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Provisional Measure Nº 2,228-1, Of 6 September 2001

Original Language Title: Medida Provisória nº 2.228-1, de 6 de Setembro de 2001

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PROVISIONAL MEASURE No 2.228-1, DE September 6, 2001.

Establishes general principles of the National Cinema Policy, creates the Cinema Superior Council and the National Cinema Agency-ANCINE, establishes the National Film Development Support Program-PRODECINE, authorizes the creation of Funding Funds of the National Film Industry-FUNCINES, changes the legislation on Contribution to the Development of the National Film Industry and gives other arrangements.

THE PRESIDENT OF THE REPUBLIC, in the use of the attribution conferring you the art. 62 of the Constitution, adopts the following Interim Measure, with force of law:

CHAPTER I

DAS DEFINITIONS

Art. 1st For the purposes of this Interim Measure is understood as:

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 catchmaking processes, of the initial used support or later to fix or transmit them, or of the means used for their vehiculation, reproduction, transmission or diffusion ;

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

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

IV-cinematographic work and independent production videophone: the one whose producer company, the majority holder of the heritage rights over the works, does not have any association or bond, direct or indirect, with service broadcasting services of sounds and images or electronic mass communication operators per signature ;

Brazilian cinematographic and videophone labor: the one that meets one of the following requirements:

a) be produced by Brazilian producer company registered at ANCINE, observed the provisions of the single paragraph, and be of author and Brazilian or foreign director resident in the Country for more than five years, using for their production, in the minimum, two thirds of Brazilian artists and technicians or residents in Brazil for more than five years ;

b) 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 the same.

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

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

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

IX-cinematographic work or long film videophone: the one whose duration is superior to seventy-minute minutes ;

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

XI-telephone: documental, fictional or animation work, with at least fifty and at maximum one hundred and twenty minutes long, produced for first display in electronic means.

Single Paragraph. For the purposes of the inciso V of this article, it is understood by Brazilian producer company that constituted under Brazilian laws and that it has its registered office and administration in the Country, whose majority of the total and voting capital is either direct or indirect entitlements of Brazilian physical persons, cream or naturalized for more than ten years, which they must exercise, in fact and in law, the decision-making power of the company.

CHAPTER II

DA NATIONAL POLITICS OF CINEMA

Art. 2nd National film policy will be based on the following general principles:

I-promotion of the national culture and the Portuguese language by stimulating the development of the national film and audiovisual industry ;

II-warranty of the presence of cinematographic works and national videophones in the various industries ;

III-programming and distribution of audiovisual works of any origin in the electronic mass media under mandatory editorial responsibility of Brazilian companies ;

IV-respect for the copyright on domestic and foreign audiovisual works.

CHAPTER III

OF THE SUPERIOR CINEMA OF CINEMA

Art. 3rd It is created the Superior Council of Cinema, an integral collegiate organ of the Civil House structure of the Presidency of the Republic, to which it competes:

I-define the national policy of cinema ;

II-approve general policies and guidelines for the development of the national film industry, with views to promote its self-sustainability;

III-stimulates the presence of Brazilian content in the various industries ;

IV-monitor the implementation of the policies referred to in the incisos I, II and III ;

V-establish the distribution of Contribution for the Development of the Cinematographic Industry-CONDECINE for each intended destination in law.

Art. 4th The Superior Board of Cinema will be integrated:

I-by the Ministers of State:

a) of Justice ;

b) of Foreign Affairs ;

c) of the Farm ;

d) of Culture ;

e) of Development, Industry and Foreign Trade ;

f) of Communications ; and

g) Head of the Civil House of the Presidency of the Republic, who will chair him.

II-by five representatives of the national film and videophone industry, who enjoy high concept in their field of speciality, to be designated by decree, for two-year term, allowed a re-driving.

§ 1st The internal regiment of the Superior Board of the Cinema will be passed by resolution.

§ 2nd The Council shall meet whenever it is convened by its Chairperson.

§ 3rd The Council shall act upon resolutions, by a simple majority of votes, present, at the very least, five members referred to in the inciso I of this article, among them their President, who shall exercise quality vote in the case of a draw, and three members referred to in the inciso II of this article.

§ 4th In cases of urgency and relevant interest, the President will be able to deliberate ad referendum of the remaining members.

§ 5th The President of the Council may invite to take part in the technical meetings, personalities and representatives of public and private bodies and entities.

CHAPTER IV

DA NATIONAL FILM AGENCY-ANCINE

I Section

Of the goals and competencies

Art. 5th It is created the National Cinema Agency-ANCINE, special municipality, linked to the Ministry of Development, Industry and Foreign Trade, noted the provisions of art. 62 of this Provisional Measure, the organ of fomenting, regulation and surveillance of the film and videophone industry, endowed with administrative and financial autonomy.

§ 1st The Agency will have headquarters and venue in the Federal District and central office in the city of Rio de Janeiro, and may set up regional offices.

§ 2nd The Ministry of Development, Industry and Foreign Trade will supervise ANCINE activities, and may enter into management contract, noted the provisions of the art. 62.

