NEHRING E ASSOCIADOS ADVOCACIA

Transcription

1 CARLOS NEHRING NETTO SUELI AVELLAR FONSECA IVA CHIABRANDO MÁRCIO BELLOCCHI ALESSANDRA MONTEBELO GONSALES CRISTIANO AFONSO NATIVIDADE DANIEL SIBILLE EMERSON SOARES MENDES FRANCISCO NAPOLI JOÃO BURKE PASSOS FILHO MÁRIO GARCIA JUNIOR RENATO OLIVEIRA PAIM JUNIOR ROBERTA FAGUNDES LEAL ANDREOLI SOPHIA CORRÊA JORDÃO DYEGO KOZAKEVIC FIGUEIREDO FABIO TORRES DAS CANDEIAS JULYANE GONÇALVES SANT ANNA APPOLINÁRIO LEANDRO LUCAS DE OLIVEIRA ALMADA THIAGO MARTINS GARCIA SILVA AV. PAULISTA, º ANDAR SÃO PAULO SP FONE: (011) (011) (English) FAX: (011) / 80 nehring@nehring.com.br OFF COUNSEL Maria Helena Leonardi Bastos Rua Barão do Triunfo, º andar São Paulo SP Fone: (011) Fax (011) R e p resentante na Europa M e. Jean-Paul Rouby 77, AVENUE PAUL DOUMER PARIS FRANCE FONE: (331) FAX: (331) jprouby@cabinet-rouby.org São Paulo, November 5, BRAZIL S TAX SYSTEM Brazil has traditionally had a complex tax system. The Federal Constitution of Brazil divides the tax jurisdiction among the (federal) Union, the States, the Federal District and Municipalities. All levels of government may create taxes according to the tax jurisdiction granted by the Federal Constitution. The Union still has powers to create certain taxes, socalled contributions, such as social contributions, contributions for the intervention in the economic order and in the interest of professional or economic categories. Upon exercising their taxing powers the Union, the states, the Federal District and municipalities are subject to many constitutional limitations, which exist to assure taxpayers a certain level of certainty and avoid arbitrary tax impositions. This section summarizes the most significant taxes affecting businesses in Brazil. 1 Corporate Income Tax - IRPJ Most businesses are required to pay corporate income tax, which is computed at a 15% rate on adjusted net income. Annual net income in excess of BRL 240,000 (approximately USD 120,000) is also subject to an additional 10% surtax. There are three different methods to calculate corporate income tax: the actual profit method (Lucro Real), the presumed method (Lucro Presumido) and the arbitrated method 1 (Lucro Arbitrado). Except where the law requires the taxpayer to calculate corporate income tax according to the Lucro Real method 2, taxpayers are free to choose the best method available. Option is definitive for the entire year and cannot be changed during the same year. Option is taken by the time the taxpayer makes the first 1 The arbitrated method applies to very few situations, most of them where tax authorities disregard taxpayer s accounting records. Because of the limited usage of this method, we have excluded any further comments thereto. 2 Article 14 of Law No. 9,718/98, as amended.

2 income tax payment in the year according to the payment code used to make such a payment 3. Under the Lucro Real method, taxpayers may choose to calculate corporate income tax quarterly 4 or annually 5. If it is calculated quarterly, corporate income tax must also be paid quarterly. Based on the quarter net income, corporate income tax is levied at a 15% rate plus 10% surtax on net income in excess of BRL 60,000 per quarter 6. The tax basis is the company s net income (income less deductible costs and expenses), as reported in accounting books. If instead corporate income tax is calculated annually, taxpayers are required to anticipate monthly payments based on estimated taxable profit 7. Under this estimated calculation, taxpayers apply an estimated profit margin over their monthly gross income similar to the Lucro Presumido s described below 8. Over such estimated basis, corporate income tax rates apply, namely, a 15% rate over the entire basis, plus a 10% surtax on basis in excess of BRL 20,000 per month. Under this estimated calculation, the taxpayers are allowed to prepare a year-todate (YTD) balance sheet and compare the YTD taxable income with the estimated tax due. If the YTD balance sheet shows a lower YTD actual income tax due, as compared to the estimated tax, then the taxpayer may elect to pay the lower of the two. Accordingly, if the YTD statements show a loss, then the taxpayer is not required to pay the estimated income tax for that month. This procedure has to be adopted monthly if the taxpayer has reasons to believe that actual taxable income is lower than the estimated one. At year-end, the final balance sheet will show if the taxpayer has to make a final tax payment or entitled to a tax refund if tax payments over the year have been more than the tax finally due. The same procedure applies to CSL, described in section B.2 below. Net operating losses ( NOLs ) generated in a taxable period can offset taxable income of subsequent periods under the Lucro Real. Though there is no statute of limitations for NOL use, offset is limited to 30% of taxable income (i.e., for each BRL 1 of taxable income, BRL 0.70 of the corresponding tax must be paid in cash even if the taxpayer has NOL) 9. Under the Lucro Presumido corporate income tax is calculated quarterly and, for most activities, the presumed profit margin (over which the rates apply) is 8% of monthly gross income corresponding to operational activities. Depending on the specific industry other rates apply 10, as follows: 1,6% - resale for final consumption of fuel and natural gas; 8% - sales of goods and products; 3 Article 26, paragraph 1 of Law No. 9,430/96 4 Article 1 of Law No. 9,430/96 5 Article 2 of Law No. 9,430/96 6 Article 3 of Law No. 9,249/95, as amended by Article 4 of Law No. 9,430/96 7 Article 2 of Law No. 9,430/96 8 The estimated profit margins are the same used for the Lucro Presumido, described in the following page. 9 Article 15 of Law No. 8,981/95 10 Article 15 of Law No. 9,249/95

