Part 1 - AL-Tax

International Taxation HandbookFinally, consider the following example with the comparison as shown below:Net income before tax and depreciation expense (EBTDep) $240,000Depreciable asset $200,000Useful economic life 5 yearsTax rate 34%Discounted tax rate 15%.For a company not engaged in rural activities:EBT EBT … EBT 240,000 (200,000/5) $200,000For a company engaged in rural activities (e.g., the asset will depreciate fully inthe first year):For the other periods:1 2 5T T …T34% 200,000 $68,0001 2 5I I … I 200,000 68,000 132,000.1 2 5EBT EBT EBT EBT 240,000 0 $240,0002 3 4 5T T TT34% 240,000 81,6002 3EBTn240,000 200,000 $40,000T4 5I I I I 112 3 4 534% 40,000 $13,600I 40,000 13,600 26,400.1240,000 81,600 158,400.Note that the total tax paid is the same in both situations.14.5 Tax credits from commodities imports androyalty paymentsContributions are another unique way the Brazilian tax framework requires additionalpayments from companies. Examples are PIS (the Programa de IntegraçãoSocial 1 ), and COFINS (Contribuição para Financiamento da Seguridade Social 2 ).Payments are based on net income (on a noncumulative basis) or on cumulativegross sales. Both contributions have been adopted to fund a governmental socialpolicy account.334