Art. 6th ANCINE will have for goals:

I-promote the national culture and the Portuguese language by stimulating the development of the film industry and national videophone in its acting area ;

II-promote the programmatic, economic and financial integration of governmental activities related to the film and videophonographic industry ;

III-increase the competitiveness of the film industry and national videophone by fostering production, distribution and display in the various market segments ;

IV-promote the self-sustainability of the national film industry aiming at increasing the production and display of Brazilian cinematographic works ;

V-promote the articulation of the various links of the production chain of the national film industry ;

VI-stimulate the diversification of film production and national videophone and the strengthening of independent production and regional productions with views to the increment of their supply and the permanent improvement of their standards of quality ;

VII-stimulate the universalization of access to cinematographic and videophone works, in particular national ones ;

VIII-ensure the diversified participation of foreign cinematographic and videophonographic works in the Brazilian market ;

IX-ensure participation of the cinematographic and videophonographic works of national production in all segments of the internal market and stimulate it in the external market ;

X-stimulate the empowerment of human resources and the technological development of the film industry and national videophone ;

XI-to ensure respect for the copyright on domestic and foreign audiovisual works.

Art. 7th ANCINE will have the following competencies:

I-execute the national politics of fomenting cinema, defined in the form of art. 3o;

II-scrutinize compliance with legislation regarding national and foreign film and videophone activity in the various segments of markets, in the form of the regulation ;

III-promote the combating of piracy of audiovisual works ;

IV-apply fines and sanctions, in the form of the law ;

V-regular, in the form of the law, the activities of fomenting and protecting the film industry and national music music, resguarding the free manifestation of thought, creation, expression and information ;

VI-coordinating government actions and activities concerning the film and videophone industry, ressaved the competencies of the Ministries of Culture and Communications ;

VII-articulate itself with the competent bodies of the federated ones with a view to optimizing the conscution of their goals ;

VIII-managing programs and mechanisms of fostering the national film and videophone industry ;

IX-set criteria for the application of promotion and financing resources to the film industry and national videophone ;

X-promote the participation of cinematographic works and national videophones at international festivals ;

XI-approve and monitor the execution of co-production, production, distribution, display and technical infrastructure projects to be carried out with public resources and tax incentives, ressaved the competencies of the Ministries of the Culture and Communications ;

XII-to provide the Brazilian Product Certificates to cinematographic and videophone works ;

XIII-provide Registration Certificates of production contracts, co-production, distribution, licensing, assignment of exploitation rights, vehiculation and display of cinematographic and videophonographic works ;

XIV-manage the information system for the monitoring of the activities of the film and videophone industry in its various means of production, distribution, display and diffusion ;

XV-articulate with organs and entities aimed at the promotion of production, programming and distribution of cinematographic and videophone works of the member states of Mercosur and too many members of the international community ;

XVI-provide technical and administrative support to the Superior Board of Cinema ;

XVII-update, in line with technological evolution, the definitions referred to in art. First of this Provisional Measure.

Single Paragraph. The basic organization and competencies of ANCINE units will be established in act of the Executive Power.

Section II

From Structure

Art. 8th ANCINE will be directed in a collegiate regime by a board composed of a Director-Chairman and three Directors, with non-coincident mandates of four years.

§ 1st Members of the Board will be Brazilians, of reputation illegal and high concept in their field of speciality, chosen by the President of the Republic and by him appointed after approval by the Federal Senate under the terms of the "f" of the inciso III of the art. 52 of the Federal Constitution.

§ 2nd The Director-Chairman of ANCINE will be chosen by the President of the Republic between the members of the Colegiated Board.

§ 3rd In case of vacancy in the course of the term of office of member of the Board of Directors, this shall be completed by successor invested in the manner provided for in § 1st of this article, which shall exercise it by the remaining time limit.

§ 4th Integrates the structure of ANCINE a Prosecutor-General, which will represent her in judgment, an Ouvidoria-General and an audit.

§ 5th The replacement of the leaders in their impediments will be disciplined in regulation.

Art. 9th Compete to the ANCINE's Colegiated Directorate:

I-exercise your administration ;

II-edit standards on matters of their competence ;

III-approve your internal regiment ;

IV-comply and enforce the policies and guidelines approved by the Board Superior of Cinema ;

V-deliberating on your budget proposal ;

VI-determine the dissemination of half-yearly reports on the Agency's activities ;

VII-decide on the sale, assignment or rental of integral assets of your estate ;

VIII-notifying and enforcing the penalties provided for in the legislation ;

IX-judgeting appeals brought against decisions by members of the Board ;

X-authorize the hiring of third-party service in the form of the current legislation ;

XI-authorize the conclusion of contracts, arrangements, and agreements ;

Single Paragraph. The Collegiate Board will meet with the presence of at least three directors, among them the Director-Chairman, and will deliberate by a simple majority of votes.