3 (d) (e) (f) (g) (h) (i) (j) 8% - cargo transportation services; 8% - hospital services; 8% - sales of real estate by companies in this business; 8% - printing industries; 8% - civil construction with use of materials; 16% - transportation services, except cargo transportation services; 16% - small service companies (with annual gross income below BRL 120,000 (app USD 60,000); 32% - other services not listed above. Based on the presumed income, a 15% rate applies and a 10% surtax is levied on presumed income in excess of BRL 60,000 per quarter, similar to that estimated calculation for Lucro Real. If the taxpayer selects this method, however, no adjustment is made at year-end. In other words, monthly tax payments made under the Lucro Presumido during the year are considered definitive with no adjustments at year-end even if the taxpayer s accounting records show higher (than the presumed) profits, or even a loss. No offsetting of NOLs is available under the Lucro Presumido. Under Lucro Presumido, any profits that exceed the presumed margin (see rates listed above) may be distributed to shareholders tax-free to the extent the company maintains accounting records to support such a distribution 11. In other words, if the balance sheet shows a profit margin of 40%, but the taxpayer, for instance, has elected to use the Lucro Presumido where the presumed margin was 8% 12, the taxpayer is entitle to distribute the entire 40% profit with no further taxation. In this situation, tax authorities cannot legally claim the taxpayer to make an additional tax payment, nor require the taxpayer to change to Lucro Real, if all requirements to use Lucro Presumido are fulfilled and followed. Not all taxpayers, though, can select the presumed method. Taxpayers under the situations described below are required to calculate income tax according to Lucro Real method 13 : (i) Companies with annual gross income in the preceding year of more than BRL 48 million, or a proportional amount of income if the company was operational for less than 12 months in the preceding year; (ii) Financial institutions and similar entities; (iii) Companies that earn profits, earnings or capital gains outside Brazil 14 ; (iv) Companies enjoying tax exemptions or tax reductions; (v) Companies that, during the year, have anticipated monthly tax payments based on estimated income (annual Lucro Real); (vi) Factoring companies. Until 1996 dividends paid to nonresidents were subject to a 15% withholding income tax, except for Japanese residents that were subject to a treaty rate of 12.5%. Profits generated after January 1, 1996 are no longer subject to 11 Article 48, paragraph 3, of Normative Instruction No. 93/97 12 According to the rate applicable to the taxpayer s relevant activity as described above. 13 Article 14 of Law No. 9,718/98, as amended. 14 Such restriction does not apply to incomes generated by exportation of goods or services, in accordance to Interpretative-Declaratory Act 5, dated October 31, 2001

