs, among others,shall be resolved in a quotaholders’ meeting.



- If the limited liability company hasmore than ten shareholders, it isrequired to publish notices for quotaholders’ meeting, as well as theminutes of certain meetings in theOfficial Gazette (Diário Oficial) and inanother wide circulation newspaper;

- The entire capital must be subscribedon incorporation of the company, butno minimum percentage needs to bepaid upon subscription;

- Until the full capital is paid in, thequota holders are jointly andseverally liable for the total capitalsubscribed;

- No legal reserve or minimumdividend is required;

- Members may withdraw and receivethe repayment of their quotas in caseof disagreement; and

- A limited liability company does notneed to publish its articles ofincorporation, financial statements orminutes of quota holders’ meetingsin an Official Gazette or newspaper,as required for the Corporations.

A limited liability company may beconverted into a corporation (and viceversa) easily and inexpensively andwithout triggering any corporate taxconsequences.

Limited Liability Companies with assetsgreater than R$ 240 million or turnovergreater than R$ 300 million are called “largecompanies” and must follow the rules of theCorporations regarding to the preparationof their financial statements. Also, largecompanies shall have their financialstatements audited by independent auditors.



São PauloHLB Onix Auditoria e Consultoria Empresarial Ltda.Rua Pedro de Toledo,164-8° Andar Sala 1Vila Clementino – São Paulo – SPCEP 04039-000

Tel: +55 11 5579 8988/5574 5369Fax: +55 11 5083 1841Email: [email protected]: www.hlbonix.comEdison Caetano [email protected] Pedrosa [email protected]

Porto AlegreRokembach + Lahm, Villanova, Gais& Cia. AuditoresCarlos GomesAvenue 1001/602Porto Alegre - RS90.480-004

Tel: +55 51 3388 1100Fax: +55 51 3388 1100Email: [email protected]: www.rokembach.com.brLuis Antonio Ilha Villanova [email protected]

São PauloHLB Spot ContábilRua Cel Oscar Porto, 813 – Conj 43Paraíso – São Paulo – SP CEP 04003-004

Tel: +551123690591 / +551123850591Fax: +551123850591Email: [email protected]: www.hlbspot.comRodrigo Tancredi [email protected]

HLB in Brazilhow to contact us



Brazil

HLB Onix Auditoria e Consultoria Empresarial Ltda . Rua Pedro de Toledo164-8° Andar Sala 1 . Vila Clementino . São Paulo . SP CEP 04039-000Tel: +55 11 5579 8988 / 5574 5369 . Fax: +55 11 5083 1841Email: [email protected] . Web: www.hlbonix.com

Rokembach + Lahm . Villanova . Gais & Cia. AuditoresCarlos Gomes Avenue 1001/602 . Porto Alegre . RS 90.480-004Tel: +55 51 3388 1100 . Fax: +55 51 3388 1100Email: [email protected] . Web: www.rokembach.com.br

São Paulo . HLB Spot Contábil . Rua Cel Oscar Porto . 813 . Conj 43Paraíso . São Paulo . SP CEP 04003-004Tel: +55 11 2369 0591 / +55 11 2385 0591 . Fax: +55 11 2385 0591Email: [email protected] . Web: www.hlbspot.com

HLB Brazil is a member of International. A world-wide network of independent accounting firms and business advisers.HLB

HLB DBI_Brazil.qxd:DBI Channel Islands Booklet A5 2013 4/9/14 12:44 Page 48

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