Art. 10. Competes with the Director-President of ANCINE:

I-exercise the legal representation of the agency ;

II-chair the meetings of the Colegiated Directorate ;

III comply with and enforce the decisions of the Colegiated Board ;

IV-exercise the quality vote, in the event of a tie in the deliberations of the Colegiated Board ;

V-nominate, exonerate and fire servers and employees ;

VI-to provide the posts in commission and the functions of trust ;

VII-approve editions of bidding and homologate adjudications ;

VIII-refer to the supervisory body of ANCINE's budget proposal ;

IX-subscribe to contracts, agreements and arrangements, previously approved by the Colegiated Directorate ;

X-order expenses and practice the necessary management acts within the scope of ANCINE's goals ;

XI-suggest the public civil action proposition by ANCINE, in the cases provided for in law ;

XII-exercise the function of Executive Secretary of the Superior Council of Cinema ;

XIII-exercise other activities necessary for the management of ANCINE and the implementation of the decisions of the Superior Board of Cinema.

Section III

Revenues and Heritage

Art. 11. They constitute revenues from ANCINE:

I-part of the proceeds from the Contribution of Contribution to the Development of the National Film Industry-CONDECINE, of which it treats Chapter VI of this Provisional Measure ;

II-up to three per cent of the resources referred to in the letters "c", "d", "and" and "j" of the art. 2nd of Law No 5,070 of July 7, 1966, observed the annual maximum limit of thirty million reais ;

III-the proceeds of the collection of fines resulting from the exercise of their assignments ;

IV-the product of the disposal of goods, objects and instruments used for the practice of infractions, as well as of the heritage of offenders, seized upon the exercise of the power of police and incorporated into the heritage of the ANCINE, in the terms of judicial decision ;

V-the product of the execution of your active debt ;

VI-the appropriations earmarked in the Budget-General of the Union, special credits, additional credits, transfers and repasses which are conferred upon it ;

VII-the donations, legacies, grants and other resources that are intended for you ;

VIII-the values ascertained in the sale or rental of movable and real estate of your property ;

IX-the values ascertained in applications in the financial market of the revenues provided for in this article ;

X-product of the collection of emoluments for services rendered ;

XI-resources arising from agreements, arrangements or contracts entered into with entities, bodies or companies, public or private, national and international ;

XII-product of the sale of publications, technical material, data and information, including for the purpose of public bidding ;

XIII-any other revenues affected to the activities of its competence, not specified in the previous incistes.

Art. 12. It is ANCINE authorized to divestle movable property or real estate of its estate that is not intended for the performance of the functions inherent in its institutional mission.

Section IV

From Human Resources

Art. 13. The ANCINE's Effective Personnel Framework will be composed of up to two hundred and fifty public jobs and should be created in specific law.

Art. 14. ANCINE will be able to hire specialists for the execution of work in the technical, administrative, economic and legal areas, by limited projects or deadlines, by observing the legislation in force.

Art. 15. ANCINE will be able to requisition, with onus, server of organs and entities from the direct, municipal, and founder federal public administration, whatever the assignments are to be exercised.

CHAPTER V

OF THE INDUSTRY INFORMATION AND MONITORING SYSTEM

CINEMATOGRAPHIC AND VIDEOPHONOGRAPHIC

Art. 16. It is established the Information and Monitoring System of the Cinematographic and Videophonographic Industry, the responsibility of ANCINE, and it may for its elaboration and execution be either properly constituted or contracted entity or company legally constituted.

Art. 17. Every room or public display space intended for cinematographic work exploration in any support should use the box office revenue control system as defined in regulation by ANCINE.

Art. 18. Exhibition companies are expected to issue reporting enumerating Brazilian and foreign cinematographic works displayed in the period by theaters of their display network, number of exhibition days, number of spectators and box office income, as defined in regulation, and this information should be referred to ANCINE.

Art. 19. The distributor and locator company of cinematographic works for video, domestic or for direct sale to the consumer, in any support, are expected to issue semester reporting by enumerating the Brazilian cinematographic works distributed in the period, number of foreign works and their relationship, number of copies distributed per title, as defined in regulation, and these information should be referred to ANCINE.

Art. 20. It may be established, by law, to make periodic provision of information on vehiculation or diffusion of cinematographic and videophone works for operating companies in other market segments beyond those indicated in the arts. 18 and 19.

Art. 21. Copies of cinematographic and videophone works intended for sale, assignment, loan, exchange, leasing, display, with or without profit, as well as cinematographic works and advertising videophones should contain in their support indelible and irremovable mark with the identification of the copyright holder in Brazil, with all the information identifying it, as model approved by ANCINE and by the Office of the Federal Revenue Office of the Ministry of Finance, without prejudice than it treats the Law No 9,610 of February 19, 1998, and the Decree no 2,894, December 22, 1998.

Art. 22. Registration of the production, distribution, exhibition of cinematographic works and national or foreign videophones in ANCINE, as laid down in regulation, is mandatory.

Single Paragraph. In order to benefit from public resources or tax incentives intended for film or videophone activity the company must be registered at ANCINE.

