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Companies, including branch and representative offices or agencies of foreign corporate entities inBrazil with their main offices abroad that present monthly taxable, presumed or arbitrated income inexcess of R$ 20 thousand, equivalent to approximately US$ 8.5 thousand, will be subject to anincome tax surtax levied at the rate of 10%Actual Taxable Income is the net income (considered as the algebraic sum of operating income, nonoperatingresults and ownership interests) corresponding to the base period, adjusted by theadditions, exclusions or offsets determined by law (art. 247 of the RIR).The Presumed Income, on which income tax is levied, corresponds to the result of the application ofthe percentages predetermined by the tax administration on gross income, of between 1.6% and 32%,according to the type of activity performed by the corporate entity (art. 519, paragraph 1 of the RIR).For companies electing for the annual Actual Taxable Income calculation system, the tax losses andnegative basis for Social Contribution on Net Profits (CSLL) may be offset up to the maximum limit of30% of net income adjusted by the additions and exclusions permitted by the income tax and CSLLlegislations. For quarterly Actual Taxable Income, the tax loss of a quarter can only be carried forwardup to the limit of 30% of the Actual Taxable Income of the subsequent quarters. In the case ofPresumed Income, it is not possible to offset tax losses.6.1.1.1. Remittances AbroadRemittances of profits and dividends abroad, on the basis of the results determined as from 1 January1996, are not subject to Withholding Income Tax (“IRRF” - art. 692 of the RIR).Remittances of interest are subject to the IRRF at the rate of 15% (art. 1 of Law 9,959/2000). This rateis increased to 25% if the recipient of the remittances resides in a tax haven or tax favorablejurisdiction.Interest remitted abroad may be deducted from the calculation of taxable profit of a corporate entity inBrazil, with limitations.In the case of the payment of interest to related persons residing abroad in an other than tax haven,interest may be deducted up to an amount that does not exceed the value calculated based on thespecific rate plus a percentage margin as spread, as defined by the Ministry of Finance based on themarket average. In the event of transactions in dollars, the rate applicable to Brazil’s sovereign bondsissued in the foreign market in dollars will apply. In the event of transactions in reais, the rateapplicable to Brazil’s sovereign bonds issued in the foreign market in reais will apply. In the remainingcases, the London Interbank Offered Rate – LIBOR is applicable for a period of six (6) months (art. 2232