DECREE NO 6,304, DE December 12, 2007.

Regulation the Act no 8,685, July 20 of 1993, which creates mechanisms to foster audiovisual activity.

THE PRESIDENT OF THE REPUBLIC, in the use of the attribution conferring you the art. 84, inciso IV, of the Constitution, and in view of the provisions of the Act No 8,685 of July 20, 1993, at art. 6th of the Law No 8,849 of January 28, 1994 at art. 2nd of Law No 9,064 of June 20, 1995 in the inciso II of the art. 6th of the Law No 9,532 of December 10, 1997 at art. 10 of the Provisional Measure no 2.189-49, August 23, 2001, in the arts. 41 a to 46 of the Provisional Measure no 2.228-1, September 6, 2001, in Law No 10,454 of May 13, 2002, in Law No 11,437 of December 28, 2006, and in the arts. 5th and 6th of Law No 11,505 of July 18, 2007,

DECRETA:

Art. 1st The mechanisms of fomenting audiovisual activity shall be governed by the provisions of this Decree.

CHAPTER I

DAS AUDIOVISUAL WORKS

Art. 2nd For the purposes of this Decree mean by:

I-audiovisual work: product of the fixation or transmission of images, with or without sound, that has the purpose of creating the motion impression, regardless of the cater processes, of the initial used support or thereafter to fix them or transmit them, or of the means used for their vehiculation, reproduction, transmission or broadcast ;

II-cinematographic work: audiovisual work whose original caption matrix is a film with photosensitive emulsion or digital caption matrix, whose destination and display is priority and initially the market of display rooms ;

III-music video works: audiovisual work whose original caption matrix is a magnetic medium with information storage capacity that translates into moving images, with or without sound ;

IV-cinematographic work and independent production videophonographic: the one whose company producer, majority holder of heritage rights on her, does not have any association or bond, direct or indirect, with broadcasters of sounds and images or electronic mass communication operators for signature ;

Brazilian cinematographic works or Brazilian music video: the one that meets one of the following requirements:

a) be produced by Brazilian producer company, observed the provisions of § 1st, registered in the National Film Agency-ANCINE, be directed by Brazilian or foreign director resident in Brazil for more than three years, and use for its production, at the very least, two-thirds of Brazilian artists and technicians or residents in the Country there are more than five years ;

b) to be held by Brazilian producer company registered at ANCINE, in association with companies from other countries with which Brazil maintains film co-production agreement and in line with these countries ;

c) be carried out, under co-production scheme, by Brazilian producer company registered at ANCINE, in association with companies from other countries with which Brazil does not maintain co-production agreement, assured the entitlement of at least forty per cent of the labor's property rights to the Brazilian producer company, and to use for its production, at the very least, two-thirds of Brazilian artists and technicians or residents in Brazil for more than three years ;

VI-market segment: exhibition room markets, home video on any support, broadcasting of sounds and images, electronic mass communication by subscription, audiovisual advertising market or any other markets that conveyor cinematographic and videophonographic works ;

VII-cinematographic works or short film music video: the one whose duration is equal or less than fifteen minutes ;

VIII-cinematographic works or mean-metre videophone: the one whose duration is superior to fifteen minutes and equal or less than seventy-minute minutes ;

IX-cinematographic works or long film videophone: the one whose duration is superior to seventh minutes ;

X-works or serial music video: the one that, under the same title, is produced in chapters ;

XI-telephone: documentary, fictional or animation work, with, at the very least, fifty and, at most, one hundred and twenty minutes of duration, produced for first display in electronic means ;

XII-mini-series: documentary, fictional or animated work produced in film or matrix of digital caption or in magnetic medium with, at the very least, three and, at most, twenty-six chapters and maximum duration of one thousand and three hundred minutes ;

XIII-programmer: company that offers, develops or produces content, in the form of channels or of isolated schedules, intended for electronic mass communication services companies by subscription or any other communication services, which transmit electronic signals of sound and image that are generated and transmitted by satellite or by any other means of transmission or vehiculation ;