Art. 23. Production in Brazil of cinematographic works or foreign videophonography is to be reported to ANCINE.

Single Paragraph. The production and adaptation of film works or foreign videophonographic, in Brazil, should be carried out upon contract with Brazilian producer company, which will be the production officer before the Brazilian laws.

Art. 24. Technical copying and reproduction services of cinematographic and videophonographic works that are intended for commercial exploitation in the Brazilian market are to be performed in laboratories installed in the Country.

Single Paragraph. The cinematographic works and foreign videophonographic works are dispensed with the requirement for mandatory copying in the Country, up to the limit of six copies in any format or system.

Art. 25. Any and any foreign advertising works or videophone music can only be conveyed or transmitted in the country, in any industry, after submitting the adaptation process, carried out by Brazilian producer company, from agreement with the standards that will be established by ANCINE, and after payment of the Contribution to the Development of the National Film Industry-CONDECINE, of which it treats art. 32.

Art. 26. The film producing film or videophone with public resources or arising from tax waiver should deposit in the Brazilian Film or entity accredited by ANCINE a low contrast, interpositive copy or digital matrix of the work, for its due preservation.

Art. 27. Cinematographic and videophone works produced with public resources or fiscal waiver, after decorating ten years of its first commercial exhibition, could be displayed on educational channels held with public resources in the services of broadcasting of sounds and images and on the channels referred to in the letters "b" to the "g" of the inciso I of the art. 23 of Law No 8,977 of January 6, 1995 and in public educational establishments, in the form defined in regulation, complied with existing contracts.

Art. 28. All Brazilian cinematographic and videophone works should, prior to its display or commercialization, apply to ANCINE the Brazilian-CPB Product Certificate.

Art. 29. Registration of co-production contracts, assignment of commercial exploitation rights, display, licensing, distribution, marketing and export of cinematographic works and videophonographic works on any support or vehicle is compulsory. at ANCINE and the voucher, in the act of their registration, of the payment of CONDECINE, for each market segment to which the contract refers, as per regulation.

Art. 30. For the granting of the indicative age classification of cinematographic and videophone works will be required by the responsible organ to certify the payment of CONDECINE in the industry to which the indicative age classification refers.

Art. 31. The hiring of the programming generated abroad by the carriers should always be done through Brazilian enterprise, which will be held responsible for the content of the schedule, observing the devices of this Interim Measuring and the legislation relevant Brazilian

Single Paragraph. Brazilian companies responsible for the content of programming the channels of electronic mass communication services by subscription, whether generated in Brazil or abroad, should provide ANCINE with their programming, including securities or chapters of serial works and advertising works, as per regulation.

CHAPTER VI

DA CONTRIBUTION TO THE DEVELOPMENT OF INDUSTRY

NATIONAL CINEMATOGRAPHIC-CONDECINE

Art. 32. The Contribution to the Development of the National Film Industry-CONDECINE will in fact have generator the vehiculation, production, licensing and distribution of cinematographic and videophone works for commercial purposes, by segment of market to which they are intended.

Single Paragraph. CONDECINE will also focus on payment, credit, employment, shipping or delivery, to producers, distributors or intermediaries abroad, of income relative to income arising from the exploitation of cinematographic works and videofonographic or for its acquisition or import, at the fixed price.

Art. 33. CONDECINE will be due a single time every five years for each industry, by:

I-title or cinematographic or videophone chapter intended for the following market segments:

a) exhibition rooms ;

b) domestic video, in any support ;

c) broadcasting service of sounds and images ;

d) mass electronic communication services per subscription ;

e) other markets, as attached.

II-title of cinematographic or videophonographic works, for each market segment to which it is intended ;

§ 1st A CONDECINE will correspond to the values of the tables listed in Annex I to this Provisional Measure.

§ 2nd In the hypothesis of the single paragraph of art. 32, CONDECINE will be determined upon the application of eleven per cent aliquot on the imports there.

Art. 34. The product of CONDECINE's fundraiser will have the following recipients:

I-custer of the activities of ANCINE ;

II-activities of nurturing cinema and audiovisual developed by the Ministry of Culture ;

III-transfer to the National Cinema Development Support Program-PRODECINE, of which it treats art. 47 of this Provisional Measure.

Art. 35. CONDECINE will be due by the following taxable persons:

I-holder of commercial exploitation or licensing rights in the Country, as the case is, for the market segments provided for in the letters "to" the "and" of the inciso I of the art. 33 ;

II-producer company, in the case of national works, or holder of the licensing for display, in the case of foreign labor, in the case of the inciso II of the art. 33 ;

III-the person responsible for the payment, credit, employment, shipment or delivery of the imports referred to in the sole paragraph of the art. 32.