4 withholding income tax 15 upon distribution to owners, regardless of nature (individual or legal entity) or domicile (resident or foreign). Most entities are required to pay social contribution tax on net income (CSL). This is a true corporate income tax surcharge levied at the rate of 9% For companies under the Lucro Real, the tax basis for the CSL is the net income specifically adjusted for purposes of this tax. Similarly to corporate income tax, taxpayers may choose to calculate the social contribution tax quarterly or annually. If annually, the taxpayer must pay monthly on an estimated basis. The CSL is not deductible from net income for purposes of calculating corporate income tax 16. CSL tax losses, so-called CSL negative basis can be used to offset CSL taxable income from subsequent periods yet limited to 30% of taxable income 17. Similar to NOLs for corporate income tax purposes, negative basis may be used to offset future taxable income without statute of limitation. Generally, the tax basis for CSL to companies under the Lucro Presumido is 12% of the same taxpayer s quarterly gross income used for corporate income tax purposes 18. An increased basis applies to service companies, where the tax basis is 32% of quarterly gross income 19. Over both bases, a 9% rate applies GROSS RECEIPT TAXES P.I.S. is a federal social contribution levied on taxpayers monthly gross income. In recent years, P.I.S. has been subject to several changes, many of them creating separate P.I.S. regimes depending on the taxpayer s business 21 or income tax calculation method (i.e., Lucro Real or Lucro Presumido). Generally speaking, there are two basic P.I.S. regimes: the cumulative regime 22 and the non-cumulative regime 23. They both depend on the corporate income tax method elected by the taxpayer. The cumulative regime generally applies to companies under the Lucro Presumido, although some exceptions apply. The tax basis is the taxpayer s monthly gross income with the exclusion of the following items 24 : Sales that are subject to P.I.S. exemptions or are zero rated; 15 Article 10 of Law No. 9,249/95 16 Article 1 of Law No. 9,316/96 17 Article 17 of Law No. 8,981/95 18 Article 29 of Law No. 9,430/96 19 Article 22 of Law No. 10,864/03 20 Article 37 of Law No. 10,637/02 21 Among the separate regimes are fuel, liquefied gas, financial institutions, non-profit organizations, cigarettes, vehicles, pharmaceutical, tires, beverages, etc. 22 Law No. 9,718/98 23 Law No. 10,637/02 24 Article 3, paragraph 2 of Law No. 9,718/98

5 Nonoperating income derived from sales of fixed assets; Resales subject to a P.I.S. tax substitution system 25 ; (d) Sales of fuel, medicines, automobiles, and other sectors for which P.I.S. is paid by the manufacturer at a higher rate; and (e) Canceled sales, unconditional discounts, and reversions of provisions that do not represent new income for the taxpayer. The rate is 0.65% 26. The cumulative P.I.S. is not levied on the following transactions 27 : Exports of goods abroad; Services to nonresident individual or legal entities, for which payment is made in foreign currency; and Sales of goods to export companies (trading companies) with a specific export purpose. Changes made in 2002 created a new P.I.S. regime: the non-cumulative regime 28. In general, those changes created a mechanism whereby taxpayers may credit the P.I.S. they pay when purchasing goods and services against the P.I.S. they collect in the course of their ordinary business (e.g., sales of goods and services) With some exceptions 29, the non-cumulative regime generally applies to companies that have elected to calculate corporate income tax according to the Lucro Real method. The non-cumulative regime, however, is not perfect since there are many restrictions as to the ability for the taxpayer to take P.I.S. tax credits. Also, the P.I.S. rate under this non-cumulative regime is 1.65% 30 (as compared to the 0.65% under the cumulative regime) The tax basis is the sum of the taxpayer s monthly gross receipts, regardless of the nature of income 31. The following items are excluded from the tax base 32 : (d) (e) Sales that are subject to P.I.S. exemptions or are zero-rated; Nonoperating income derived from sales of fixed assets; Resales subject to a P.I.S. tax substitution system whereby P.I.S. is paid up front by the first seller in the economic chain; Sales of fuel, medicines, and tires, for which P.I.S. is paid by the manufacturer at a higher rate; and Canceled sales, unconditional discounts, and reversions of provisions that do not represent new income for the taxpayer. 25 Under the substitution regime, the P.I.S. due from a production chain is imposed in advance on the first taxpayer in the sequence, usually the manufacturer of the original product. In subsequent transaction, the relevant product is not subject to P.I.S. 26 Article 4 of Law No. 9,718/98 27 Article 14, paragraph 1 of Provisional Measure No. 2,158/01 28 Law No. 10,637/02 29 Article 8 of Law No. 10,637/02 30 Article 2 of Law No. 10,637/02 31 Article 1 of Law No. 10,637/02 32 Article 1, paragraph 3 of Law No. 10,637/02. For COFINS, referred to in section B.3.2, the legal basis is Article 1, paragraph 3 of Law No. 10,833/03.

