Brazil's Tax and Trade Policies under the Rousseff - Brazil-US ...

Taxes on Company’s DistributionsDividends• The profits distributed as dividends, by Brazilian resident legal entities to beneficiaries thatare resident in Brazil (corporations or individuals) or abroad, are currently not subject towithholding income tax in BrazilInterest on Net Equity (“INE”)• Brazilian legislation permits a Brazilian corporation to make distributions to shareholdersas INE and treats those payments as a tax deductible, if some requirements are met• For purposes of tax deduction, the payments of INE are limited to the daily pro ratavariation of the long term interest rate (TJLP), as determined by the Central Bank fromtime to time, over the net equity of the company• Also, for purposes of tax deductibility, the amount to be paid may not exceed the greaterof50% of net income (after CSLL but before taking into account IRPJ and theamounts of INE itself) related to the period in which the payment is made and50% of the sum of retained profits and profit reserves as of, as rule, the beginningof the calendar year in which the payment is made