Art. 36. CONDECINE is expected to be collected at ANCINE in the form of the regulation:

I-on the date of registration of the commercial exploitation rights assignment for the markets of display and domestic video rooms in any support ;

II-on the date of registration of the contract for the assignment of commercial exploitation rights or the licensing agreement for the market for the broadcasting services of sounds and images and other markets, as attached ;

III-on the date of the solicitation of the Brazilian Product Certificate for cinematographic work or national advertising videophonographic for each industry ;

IV-on the date of registration of the licensing agreement for the cinematographic work or foreign advertising music video ;

V-on the date of registration of the licensing or commercial exploitation contract, or in the solicitation of the Brazilian Product Certificate, for cinematographic work and national videophonographic for the broadcasting services market of sounds and images and electronic communication of mass per signature ;

VI-on the date of payment, credit, employment, shipping or delivery of the imports referred to in the single paragraph of the art. 32 ;

VII-on the date of granting the certificate of indicative classification in the other cases.

Art. 37. The non-pickup of CONDECINE within the time limit will subject the taxpayer to the penalties and moratorial additions provided for in the arts. 44 and 61 of the Law No 9,430 of December 27, 1996.

Single Paragraph. The physical or legal person who promotes the display, transmission, diffusion or vehiculation of cinematographic and videophone works that has not been the subject of the CONDECINE pickup responds in solidarity with that contribution.

Art. 38. CONDECINE's collection and surveillance activities will be exercised by ANCINE.

Single Paragraph. The provisions of this article do not exclude the jurisdiction of the Office of the Federal Revenue Office to have on tax matters relating to the incidence of which they treat the single paragraph of art. 32 and the § 2nd of the art. 33.

Art. 39. Are exempt from CONDECINE:

I-the cinematographic and videophone works intended for the exclusive exhibition at festivals and samples, provided that previously authorized by ANCINE ;

II-the cinematographic work and journalistic videophysics, as well the sporting events ;

III-the calls of the programmes and the advertising of cinematographic works and videophones conveyed in the broadcasting services of sounds and images and in the electronic mass communication services by subscription ;

IV-the cinematographic works and Brazilian advertising videophones of cost of production less than R$ 500.00.

V-the export of Brazilian cinematographic and videophonographic works and the Brazilian programming conveyed to the outside ;

VI-Brazilian audiovisual works, produced by the broadcasting services companies of sounds and images and companies of electronic mass communication services by subscription, for display in their own industry or when transmitted by force of law or regulation in another industry, observed the provisions of the single paragraph.

Single Paragraph. Brazilian audiovisual works, produced by the broadcasting services companies of sounds and images and electronic mass communication services companies by subscription, will be subject to the payment of CONDECINE if they come to be marketed in other market segments.

Art. 40. The values of CONDECINE are reduced to:

I-twenty percent, when dealing with film works or Brazilian non-advertising music video ;

II-thirty per cent, when it comes to:

a) works considered of relevant artistic or cultural interest, in the form of the regulation ;

b) cinematographic and videophone works intended for vehiculation in sounds and imaging services and whose production has been carried out more than twenty years prior to the registration of the contract at the ANCINE ;

III-half per cent, when it comes to film works or Brazilian advertising music video.

CHAPTER VII

OF INDUSTRY FUNDING FUNDS

National cinematographic-funcines

Art. 41. 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.

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

§ 2nd The administrator will be responsible for all of the Fund's obligations, including those of a tax character.

Art. 42. It is incumbent on the Securities and Exchange Commission to authorise, discipline and scrutinize the constitution, operation and administration of FUNCINES, observed the provisions of this Provisional Measure and the standards applicable to investment funds.

Single Paragraph. The Securities Commission shall communicate the constitution of FUNCINES, as well as their respective administrators to ANCINE.

Art. 43. The resources picked up by FUNCINES will be applied, in the form of the regulation, on projects and programs that, meeting the criteria and guidelines set by ANCINE, are intended for:

I-Brazilian cinematographic works of independent production ;

II-construction, reform and retrieval of the exhibition rooms ;

III-acquisition of shares of national open capital companies constituted for the production, marketing, distribution or display of Brazilian independent production cinematographic works ;

IV-film or serial music video produced with at least three and maximum twenty-six Brazilian independent production chapters and telephone helplyms.

§ 1st The broadcasting service companies of sounds and images and electronic mass communication by subscription will not be able to deter the shareholder control of the companies referred to in the inciso III of this article.

§ 2nd FUNCINES should maintain, at a minimum, eighty per cent of their heritage applied in ventures of the species listed in this article, observed, in relation to each species of destination, the minimum percentage to be established in regulation

§ 3rd instalment of the Fund's estate not committed to the applications of which it treats this article, will consist 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 a majority shareholding of the Fund itself.

§ 5th The cinematographic and videophysical works of advertising or journalistic nature will not be able to benefit from FUNCINES or PRODECINE, which deals with art. 47 of this Provisional Measure ;

§ 6th The cinematographic and videophone works produced with features of FUNCINES will have their final cut and editing approved for display by their director and principal producer.

§ 7th In cases of incisos I and IV there must be guarantee of conveyance and diffusion of the works.

Art. 44. Up to the period of ascertaining relative to the 2010 calendar year inclusive, legal persons subject to taxation on the basis of real profit will be able to deduct from the income tax due share of the value corresponding to the amounts applied in the acquisition of shares of FUNCINES.