XIV-international programming: that generated, made available and transmitted directly from the exterior for Brazil, by satellite or by any other means of transmission or vehiculation, by the channels, programmers or foreign companies, intended for the electronic communication services companies by subscription or any other communication services that transmit electronic signals of sound and image ; and

XV-national programming: that generated and made available, in the Brazilian territory, by the channels or programmers, including Brazilian or foreign audiovisual works, intended for electronic mass communication services companies by subscription or any other communication services that transmit electronic signals of sound and image, which is generated and transmitted directly in Brazil by companies based in Brazil, by satellite or by any other means of transmission or vehiculation.

§ 1st For the purposes of the inciso V of the caput, it is understood by Brazilian company that constituted under the Brazilian laws, with registered office and administration in the Country, whose majority of the total and voting capital is of entitlement, direct or indirect, of Brazilians nated or naturalized for more than ten years, which must exercise in fact and rightfully the power company decision-making.

§ 2nd ANCINE will be able to expedite standards by defining the concept of audiovisual producing company independent, as well as the concept of association or bond between the producer and company company of the market segment of sounds and images or enterprise of the electronic mass communication market segment by subscription, targeting establish criteria for the application of the income tax advination resources as laid down in this Decree.

CHAPTER II

DOS INVESTMENTS

Art. 3rd Until fiscal 2010 exercise, inclusive, the taxpayer will be able to deduct from tax on the income due to amounts regarding project investment previously approved by ANCINE for:

I-the production of Brazilian film audiovisual works of independent production ; and

II-specific projects of the audiovisual area, exhibition cinematographic, distribution and technical infrastructure, whose project has been submitted by Brazilian company.

§ For the purpose of the provisions of the caput, only deductible from the tax on income due to the investor values:

I-by the physical person in the calendar year to which the annual adjustment declaration is referred ; and

II-by the legal person taxed for real profit in the respective period of ascertaining tax.

§ 2nd The deduction that they treat the caput and § 1st of this article is limited:

I-regarding the physical person, six per cent of the income tax due in the declaration of annual adjustment, jointly with the relative deductions:

a) the contributions made to the funds controlled by the Municipal, State and National Councils of the Rights of the Child and the Adolescent-CONANDA ;

b) to the contributions made effectively in favor of cultural projects, approved in the form of the regulation of the National Culture Support Program-PRONAC, instituted by art. 1st of Law No 8,313 of December 23, 1991 ;

c) to sponsorship or donation to sports projects and sports projects previously approved by the Ministry of Sport, of which it treats art. 1st of Law No 11,438 of December 29, 2006 ;

d) to sponsorship the production project of Brazilian production cinematographic works independent, of which they treat the arts. 5th and 6th of this Decree ;

e) to the amounts applied in the acquisition of shares of the Industry Funding Funds National Cinematographic-FUNCINES, of which it treats the inciso I of the § 2nd of the art. 22 of this Decree ;

II-regarding the legal person, three per cent of the value of the tax on income due, prior to additional, ascertained based:

a) in the estimated profit ;

b) in the quarterly real profit ; or

c) in the balance of the tax due in the annual adjustment.

§ 3rd In the case of legal persons who are to collect the tax on the basis of profit estimated, the vested value could be deducted from the tax due in the month in which it was applied, and the surplus may be deducted in subsequent months until December of the same calendar year.

§ 4th In the hypothesis of § 3rd, if the vested value deducted during the period of ascertainment is higher to the calculated on the basis of the tax due in the annual adjustment, the difference should be collected as tax at the same time limit set for the payment of the single quota.

§ 5th Without prejudice to the provisions of the inciso II of § 2nd, the legal person may exclude the total of the investment, effected in the form of the incisos I and II of the caput, of the net profit for the determination of real profit.

