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Investor Presentaiton

CORPORATE LAW BY PAULO SALVADOR RIBEIRO PERROTTI AND FERNANDO MAURO BARRUECO BRAZIL - CANADA COMPARATIVE LAW • of 11%, whereas self-employed workers pay 20%. In both cases, the basis for calculation of this charge is limited to R$ 2.400,00 (adjusted monthly as of January 2004). Corporations pay CINSS at the rate of 20% on payments to individuals for services performed, with no ceiling. Rate of 2% on gross revenue exclusively for companies that provide information technology (IT), information technology and communication (ICT), call centers and companies in the hospitality industry and construction industry. Contribution to intervene in the economic domain (CIDE): (I) CIDE/ Fuel is due at specific rates on import and trade in the domestic fuel market; and (II) CIDE/Remittances is due on remittances to foreign individuals for royalties or technology transfers. The rate is 10%. Alternative Tax Regime There are three options for tax assessment in Brazil: Actual profit: This is the general (or default) format to assess and pay taxes in Brazil. It goes along the basic lines of taxation in other countries. The main taxes to be paid by companies are: Taxes applied when an invoice is issued (PIS and COFINS) and taxes that are applied on the net income such as IRPJ (tax over net income) and CSLL (social contribution over net income). In addition there are taxes over the payroll that concern the employer's part of social security (public health services and pension programs). Assumed Profit: This is a simplified form of assessing taxes and bookkeeping which can be applied by companies. Simplified Taxation System: Intended for small companies, with just a single tax (called simplified taxation system). It applies to companies with less than R$ 3.6 M in revenues. ■ 11
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