Single Paragraph. The deduction referred to in this article may be used alternatively to that of the art. First of Law No 8,685 of July 20, 1993 until the calendar year 2006 when it will extinguish this benefit.

Art. 45. The deduction that it treats the art. 44 will focus on the tax due:

I-in the quarter to which you refer to investments, for legal persons who ascertain the quarterly real profit ;

II-in the calendar year, for legal persons who, having opted for the collection of the tax per estimate, ascertain the annual real profit.

§ 1st instalment to be deducted will be calculated by applying percentage corresponding to the sum of the income tax deductions of legal persons and the social contribution on net profit, including additional, on the value of quota acquisition of FUNCINES, limited to three per cent of the tax due and observed the provisions of the inciso II of the art. 6th of Law No 9,532 of December 10, 1997.

§ 2nd The values that exceed the limits set out in § 1st may not be used in a later period of ascertainment.

§ 3rd The integral value of investments made in the form of this article may be deducted from net profit, in the determination of real profit, in the following percentage:

I-one hundred per cent, in the years-calendar 2002 a to 2005 ;

II-fifty per cent, in the years-calendar from 2006 a to 2008 ;

III-twenty-five per cent, in the years-calendar of 2009 and 2010.

§ 4th The legal person who divested the shares of FUNCINES can only consider as cost of acquisition, in determining the capital gain, the values deducted in the form of § 3rd in the hypothesis where the disposal occurs after five years of the date of its acquisition.

§ 5th In any hypothesis, it will not be deductible for the loss ascertained in the divestment of the shares of FUNCINES.

§ 6th The provisions in § § 3rd to 5th apply also to the social contribution on net profit.

Art. 46. Net income and gains earned by the FUNCINES portfolio are exempt from the income tax.

§ 1st The income, capital gains and net gains arising from application at FUNCINES subject to the tax standards applicable to the other securities in the capital market.

§ 2nd Ospeeding quota rescue of FUNCINES, due to the termination of the term of duration or the liquidation of the fund, on the income of the quotist, made up of the positive difference between the ransom value and the cost of acquisition of quotas, will focus income tax on the source at the aliquot of twenty per cent.

CHAPTER VIII

TOO MANY INCENTIVES

Art. 47. It is instituted the National Film Development Support Programme-PRODECINE, aimed at capturing and applying resources needed to foster projects of production, distribution, marketing and display of cinematographic works and Brazilian independent production videophone, as well as technical infrastructure projects for film activity, including payment of the Additional Income Award that treats art. 54 in the form of the regulation.

§ 1st PRODECINE resources can be object of application to lost fund, in the specific cases provided for in the regulation.

§ 2nd ANCINE will establish general criteria and guidelines for the application and surveillance of PRODECINE resources.

Art. 48. Are resources sources of PRODECINE:

I-percent of the proceeds from the Contribution fundraiser for the Development of the National Film Industry-CONDECINE ;

II-the proceeds of the collection of fines and interest, arising from the disfulfillment of funding standards by the beneficiaries of PRODECINE resources ;

III-the remuneration of the funding granted ;

IV-the donations and other unspecified aports ;

V-the appropriations earmarked in the budgets of the Union, the States, the Federal District and the Municipalities ;

Art. 49. The abatement of the income tax at the source, that it treats it art. 3rd of the Act No. 8,685, 1993, will apply exclusively to projects previously approved by ANCINE in the form of the regulation, observed the provisions of the art. 67.

Single Paragraph. The option for the benefit provided in the caput departs from the incidence of the § 2nd of the art. 33 of this Provisional Measure.

Art. 50. The deductions provided for in art. First of Law No 8,685, 1993, stay extended until the financial year 2006 inclusive, and projects to be benefited by these incentives are previously approved by ANCINE.

Art. 51. The art. 5th of Law No 8,685, 1993, passes vigorously with the following essay:

" Art. 5th The values not applied in the form of the previous article, within one hundred and eighty days counted from the date of the deposit, will be intended for ANCINE, for application in projects to foster the national film industry, as laid down in regulation " (NR)

Art. 52. From the 1st of January 2007, the paragraph "to" the inciso II of the art. 3rd of the Act No 8,313 of December 23, 1991 will apply with the following essay:

"a) production of discs, videos, short film works and medium films and documentary films, preservation of the film acquis as well as other music video playback of cultural character ;" (NR)

Single Paragraph. The Superior Board of Cinema may anticipate the entry into force of the provisions of this article.

Art. 53. The § 3rd of the art. 18 of the Act No 8,313, 1991, passes vigorously with the following essay:

" Art. 18. ......................................................

......................................................