Art. 4th The deduction of tax on income due to which it treats art. 3rd is only allowed for investments made in the capital market, in assets provided for in law, and authorized by the Securities Commission-CVM, upon acquisition of representative shares of marketing rights on the works referred to in the inciso I of the art caput. 3rd, characterized by investment certificates.

§ 1st The investment certificates to which the caput is referred are securities subject to the system of Law No 6,385 of December 7, 1976, by which the CVM regulation as to the form of issuance, distribution, negotiation and intermediation of such certificates in the capital market is made.

§ 2nd The responsibility of the purchasers is limited to the integralization of the subscribed quotas represented in the investment certificate.

§ 3rd shall only be able to enjoy the incentive the investor who is identified in the certificate of investment as first acquirer.

§ 4th Income or earnings earned in the rescue or disposal of investment certificates are subject to tax on income tax in the form of legislation applicable to incidence at source, capital gain or net gain in variable income, as the case may be.

CHAPTER III

DOS SPONSORSHIPS

Art. 5th Up to the 2016 calendar year, inclusive, the taxpayer will be able to deduct from tax on the income due to the amounts regarding sponsorship the project previously approved by ANCINE for:

I-the production of Brazilian audiovisual works of independent production ; and

II-specific projects of audiovisual area of diffusion, preservation, display, distribution technical infrastructure, whose project has been submitted by Brazilian company.

§ First For effect of the caput, only deductible from the tax on income due to amounts spent on sponsorship title:

I-by the physical person in the calendar year to which the annual adjustment declaration is referred ; and

II-by the legal person taxed for real profit in the respective period of tax ascertaining.

§ 2nd The deduction that it treats the caput is limited:

I-regarding the physical person, six per cent of the income tax due in the declaration of annual adjustment, jointly with the relative deductions:

a) the contributions made to the funds controlled by the Municipal, State and National Councils of the Rights of the Child and the Adolescent-CONANDA ;

b) to the contributions effectively undertaken in favor of cultural projects, approved in the form of the regulation of PRONAC ;

c) to sponsorship or donation to sports projects and sports projects previously approved by the Ministry of Sport, of which it treats art. 1st of Law No 11,438, 2006 ;

d) to the investment that they treat the art. 3rd and 4o;

e) the amounts applied in the acquisition of shares of FUNCINES of which it treats the inciso I of the § 2nd of the art. 22 ;

II-regarding the legal person, four per cent of the value of the tax on income due, prior to additional, ascertained based:

a) in the estimated profit ;

b) in the quarterly real profit ; or

c) in the balance of the tax due in the annual adjustment.

§ 3rd In the case of legal persons who are to collect the tax on the basis of profit estimated, the vested value could be deducted from the tax due in the month in which it was applied, and the surplus may be deducted in subsequent months until December of the same calendar year.

§ 4th In the hypothesis of § 3rd, if the vested value deducted during the period of ascertainment is higher to the calculated on the basis of the tax due in the annual adjustment, the difference should be collected as tax at the same time limit set for the payment of the single quota.

§ 5th Legal persons will not be able to deduct the value of the sponsorship of which it treats this article for purposes of determining the real profit and the calculation basis of the Social Contribution on Net Profit-CSLL.

§ 6th The resources of the specific projects of the audiovisual area of which it treats the inciso II of the caput can be applied by means of refundable or non-refundable values, as per standards dispatched by ANCINE.

§ 7th The values reimbursed in the form of § 6th will be intended for the National Cultural Fund-FNC and will be allocated in specific programming category called the Audiovisual Setorial Fund.

CHAPTER IV

DOS SPECIAL FOSTER PROGRAMS

Art. 6th ANCINE will be able to institute special programmes to foster the development of Brazilian audiovisual activity for fruition of the income tax deduction, in the form of art. 5th.

§ 1st The resources intended for special foster programs will be applied in projects audiovisual distribution, display, diffusion and production of Brazilian audiovisual works of independent production, chosen by means of public selection, as per the standards

§ 2nd The resources of the special promotion programmes of which it treats § 1st can be applied by means of refundable or non-refundable values, as per standards dispatched by ANCINE.