6 As in the cumulative P.I.S., regime, the non-cumulative P.I.S. is not levied on the following items 33 : Exports of goods abroad; Services to nonresident individual or legal entities, for which payment is made in foreign currency; and Sales of goods to export companies (trading companies) with a specific export purpose. Regarding sales to export companies, those companies must conclude the export within 180 days of the acquisition, or they will be subject to P.I.S. 34. Unlike true value-added taxes, under the non-cumulative P.I.S. regime the taxpayer calculates its own P.I.S. tax credits based on certain purchases of goods, services, assets, and so on. To calculate the credit, the taxpayer is required to apply the 1.65% 35 rate to the amount of certain purchases and/or deductions. Items on which the taxpayer is allowed to calculate the P.I.S. tax credit (by applying the 1.65% rate) include 36 : (d) (e) (f) (g) (h) Goods purchased during the month for resale, except those subject to a P.I.S. tax substitution system or single-phase P.I.S.; Goods and services purchased during the month and used as raw material in the manufacturing of products or services sold by the taxpayer, including fuel and lubricants; Expenses incurred during the month on leases of buildings, machinery, and other equipment used in the activities of the company; Financial lease expenses; Depreciation expenses of machinery, equipment and other fixed assets acquired or produced by the taxpayer for lease or manufacturing of products or services for sale; Amortization expenses, including labor expenses, borne by the taxpayer (as lessee) for improvements made to buildings owned by third parties; and Value of goods returned to the taxpayer for which sales income was taxed at the new P.I.S. rate in a previous month; Electricity consumed in the taxpayer s premises. The credit is allowed even if the taxpayer exports products or services that are exempt from P.I.S. In that case, the credit can be used to reduce the P.I.S. due on domestic sales or to offset other federal taxes administered by the Federal Revenue Department. If the taxpayer has excess of P.I.S. credits, this excess can be used in the following months against P.I.S. liabilities or against other federal taxes 37. At the end of each quarter, the taxpayer will have the option of filing for a refund of the 33 Article 5 of Law No. 10,637/02 34 Article 7 of Law No. 10,637/02 35 Article 3, paragraph 1 of Law No. 10,637/02 36 Article 3 of Law No. 10,637/02 37 Article 3, paragraph 4 of Law No. 10,637/02 and Article 21 of Normative Instruction No. 600/05 of the Federal Revenue Department

7 excess P.I.S. credit during that quarter 38. The refund procedure will follow the existing regulations on refunds 39. P.I.S. rules exclude certain items that do not generate P.I.S. credits, including 40 : (d) Labor costs paid to individuals; Goods and services purchased from nonresident companies; Costs and expenses incurred, paid, or credited to nonresident companies; and Goods and services purchased, and costs and expenses incurred, before 1 December Since May 2004, P.I.S. also applies on imports of goods and services (P.I.S.- Imports) 42. The rate is the same of the non-cumulative P.I.S. (1.65%), even though P.I.S.-Imports applies to all imports carried on by corporate taxpayers, including those under the Lucro Presumido and subject to cumulative P.I.S. For companies under the non-cumulative P.I.S. regime, P.I.S.-Imports is creditable. COFINS is also a federal social contribution levied on corporate taxpayers monthly gross income. Like P.I.S., COFINS has been subject to many changes in the last few years, which have made COFINS rules very complex. COFINS also has two basic tax regimes, the cumulative and the non-cumulative regime, the latter created in The COFINS tax rate under the cumulative regime is 3% 43, while the rate under the non-cumulative regime is 7.6% 44. Although regulated by different laws, P.I.S. and COFINS regimes, whether cumulative or non-cumulative, are basically identical. For the cumulative COFINS, the difference is basically the rate (3% for cumulative COFINS and 0.65% for cumulative P.I.S.). Companies under the Lucro Presumido pay COFINS according to the cumulative regime 45, i.e., at the rate of 3% with no tax credit available. For the non-cumulative COFINS, the same exceptions, exclusions, exemptions, items generating tax credits, items that do not generate tax credits, applicable to P.I.S., also apply to COFINS. Tax credits are calculated by applying the COFINS non-cumulative rate of 7.6% on eligible items (please see section 3.1 above). 38 Article 22 of Normative Instruction No. 600/05 39 Normative Instruction No. 600/05 40 Article 3, paragraphs 2 and 3 of Law No. 10,637/02 41 Date the regime entered into force. 42 Law No. 10,865/04 43 Article 8 of Law No. 9,718/98 44 Article 2 of Law No. 10,833/03 45 Article 10, II of Law No. 10,833/03