§ 3rd The donations and sponsorships in cultural production, as referred to in § 1st, will meet exclusively the following segments:

a) scenic arts ;

b) books of artistic, literary or humanistic value ;

c) erudical or instrumental music ;

d) exhibitions of visual arts ;

e) hit donations for public libraries, museums, public and film archives, as well as personnel training and equipment acquisition for the maintenance of these hits ;

f) production of cinematographic works and short-and medium-mean videophonography and preservation and diffusion of the audiovisual acquis ; and

g) preservation of material and immaterial cultural heritage. " (NR)

Art. 54. It is instituted the Additional Prize for Income, calculated on the box office rentals earned by the Brazilian film works of independent production, which will be awarded to producers, distributors and exhibitors, in the form that dispose of the regulation.

Art. 55. For a period of twenty years, counted from September 5, 2001, the proprietary, locator or rental companies of rooms, spaces or commercial public exhibition venues will exhibit Brazilian film works of long metre, by a number of days fixed, annually, by decree, heard the representative entities of the producers, distributors and exhibitors.

§ 1st The exhibition of Brazilian cinematographic works will be commensurate in proportion, in the semester, and the exhibitor may anticipate the schedule of the following semester.

§ 2nd ANCINE shall, semester, comply with the provisions of this article.

§ 3rd The cinematographic works and telephones that are displayed in electronic means prior to the commercial display in rooms will not be computed for the purposes of complying with the willing on the caput.

Art. 56. For a period of twenty years, counted from September 5, 2001, domestic video distribution companies are expected to have an annual percentage of Brazilian cinematographic and videophonographic works between their titles, compelling themselves to launch them commercially.

Single Paragraph. The percentage of launches and titles referred to in this article will be fixed annually by decree, heard the national character entities representative of the activities of production, distribution and marketing of cinematographic works and videophonographical.

Art. 57. It can be established by law the compulsory vehiculation of cinematographic works and Brazilian videophones of independent production in other industries in addition to those indicated in the arts. 55 and 56.

CHAPTER IX

DAS PENALTIES

Art. 58. Exhibition companies, distributor and video locator, should be author-led by ANCINE in cases of non-compliance with the provisions of this Interim Measure.

Art. 59. The disfulfillment of the obligation that it treats art. 55 will subject the offender to a fine corresponding to five per cent of the average daily box office income, ascertained in the previous semester to the infraction, multiplied by the number of days in which the obligation has not been fulfilled.

Single Paragraph. It is understood by mean income that obtained after deduction of gross box office grossing of the value of municipal, state, federal, and copyrighted taxes that incidir on the value of the ticket to the public.

Art. 60. The discompliance to the willing in the arts. 17 a 19, 21, 24 a 26, 28, 29, 31 and 56 of this Provisional Measure subject to offenders to fines of R$ 2,000.00 (two thousand reais) at R$ 2,000,000.00 (two million reais) in the form of the Regulation.

§ 1st In any hypothesis the fines will be limited to:

I-a tenth per cent of gross revenue, for the willing in the arts. 18, 19, 21, 26, 28, 29 and in the single paragraph of art. 31.

II-three tenths per cent of gross revenue, for the willing in the arts. 17, 24, 25 and 56 ;

III-five tenths per cent of gross revenue, for the willing on the art caput. 31.

§ 2nd If it is not possible to ascertain the value of the gross revenue referred to in the caput for lack of information, ANCINE will arbitrate it in the form of the regulation, which it will observe, either isolated or jointly, among others, the following criteria:

I-gross revenue referring to the last period in which the legal person has retained registration in accordance with the commercial and fiscal laws, updated monetarily ;

II-the sum of the values of the circulating asset, achievable long-term, and permanent, existing in the last known balance sheet, updated monetarily ;

III-the value of the constant capital of the last known or registered balance sheet in the acts of constitution or alteration of the society, updated monetarily ;

IV-the value of the net worth constant of the last known balance sheet, updated monetarily ;

V-the value of the purchases of goods made in the month ;

VI-the sum, in each month, of the values of the payroll of employees and purchases of raw materials, intermediate products and packaging materials ;

VII-the sum of the values due in the month to employees ; and

VIII-the monthly rental value due.

§ 3rd shall apply, in the alternative, to the provisions of this article, the standards of profit arbitration provided for under federal tax legislation.

Art. 61. The discompliance of projects executed with resources received from PRODECINE and FUNCINES, non-effectivation of the investment or their realization at odds with the Statue imply the return of the increased resources of:

I-moratorial interest equivalent to the referential rate of the Special Settlement and Custody System-SELIC, for federal securities, accumulated monthly, calculated from the first day of the month subsequent to that of receipt of the resources up to the month prior to that of payment and one per cent in the month of payment ;

II-fine of twenty per cent calculated on the total value of resources.

CHAPTER X

TRANSITIONAL PROVISIONS

Art. 62. For the first twelve months, counted as of September 5, 2001, ANCINE will be bound by the Civil House of the Presidency of the Republic, which will respond by its supervision during that period.

Art. 63. ANCINE shall, within twenty-four months, constitute from the date of its implantation, its own personnel framework, by means of the holding of public tender of evidence, or of evidence and titles.

Art. 64. During the first twenty-four months subsequent to its installation, ANCINE will be able to requisition, with onus, servers and employees of public administration bodies and entities.