§ 3rd The values reimbursed in the form of § 2nd shall be intended for the FNC and shall be allocated in category of specific programming called the Audiovisual Setorial Fund.

§ 4th basic parameters for the application of the non-refundable and refundable values provided in § 2nd shall be objects of specific norm of ANCINE, heard the Ministry of Finance.

CHAPTER V

DOS PROJECTS NOT LOVED BY THE DEDUCTION

Art. 7th The values invested or sponsored with the use of the tax proceeds on the income, in the form of the arts. 3rd to 6th, 10 and 11, they will not be able to be used in favour of production project of audiovisual works of an advertising nature.

CHAPTER VI

OF PUBLIC RESOURCE APORT LIMIT

Art. 8th The projects to which the arts refer. 3rd to 6th should cumulatively meet the following requirements:

I-counterpart of own resources or third parties corresponding to five per cent of the budget global approved, proven to the end of its realization ; and

II-the somatorial of the resource aports object of the deductions provided for in the arts. 3rd to 6th is limited to R$ 4,000,000.00 (four million reais).

§ 1st The release of resources is conditional on the integralization of at least fifty per cent of the approved features for project realization.

§ 2nd The production projects of long film cinematographic works approved by ANCINE, until December 28, 2006, in the form of art. 25 of Law No 8,313, 1991, and § 5th Art. 4th of Law No 8,685 of July 20, 1993 shall not be subject to the provisions of the inciso II of the caput, being observed, as limit, the authorized value in the approved project until December 28, 2006.

CHAPTER VII

DO DEPOSIT IN SPECIAL ACCOUNT

Art. 9th The taxpayer who chooses for the use of the deduction provided in the arts. 3rd to 8th shall deposit, within the legal period fixed for the collection of the tax, the value corresponding to the deduction of the tax in account of special financial application, in public financial institution, the move of which shall be subject to prior verification by ANCINE that the deposited value is intended for investments in production projects of cinematographic audiovisual works and Brazilian independent production videophones.

§ 1st The financial application account to which the caput is referred will be opened:

I-on behalf of the bidder, for each project, in the case of the arts. 3rd to 5th, remaining blocked until express motion authorization, given by ANCINE, in accordance with standards to be made by it ;

II-on behalf of ANCINE, for each special promotion programme, in the case of art. 6th.

§ 2nd ANCINE will dispatch specific document, for the purpose of tax voucher, of the accession of the contributor to the special promotion programme, in the act of deposit of resources in the account that it treats the inciso II of § 1st.

§ 3rd ANCINE will expedite supplementary standards for compliance with the provisions of this article's caput.

CHAPTER VIII

DA TAX DEDUCTION ON SHIPPING TO THE EXTERIOR

Art. 10. The taxpayers of the tax on the income incident under the art. 13 of Decree-Law No 1,089 of March 2, 1970, will be able to deduct the value corresponding to seventy per cent of income tax due to be invested in the development of projects, approved by ANCINE, for the production of works Brazilian cinematographic of independent production films, and in the co-production of Brazilian independent production telephone and Brazilian film production and film ministes.

Art. 11. The taxpayers of the tax on the income incident under the art. 72 of Law No 9,430 of December 27, 1996, recipients of credit, employment, remittal, delivery or payment by the acquisition or remuneration, to any title, of rights, relating to transmission, by means of broadcasting of sounds and images and service of electronic mass communication by subscription, of any audiovisual works or events, even those of sports competitions of which it is part of Brazilian representation, will be able to deduct the corresponding value to seventy per cent of the tax on income due to be invested in the development of projects, approved by ANCINE, for the production of Brazilian cinematographic works of independent production and in the co-production of cinematographic works and Brazilian music video games independent short, medium and longer-metre, documentaries, telephone and minisséries.

Art. 12. The legal person responsible for the remittances paid, credited, employed, delivered or referred to the taxpayers of which they treat the arts. 10 and 11 shall have preference in the use of the resources arising from the deduction in them.