8 As P.I.S., both cumulative and non-cumulative COFINS are not levied on the following items of income 46 : Exports of goods abroad; Services to nonresident individual or legal entities, for which payment is made in foreign currency; and Sales of goods to export companies (trading companies) with a specific export purpose. Under the non-cumulative COFINS, as under non-cumulative P.I.S., tax credits can be used to reduce COFINS due on domestic sales or to offset other federal taxes administered by the Federal Revenue Department 47. If the taxpayer has excess COFINS credits, the excess can be used in the following months against COFINS due. At the end of each quarter, the taxpayer has the option of filing for a refund of the excess COFINS credits during that quarter. The refund procedure follows the existing regulations on refunds 48. Like P.I.S., COFINS also applies to imports of goods and services since May 2004 (COFINS-Imports). The same rules described for P.I.S.-Imports in section 3.1 above applies to COFINS-Imports. 3.3 P.I.S./COFINS SPECIAL TAX REGIME FOR EXPORTS There is a tax incentive for exports of Brazilian products that enables suspension of P.I.S./COFINS on the sales of raw materials by suppliers to a manufacturer that will export the final products 49. The tax incentive comes in the form of a special tax regime that must be requested by the exporter. The special regime contemplates three basic requirements, as follows: Export income in the preceding year must be at least 80% of the exporter s total income; The exporter must calculate income tax according to the Lucro Real regime; The exporter must request authorization to the Federal Revenue Department to use the regime. In what refers to item above, if the exporter was still not operating in the preceding year, then it must undertake to reach the 80% export-income requirement during the three following years. The same commitment applies if the exporter was operational in 2006, but did not reach the 80% export-income requirement. Once the regime is granted, the exporter must inform its suppliers that it is under the special regime; it must also inform the number of the special regime number 46 Article 14 of Provisional Measure No. 2,158/01 and Article 6 of Law No. 10,833/03 47 Article 6, paragraph 1 of Law No. 10,833/03 48 Articles 21 and 22 of Normative Instruction No. 600/05 49 Article 40 of Law No. 10,865/04 and Normative Instruction No. 595/05 of the Federal Revenue Department

9 (attributed by tax authorities) to suppliers, which must indicate such number in all sales to exporter to guarantee the P.I.S./COFINS suspension. Other important aspects of the special regime include: (d) (e) (f) (g) Purchases of products under this special regime do not generate P.I.S./COFINS credits to the exporter; The exporter is not required to always purchase goods under the regime; exporter may choose to have some of its purchases outside the regime and, thus, subject to P.I.S./COFINS and entitled to P.I.S./COFINS credits; Goods and other materials acquired under the special regime require the exporter to export the finished products within one year from the date of purchase; The exporter cannot have any pending federal tax issues, otherwise the regime is not granted; upon filing for the regime, the exporter must present a tax clearance certificate issued by the Federal Revenue Department and the Federal Revenue Attorney General; If the exporter fails to comply with any requirement, the regime will be cancelled and exporter will not be able to be included in the regime again for a period or 2 years; If the regime is cancelled, the exporter will have to export all existing inventory (that benefited from P.I.S./COFINS suspension) or final products derived thereof within 60 days of the date of cancellation; otherwise, exporter is required to pay P.I.S./COFINS not paid by its suppliers with respect to existing inventory acquired with P.I.S./COFINS suspension; The exporter must maintain accurate bookkeeping of purchases, inventory and exports of products. The federal excise tax (Imposto sobre Produtos Industrializados, or IPI) is a tax levied on manufactured products as they leave the plant where they are manufactured 50. It is also due on imported products at the time of importation and resale by the importer 51. IPI tax rates vary depending on the product s nature: the more essential the lower the rates, which are contained in a specific tariff table 52. Though technically not a true value-added tax, IPI has certain typical elements of a value-added tax. As an example, manufacturers may credit the federal excise tax paid on imports and to local suppliers of raw material, intermediary products, wrapping and packaging materials used to manufacture the final product 53. Taxpayer actually pays to the government the IPI corresponding to the difference between the credited and the debited amounts. IPI is not levied on exportation of products abroad Article 2, I of Law No. 4,502/64 51 Article 2, II of Law No. 4,502/64 52 Article 13 of Law No. 4,502/64 53 Article 25 of Law No. 4,502/64 54 Article 39 of Law No. 9,532/97

