1E9Ct5D

Today, this new system is expected to be followed until 31 December 2014 and is mandatory for thecompanies engaged in the branches of economic activity covered by the policy, including:(i) maintenance and repair of aircrafts, engines, components and related equipment; (ii) internationalcargo transportation; (iii) international passenger transportation; (iv) long-distance, coastal and inlandmaritime transport of cargo and passengers (v) maritime and port support navigation; (vi) maintenanceand repair of vessels; (vii) specific retail activities; (viii) provision of information technology (IT) andinformation and communication technologies (ICT) services; (ix) companies engaged in the hotelindustry; (x) collective passenger transport by road; and (xi) industrialization of any products whoseMercosur Common Nomenclature (NCM) is listed in Law 12,546/11.It is important to point out that the application of this system involves many different details that mustbe analyzed on a case by case basis.6.1.6.3. Contribution for the Funding of Social Security - (Contribuição para Financiamento daSeguridade Social – COFINS)COFINS is entirely allocated for the maintenance of Social Security and, under the cumulative system,is levied at the rate of 3% (art. 8 of Law 9,718 of 27 November 1998) on the monthly turnover, andsome deductions provided in law are permitted (art. 3, paragraph 2 of Law 9,718/98).For financial institutions, the COFINS contribution is imposed at the rate of 4% (art. 18, of Law10,684/03).Revenues generated with the sale of goods or services destined for the foreign market are exemptfrom the COFINS contribution (art. 14, I and II of MP 2,158- 35/01), and also the sale made by atrading company specifically for export purposes (art. 6, III of Law 10,833/03) and issues of goodsdestined for the Manaus Free Trade Zone for sale or industrialization in that area (art. 2 of Law10,996/04).It is important to mention that Law 10,833/03 introduced the COFINS non-cumulative system forcorporate entities taxed by actual income. Under such system, COFINS is payable at 7.6%, butpermitting that companies calculate and discount from the due amount of the contribution, creditsrelating to certain previous operations, such as: goods purchased for resale; goods and services, usedas inputs for the provision of services and in the production or manufacture of goods or productsintended for sale, including fuels and lubricants; rents of buildings, machinery and equipment, paid toa corporate entity, used in the company’s business activity; electric power consumed in the company’sestablishments, and other cases (arts. 2 and 3 of Law 10,833/03).43