Single Paragraph. For the exercise of the preference provided for in the caput, the taxpayer of the tax shall transfer expressly to the person responsible for the credit, employment, shipment, delivery or payment the value deducted from the tax on the income due that it treats the caput, in device of the contract or by document specially constituted for such purposes.

CHAPTER IX

DO DEPOSIT IN SPECIAL ACCOUNT

Art. 13. The taxpayer who chooses to use the intended deduction in the arts. 10 and 11 shall deposit, within the legal period fixed for the collection of the tax, the value corresponding to the deduction of the tax in account of special financial application, in public financial institution, the move of which shall be subject to prior demonstration by ANCINE that it is intended for investments in production projects of cinematographic audiovisual works and Brazilian independent production videophones.

Single Paragraph. The financial application account referred to in the caput shall be opened on behalf of the taxpayer, his legal representative or the consignment officer.

CHAPTER X

OF PUBLIC RESOURCE APORT LIMIT

Art. 14. The projects to which the arts refer. 10 a 12 should cumulatively meet the following requirements:

I-counterpart of own resources or third parties corresponding to five per cent of the budget global approved, proven to the end of its realization ; and

II-the somatorial of the resource aports object of the deductions provided for in the arts. 10 and 11 is limited to R$ 3,000,000.00 (three million reais).

§ 1st The release of resources is conditional on the integralization of at least fifty per cent of the approved features for project realization.

§ 2nd The production projects of long film cinematographic works approved by ANCINE, until December 28, 2006, in the form of art. 25 of the Act No. 8,313, 1991, and art. 18 of this Decree, shall not subject itself to the provisions of the inciso II of the caput, being observed, as limit, the authorized value in the approved project until December 28, 2006.

CHAPTER XI

DOS PROJECTS PRODUCED IN COUNTERPART OF THE EXEMPTION OF CONDECINE

Art. 15. The projects produced with the resources arising from the option for applying three per cent of the imports on income or remuneration, paid, credited, employed, remitted or delivered to producers, distributors or intermediaries in the exterior, by exploitation in the Country of cinematographic and videophonographic works or by its acquisition or importation at fixed price, as well as any amount relating to the acquisition or licensing of any form of rights, in return for the Exemption from Contribution to the Development of the National Film Industry-CONDECINE that it treats the inciso X of the art. 39 of the Provisional Measure No 2.228-1 of September 6, 2001 may use the deduction for investment, in the form of the arts. 3rd and 4th, to patronage, in the form of art. 5th, and the special promotion programmes, in the form of art. 6th, limited to ninety and five percent of the total budget approved by ANCINE for the project.

§ You can benefit from the deduction that treats caput the projects relating to the production of works cinematographic and Brazilian video games of long, medium and short films of independent production, of co-production of cinematographic works and Brazilian videophonographic of independent production, of telephones, minisséries, documental, fictional, animation and television programs of educational and cultural character, Brazilians of independent production, approved by ANCINE.

§ 2nd The values arising from the option to apply three per cent of the imports relating to income or remuneration to which you refer to the caput in the production of works mentioned in § 1st shall be deposited on the date of payment, credit, employment, shipping or delivery to producers, distributors or intermediaries abroad, in special financial application account at public financial institution on behalf of

§ 3rd The values provided for in the caput may not be applied in audiovisual works of nature advertising.

§ 4th The release of the values deposited in the special financial application account of which it treats § 2nd is conditioned on the integralization of at least fifty per cent of the approved resources for the realization of the project.

CHAPTER XII

DA TRANSFER OF RIGHTS RELATED TO THE

WORKS CARRIED OUT WITH INCENTIVISED RESOURCES

Art. 16. For the purposes of fruition of resources encouraged by the film producing company and independent production videophone, ANCINE will be able to establish limitations and criteria for the transfer of rights of the works carried out with these features.