§ First Transcorrection of the period referred to in the caput, only be ceded to the ANCINE servers by it requested for the exercise of posts in commission.

§ 2nd During the first twenty-four months subsequent to its installation, ANCINE will be able to supplement the remuneration of the requested public servant or employee, up to the limit on the remuneration of the effective post or employment permanent occupied on the organ or entity of origin, when the application involves in reducing that remuneration.

Art. 65. ANCINE will be able to hire professionals indispensable to the achievement of their work, while not completing their own personnel framework, for a specified period and not more than twenty-four months counted from their implantation, vetted to rehiring before decoration twenty-four months of the termination of the contract.

§ 1st The temporary hires will be made for a given time, and observed the maximum period of twelve months, and may be extended, provided that its duration does not exceed the final term of the authorization that it treats the caput of this article.

§ 2nd The remuneration of the personnel contracted temporarily, will refer to the values set out in joint act of the Agency and the central body of the Federal Administration's Civil Personnel System-SIPEC.

§ 3rd Applies to the personnel employed temporarily by the Agency, the willing in the arts. 5th and 6th, in the single paragraph of art. 7th, in the arts. 8th, 9th, 10, 11.12 and 16 of the Act No 8,745 of December 9, 1993.

Art. 66. Is the Executive Power authorized to:

I-transfer to ANCINE the technical and patrimonial arrangements, obligations and rights of the Registry Division of the Registry for Audiovisual Development of the Ministry of Culture, as well as those corresponding to others activities assigned to the Agency by this Provisional Measure ;

II-redeploy, transfer, transfer, or use, from the installation of the ANCINE, the budgetary allocations approved in the Budget Act of 2001, which are earmarked for the Ministry of Culture, concerning the assignments transferred to that municipality, maintained the same budget classification, expressed by programming category at its lowest level, observed the provisions of the § 2nd of the art. 3rd of Law No 9,995 of July 25, 2000, as well as the respective detailing by budget sphere, expense groups, resource sources, application modalities, and usage identifiers.

Art. 67. Within a maximum of one year, counted from September 5, 2001, regulation should be issued on the form of transfer to ANCINE, of the processes relating to the approval of projects on the basis of the Act No 8,685 of 1993, and Law in the 8,313, 1991, inclusive of those already approved.

Single Paragraph. Until the processes referred to in the caput are transferred to the ANCINE, their analysis and follow-up will remain the office of the Ministry of Culture.

Art. 68. In the first management of ANCINE, a director will be given a two-year term, one of three years, one of four years and one of five years, to implement the non-coincident mandates system.

Art. 69. It is up to the Advocacy-General of the Union for representation in the legal proceedings in which ANCINE is party or stakeholder, until the deployment of its Attorney General.

Single Paragraph. The Ministry of Culture, through its Legal Consultation, will promote, within one hundred and eighty days, counted from September 5, 2001, the lifting of the ongoing legal proceedings involving matter whose competence has been transferred to the ANCINE, which will replace it in the respective processes.

Art. 70. The installation of ANCINE will give you up to one hundred and twenty days, starting from September 5, 2001 and the beginning of the exercise of your competencies from the publication of your regimental structure in act of the President of the Republic.

CHAPTER XI

GENERAL AND FINAL PROVISIONS

Art. 71. It is vetoed to employees, to the requisitioned, to the occupants of commissioned positions and to ANCINE leaders the exercise of other professional activity, including operational company management, or political-party direction, excepted cases admitted into law.

Single Paragraph. In the event that the ANCINE leader is partner-company-controller related to the film and videophonographic industry, it is the same prevented from using public resources or tax incentives during the period when the leader is in the exercise of its functions.

Art. 72. They are set up for exercise in ANCINE the commissioned positions laid out in Annex II of this Interim Measure.

Art. 73. The quantitative of requisitioned servers or employees, plus the Effective Staff Board, temporary contractors and commissioned office occupants will not be able to exceed the number of jobs set for ANCINE at art. 13 of this Provisional Measure.

Art. 74. The Executive Power will stimulate the association of national and foreign capitals, including through the mechanisms of external debt conversion, for financing to companies and projects aimed at the activities of which it treats this Medida Interim, in the form of the regulation

Single Paragraph. Deposits on behalf of foreign creditors to the order of the Central Bank of Brazil will be released for their face value, in amount to be fixed by that Bank.

Art. 75. This Provisional Measure will be regulated by the Executive Power.

Art. 76. The acts practiced on the basis of the Provisional Measure no 2,219, of September 4, 2001, shall be convalidated.

Art. 77. They are revoked the inciso II of the art. 11 of Decree-Law No 43 of November 18, 1966, the Decree-Law No 1,900 of December 21, 1981, the Law No 8,401 of January 8, 1992, and the Provisional Measure no 2,219 of September 4, 2001.

Art. 78. This Provisional Measure comes into force on the date of its publication.

Brasilia, September 6, 2001 ; 180th of Independence and 113th of the Republic.

FERNANDO HENRIQUE CARDOSO

Sergio