10 Similar to IPI, ICMS (Imposto sobre Circulação de Mercadorias e Serviços) is another almost-true value-added tax on sales of most goods and certain services 55. It is payable to state governments upon imports into Brazil and sale or transfer of goods within Brazil; it is also payable upon certain communication and intra- and interstate transportation services 56. The rates and tax benefits vary from state to state and they also depend on the specific transaction (e.g., intra- or interstate sales of goods, communication or transportation services). The ICMS system enables the taxpayer to offset the tax paid in acquiring goods and services (including imports) against the tax due on subsequent taxable transactions 57. The difference is the amount owed to the state government. Importers may book a credit for ICMS paid on imports and on local purchases of fixed assets, although state rules may impose restrictions for immediate use of such credits. In certain (but not all) States, taxpayers with excess credits may transfer them to third parties. We can further develop this issue, if necessary. For domestic sales in the state of São Paulo, ICMS rate is 18% 58 or % for sales within the state, 12% for general interstate transactions with taxpayers located in the South and Southwest regions (except Espírito Santo) 60, and 7% on sales to taxpayers located in the North, Northeast or Central West regions, or to the State of Espírito Santo 61. No ICMS applies for exportation of products 62. ICMS paid in Brazil during intermediary phases before the exportation may be recovered by the taxpayer, or used to purchase materials or equipments to be used in the industrialization of taxpayer s products 63, depending on a special authorization from the State Tax Authority. 6 SERVICES TAX Except for services which are subject to ICMS (certain communication and intraand interstate transportation services), usually, services are assessed by Services Tax in Brazil 64. Such tax may be charged by Municipality, depending on the existence of a local law ruling such tax. All Municipalities shall obey a general 55 Article 19 of Complementary Law No. 87/96 56 Article 2 of Complementary Law No. 87/96 57 Article 20 of Complementary Law No. 87/96 58 Article 52, I, of São Paulo State Decree No / Article 55, of São Paulo State Decree No / Article 52, III, of São Paulo State Decree No / Article 52, II, of São Paulo State Decree No / Article 155, 2º, X, a of Federal Constitution 63 Article 73, III, a and b of São Paulo State Decree No / Article 156, III, of Federal Constitution

11 federal law which sets forth boundaries for Services Tax. Currently, such federal law is Complementary Law 116/2003. It is important to mention that there are, currently, 194 services listed in Complementary Law 116/2003. Only listed services are subject to ISS. A major question concerning ISS is to which municipality such tax shall be paid. A situation in which a Company from one city renders service in another city is not difficult to occur. According to jurisprudence and to Complementary Law 116/2003, normally such tax must be paid to the city where services are actually rendered, even if the Company is located in another city. This applies also to services rendered by a Company located abroad, since importation of services is also subject to ISS 65. Taxpayer is the Company or the person which renders services 66. A Municipal law may oblige the person who purchases the services to withhold and pay ISS, on behalf of the actual taxpayer. Tax rates varies from 2% to 5% 67 on the price of the service, however, there are still some cities discussing their right to maintain smaller tax rates, established before Complementary Law 116/2003 entered into validity. Exportation of services are not subject to ISS 68. The Provisional Bank Transactions Tax (Contribuição Provisória sobre Movimentação ou Transmissão de Valores e de Créditos de Natureza Financeira, or CPMF) is a tax imposed at the rate of 0.38% 69 on any debit made into bank accounts 70 (e.g., cash withdrawals, cashing checks, wire transfers). An exception applies to investments accounts, were debits are CPMF-exempt. The tax is debited weekly from taxpayers bank account by the financial institutions where the account kept. Existence of CPMF was expected to end in December, 2007, however, it is probably going to be renewed for some years, at its present or at a different rate. 8 Conclusion This overview presented only the main aspects of the most relevant taxes that may be applicable to companies in Brazil. As one may observe, Brazilian Tax System is complex and it is in constant modification. Besides, depending on the kind of business developed, other taxes may be applicable as well, therefore each case must be analyzed individually, with the purpose not only to assure that all the 65 Article 1º, 1º of Complementary Law 116/ Article 5º of Complementary Law 116/ Article 8º, II, of Complementary Law 116/ Article 2º, I, of Complementary Law 116/ Article 3 of Constitutional Amendment No. 42/03 70 Article 2 of Law No. 9,311/96

12 taxes are correctly paid, but also to verify if the best optimized tax structure is implemented. This study is based on the rules in force in November, However, since Brazilian Tax laws are subject to frequent modifications, readers are encouraged to check whether such rules are still valid whenever they use this text for any purpose. NEHRING E ASSOCIADOS ADVOCACIA DAVID SILVA JOÃO BURKE