CHAPTER XIII

DA NON-APPLICATION OF RESOURCES

Art. 17. It is intended for the FNC, allocated in specific programming category called the Audiovisual Sector Fund, the investment figures (art. 3rd), to sponsorship (art. 5th), to the special promotion programmes (art. 6th), to investments in production projects of cinematographic audiovisual works and Brazilian independent production videophonography (arts. 10 and 11), and projects with the resources arising from the option for applying three per cent of the imports on income or remuneration (art. 15), in case they are not applied:

I-within forty-eight months, counted from the date of the start of the first deposit in the account of that treats art. 9o;

II-after one hundred and eighty days of your deposit on the account that it treats art. 13 ;

III-after two hundred and seventy-days of your deposit in the account that it treats the § 2nd of art. 15.

CHAPTER XIV

DA USE OF INCENTIVES IN CONJUNCTION WITH THE LAW No 8,313, DE 1991

Art. 18. The willing in the arts. 3rd to 15 does not make it impossible for the same project to benefit from resources provided for in the Act No. 8,313, from 1991, provided that it was framed in its objectives, limited the total of these incentives to ninety and five per cent of the total budget approved by the ANCINE.

CHAPTER XV

From the Funding Funds of the National Film Industry-FUNCINES

Art. 19. The Funding Funds of the National Film Industry-FUNCINES will consist of the form of closed condo, without legal personality, and administered by financial institution authorised to function by the Central Bank of the Brazil or by agencies and development banks.

§ 1st Heritage of FUNCINES will be represented by quotas issued under the scriptural form, divested to the public with the intermediation of the Fund administrator.

§ 2nd Administrator will be responsible for all the obligations of the Fund, including those of character tax.

Art. 20. It is incumbent upon the CVM to authorise, discipline and scrutinize the constitution, operation and administration of FUNCINES, observed the provisions of the Provisional Measure in the 2.228-1, 2001, and the standards applicable to investment funds.

Single Paragraph. The CVM will communicate to ANCINE the constitution of FUNCINES, as well as their respective administrators.

Art. 21. The resources picked up by FUNCINES will be applied on projects and programs that, meeting the criteria and guidelines set by ANCINE, are intended for:

I-projects of production of independent Brazilian audiovisual works carried out by companies Brazilian producers ;

II-construction, reform and retrieval of the exhibition rooms owned by Brazilian companies ;

III-acquisition of shares of Brazilian companies constituted for the production of audio Brazilian independent production, as well as for marketing, distribution, exhibition of audiovisual works and for the provision of film and audiovisual infrastructure services ;

IV-marketing and distribution projects of Brazilian cinematographic audiovisual works of independent production carried out by Brazilian companies ; and

V-infrastructure projects carried out by Brazilian companies.

§ 1st For the purpose of the application of the resources of FUNCINES, the broadcasting companies of sounds and images and telecom service providers will be unable to deter the stock control of the companies referred to in the inciso III of the caput.

§ 2nd FUNCINES should maintain, at a minimum, ninety per cent of their heritage applied in endeavors of the species listed in the caput, observed, in relation to each species of destination, the minimum percentage to be established in act exorted by the ANCINE, which is also responsible for the prior approval of the policy of investments of FUNCINES and their respective allocation range of assets by species of destination.

§ 3rd instalment of the Fund's estate not committed to the applications of which it treats the caput will consists of securities issued by the National Treasury or the Central Bank of Brazil.

§ 4th Is vetoed the application of FUNCINES resources in projects that have majority participation of quotistic from the Fund itself.

§ 5th The audiovisual works of an advertising, sports or journalistic nature cannot be benefit from resources from FUNCINES or the FNC allocated in the specific programming category Audiovisual Fund.

§ 6th In the cases of the inciso I of the caput, the project should contemplate the distribution guarantee or spreading of the works.

Art. 22. Up to the period of ascertaining pertaining to the 2016 calendar year, inclusive, the physical and legal persons taxed by real profit will be able to deduct from income tax due to the amounts applied in the purchase of shares of FUNCINES.

