to the Brazilian Federal Revenue Customs Agency. The concession of "Limited" Radar is faster and is not heavily dependent on proof of financial capacity. (iii) Unlimited Radar. The "Unlimited" type allows unrestrained freedom to operate foreign trade, but a recurring analysis on the financial capacity of the importer will be performed by customs authorities – regularly based on the level of taxes collected in Brazil – in order to continuously confirm the unlimited permission to import. Other specific registrations may be needed depending on the activity to be performed by the company. The registrations are part of the standard routine of a company formation, and we estimate that a company will be fully operational within 45 days following the filing with the Board of Commerce. The time for conclusion provided above is an estimated only, which depends entirely on the internal procedures of the applicable governmental entities as well as specific requirements depending on the industry and/or market of the company. 5. Basic Tax Aspects to be Considered. 5.1. Taxation: Brazilian legal entities are individually taxed, without the possibility of tax consolidation. They may be subject to taxes at the Federal, State and Municipal level of government, according to their activities: (a) All companies are subject to income taxes (Corporate Income Tax - IRPJ and Social Contribution on Net Profit - CSLL). The most common regimes of assessment of these taxes are the Deemed Profit Regime and the Real Profit Regime, as further detailed below.

(b) PIS and COFINS contributions are also generally due by all companies. In most cases, their regime varies according to the income tax regime elected by the taxpayer. If the company opts for the Deemed Profit Regime, as defined below, it will be subject to the PIS/COFINS cumulative regime, under which they are calculated based on gross receipts from operating activities at lower rates (3.65% combined), but without offsetting credits. If the company elects for the Real Profit regime, it is generally subject to the PIS/COFINS under the non- cumulative regime, which are calculated with higher rates (9.25% combined) on a wider base encompassing operating activities, non-operating and financial transactions. Financial income is generally subject to PISCOFINS at a combined 4.65% rate. The non-cumulative regime allows the taxpayer to offset credits from certain costs and expenses. PIS/COFINS are also levied on the importation of goods at a combined rate of 11.75%, whereas importation of services is taxed at a combined rate of 9.25%. Imported goods and services are generally creditable under the non-cumulative regime, if those costs and expenses qualify under the requirements stipulated by statute. (c) The Import Duty is collected upon customs clearance of goods imported into Brazil. The taxable base is the CIF value of the goods. The rates are usually defined in a schedule based on the Harmonized System and generally vary from 0% to 35% (goods considered to be “essential” are subject to lower rates while superfluous goods are taxed at higher rates). The amount paid upon customs clearance is not recoverable by the importer in the form of a credit and consequently becomes part of the cost of the imported product. Brazilian

ILN Corporate Group – Establishing a Business Entity Series

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