§ 1st Only are tax deductible due to the amounts applied in the acquisition of quotas of the FUNCINES:

I-by the physical person in the calendar year to which the annual adjustment declaration is referred ; and

II-by the legal person in the respective period of tax ascertaining.

§ 2nd The deduction that it treats the caput is limited:

I-for the physical person, six per cent of the tax due in the annual adjustment statement, jointly with the relative deductions:

a) the contributions made to the funds controlled by the Municipal, State and National Councils of the Rights of the Child and the Adolescent-CONANDA ;

b) to the contributions effectively undertaken in favor of cultural projects, approved in the form of the regulation of PRONAC ;

c) to sponsorship or donation to sports projects and sports projects previously approved by the Ministry of Sport, of which it treats art. 1st of Law No 11,438, 2006 ;

d) to the investment that they treat the art. 3rd and 4o;

e) to sponsorship the production project of Brazilian production cinematographic works independent of which treat the arts. 5th and 6o;

II-regarding the legal person, three per cent of the value of the tax on income due, prior to additional, ascertained based:

a) in the estimated profit ;

b) in the quarterly real profit ; or

c) in the balance of the tax due in the annual adjustment.

§ 3rd In the case of legal persons who are to collect the tax on the basis of profit estimated, the vested value could be deducted from the tax due in the month in which it was applied, and the surplus may be deducted in subsequent months until December of the same calendar year.

§ 4th In the hypothesis of § 3rd, if the vested value deducted during the period of ascertainment is higher to the calculated on the basis of the tax due in the annual adjustment, the difference should be collected as tax at the same time limit set for the payment of the single quota.

§ 5th Legal persons will not be able to deduct the total value of the amounts applied in the acquisition of shares of FUNCINES that it treats the caput for purposes of determining the real profit and calculation basis of CSLL.

§ 6th The legal person who divestes the quotas of FUNCINES may only consider how cost of acquisition, in determining the capital gain, the values deducted in the form of the caput in the hypothesis in which the disposal occurs after five years of the date of its acquisition.

§ § 7th In any hypothesis, it will not be deductible the loss ascertained in the divestment of the shares of FUNCINES.

§ 8th Net income and earnings and capital earned by FUNCINES portfolio stay exempt of the income tax.

§ § 9th The income, capital gains and net gains arising from application in FUNCINES subject to the tax standards applicable to the other securities in the capital market.

§ 10. Occurring FUNCINES quota rescue, due to the termination of the duration or settlement of the Fund, on the income of the quotist, made up of the positive difference between the ransom value and the cost of purchasing the quotas, will focus on income tax at source at the aliquot of twenty percent.

CHAPTER XVI

DA REMUNERATION OF MANAGEMENT SERVICES

Art. 23. You may find from the budgets of national cinematographic and audiovisual works using the income tax deductions due under this Decree, in the amount up to ten per cent of the total approved, the remuneration of the services of management and execution of the respective project by Brazilian film producing companies in the form to be established in act of ANCINE.

§ 1st In the case of outsourcing of the services to which the caput refers, their payments should be proven in the installments of accounts with tax notes or receipts of the contracted companies, accompanied by the voucher for the collection of the tributes and corresponding contributions.

§ 2nd A company producing audiovisual works project approved by ANCINE prior to the promulgation of the Law No 11,437, 2006, which is not in the stage of final accountability, and whose Brazilian Product Certificate has not been requested, may apply for the inclusion of the remuneration for which it treats the caput, upon reshaping the budget of the project, provided that this does not exceed the limit of the resources arising from the income tax deductions set in this Decree.

CHAPTER XVII

DA PROVISION OF INFORMATION TO ANCINE

Art. 24. Explorers of audiovisual activities should provide information to ANCINE as to the co-production contracts, assignment of commercial exploitation rights, display, vehiculation, licensing, distribution, marketing, import and export of audiovisual works carried out with resources provided in the arts 3rd, 4th, 5th, 6th, 10, 11, 15 and 22 or originating in direct promotion actions, as per the standards dispatched by ANCINE.

CHAPTER XVIII

DA RETURN OF RESOURCES

Art. 25. The non-compliance of the approved project with resources referred to in the arts. 3rd, 5th, 6th, 10, 11 and 22 and the non-effectivation of the investment or the realization of the project at odds with the Staff Regulations in this Decree imply the return of these resources to the Union by the project's proponent of the project, with incidence of interest from late and fine of lives of fifty per cent.

§ 1st Interest on arrears, of which it treats the caput, equivalent to the variation in the benchmark rate of the System Special Liquidation and Custody-SELIC, for federal securities, accumulated monthly, are calculated from the first day of the month subsequent to the income tax salary whose share has been earmarked for the projects it treats this Decree until the month prior to the return of resources and one per cent in the month of the return of such resources.

§ 2nd In case of compliance of more than seventy per cent on the budgeted value of the project, the return that it treats this article will be proportional to the non-compliant part.

§ 3rd Case the resources received, with the accruals provided for in this article, are not returned, the responsible for the project, ensured the broad defence, will be enrolled in the Informational Cadastro of unquipped credits from the federal public sector-Cadin, as provided for in the Act No. 10,522 of July 19, 2002.

CHAPTER XIX

DA LACK OF INSUFFICIENCY OF TAX GAP

Art. 26. The lack or insufficiency of the income tax collection by the realization of deductions at odds with the statut in the arts. 3rd, 5th, 10, 11 and 22 implies launch of uncollected tax or difference, plus interest on arrears and a fine of trade, as provided for in income tax legislation.

CHAPTER XX

DAS INFRACTIONS COMMITTED IN AUDIOVISUAL ACTIVITIES

Art. 27. In the event of a discontinuation of the determinations contained in this Decree, the following restrictive administrative penalties shall be considered, without prejudice to the other penalties provided for in this Decree and in the arts. 13 and 15 of the Act No 11,437, 2006:

I-loss or suspension of participation in the FNC programs allocated in programming category specific called the Audiovisual Setorial Fund ;

II-loss or suspension of participation in funding lines in financial institutions public ;

III-prohibition of hiring with public administration, for the period of up to two years ; and

IV-suspension or prohibition of fruition of resources referred to in the arts. 3rd, 5th, 6th, 10, 11 and 22 advent of federal legislation to foster culture or audiovisual sector, for the period of up to two years.

CHAPTER XXI

DAS GENERAL PROVISIONS

Art. 28. Observed the specific limits and the provisions of § 4th of art. 3rd of the Law No 9,249 of December 26, 1995, the total deductions from which they treat art. 26 of the Act No. 8,313, 1991, and the arts. 3rd, 5th and 22 of this Decree will not be able to exceed four per cent of the tax due by the legal person, before the additional one.

Art. 29. The ANCINE shall scrutinise the effective implementation of this Decree with regard to the realization of audiovisual works and the application of the resources in them, applying, where appropriate, the penalties provided for in art. 27.

Single Paragraph. The proceeds of the fines applied in the form of the caput of this article will revert to exclusive use in audiovisual activity.

Art. 30. The Office of the Federal Revenue Office of Brazil shall scrutinize, within the scope of its tasks, the implementation of this Decree, and it shall be responsible for the application of the fine provided for in 26.

Single Paragraph. For the purpose of the caput, ANCINE will send the necessary information to the Office of the Brazilian Federal Revenue Office.

Art. 31. The Office of the Federal Revenue Office of Brazil and ANCINE will expedite, within the scope of their powers, the standards required for the application of the provisions of this Decree.

Art. 32. It is revoked the Decree no 974 of November 8, 1993.

Art. 33. This Decree shall enter into force on the date of its publication.

Brasilia, December 12, 2007 ; 186th of the Independence and 119th of the Republic.

LUIZ INACIO LULA DA SILVA

Guido Mantega

Gilberto Gil

This text does not replace the published in the DOU of 12/13/2007