PROVISIONAL MEASURE # 2.128-6, OF January 26, 2001

Changes income tax legislation with respect to tax incentives for exemption and reduction, sets guidelines for tax incentives for the application of income tax on income in the Investment Funds Regionals, and it gives other arrangements.

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

Art. 1º Without prejudice to the other standards in force applicable to the matter, from the calendar year 2000 and until December 31, 2013, legal persons who have approved design for installation, enlargement, modernization or diversification framed in sectors of the economy considered, in act of the Executive Power, priority for regional development, in the areas of acting of the Superintendence of the Development of North-East-SUDENE and the Superintendence of the Development of the Amazon-SUDAM, will be entitled to seventy reduction and five percent of the income tax and additional non-restitution, calculated on the basis of profit from the holding.

§ 1º The fruition of the tax benefit referred to in the caput will give you from the subsequent calendar year to that in which the installation, modernization, extension or diversification project enters into operation, according to the exorder laude, by SUDAM or SUDENE, up to the last working day of the month of March of the calendar year subsequent to the start of fruition.

§ 2º In the event of expedition of constitutive laude after the date referred to in the preceding paragraph, the fruition of the benefit shall be given from the calendar year of the laude expedition.

§ 3º The term of fruition of the tax benefit is equal to the period between the year of commencement of fruition and December 31, 2013, and may not exceed ten years.

§ 4º For the purposes of this article, the diversification and total modernization of existing venture will be considered to be implantation of new producer unit, second criteria laid down in regulati

§ 5º In the chances of extension and partial modernization of the venture, the benefit provided for in this article is conditioned on the increase in actual capacity installed in the expanded or modernized production line in, at the very least:

I-twenty per cent, in the cases of infrastructure ventures (Law No. 9,808 of July 20, 1999) or structurers, in the terms and conditions set by the Executive Power ; and

II-fifty per cent, in the cases of the other priority endeavours.

§ 6º The provisions of the caput shall not apply to the pleas approved or filed in the competent organ and in the form of the previous legislation, until August 24, 2000, for which the discipline introduced by the caput of the art. 3º of Law No. 9,532 of December 10, 1997.

§ 7º Legal persons holding projects for implantation, modernization, extension or diversification filed in the competent body and in the form of legislation prior to August 24, 2000, which will come to be approved on the basis of in the discipline introduced by the caput of the art. 3º of Law No. 9,532, 1997, and whose activity falls within the economic sector considered priority, in act of the Executive Power, will be able to plead the reduction provided for in this article by the deadline that will remain in order to complete the ten-year period.

§ 8º The laureate referred to in § § 1º and 2º shall be exfiled in accordance with standards laid down by the Ministry of National Integration.

Art. 2º It gets extinct, for the period of ascertaining started from 1º January 2001, the tax benefit of reducing the income tax and additional non-restitution, of which it treats art. 14 of Law No. 4,239 of June 27, 1963 and the art. 22 of Decree-Law No. 756 of August 11, 1969, except for those ventures of the sectors of the economy that will come under consideration, by the Executive Power, priority for regional development, and for those with registered office in the area of jurisdiction of the Franca Zone of Manaus.

Art. 3º As of the 2000 calendar year and by December 2013, the option of the legal persons taxed based on the real profit by the application of the income tax on income due will be:

I-thirty percent in favor of the North-East Investment Fund and the Amazon Investment Fund-FINAM (Decree-Law No. 1,376 of December 12, 1974, art. 1º, I, "a"), included the compulsory deductions, in the amount of twelve per cent, in favor of the National Integration Program-PIN and the Land and Stimulus Redistribution Program to Northern and North-East Agroindustry-PROTERRA, of which it takes care the art. 5º of Decree-Law No. 1,106 of June 16, 1970, and the art. 6º of Decree-Law No. 1,179 of July 6, 1971, respectively ; and

II-twenty-five percent in favor of the State Economic Recovery Fund of the Holy Spirit-FUNRES (Decree-Law No. 1,376, 1974, art. 11, V).

Single Paragraph. The option referred to in this article does not reach the payments by estimate or share of the tax with maturity from 1º January 2014.

Art. 4º Without prejudice to the other standards in force on the matter, it is maintained, until December 31, 2013, the percent of thirty percent predicted in the inciso I of the art. 2º of Law No. 9,532, 1997, for those ventures of the sectors of the economy that will come under consideration, in act of the Executive Power, priority for regional development.

Art. 5º The arts. 5º, 9º and 21 of Law No. 8,167 of January 16, 1991, pass vigorously with the following changes:

" Art. 5º Investment Funds shall apply their resources, as of August 24, 2000, in the form of subscription of convertible debentures in shares, of issuance of the beneficial companies, by observing that the conversion will only occur:

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

§ 1º As of 1º September 2000, there will only be project approval that has proven economic and financial feasibility, attested by updated studies, and that it is properly framed in the approved guidelines and priorities by the respective Deliberative Council, by making the issuance of the debentures conditional on the appropriate constitution of the guarantees provided for in § 4º of this article

§ 2º The Operator Banks shall be responsible for the conversion of which it treats the caput, which shall take effect, in full, within one year from the date of issuance of the Implanted Venture Certificate (CIS), in the terms of § 12 of this article, not admitted to secondary allotment of the debentures.

§ 3º Vencil the time limit set for conversion under the preceding paragraph shall remain the obligation to rescue the debentures, at the respective maturity, to be carried out by the issuing company.

§ 4º The debentures to be underwritten with the resources of the Funds should have real or floating warranty, cumulatively or not, admitted, in relation to the former, their constitution in competition with other claims, at the discretion of the Bank Operator, plus bail provided by controller shareholders.

§ 5º In the event of debentures with a floating guarantee, the issuing company shall assume, in the issuing deed, the obligation not to divest or burden real estate or other well subject to registration of property which is part of the project, without the prior and express authorization of the Regional Development Supervision, which should be averaged in the competent registration.

§ 6º The issuing deed of debentures shall be made by public or particular instrument.

§ 7º It does not apply to the debentures of which it treats this Act, the provisions of § 1º of the art. 57, art. 66 and art. 70 of Law No. 6,404 of December 15, 1976 (Law on Societies by Actions).

§ 8º The ceilings and minimum limits for the grace, amortization and maturity deadlines and other conditions of the debentures issued on the basis of the provisions of this article shall be established by the Ministry of National Integration, from advent proposals from the Superintendencies, which will take into consideration the sectorial and local peculiarities of the endeavors to be encouraged.

§ 9º The remuneration of debentures issued on the basis of the provisions of this Act shall be established, as per the legislation in force, by the National Monetary Council, by you or its mandators, using as reference the charges financial in financing granted with resources from the North, North East and Midwest Financing Constitutional Funds.

§ 10. Contracts regarding the projects to be benefited from proceeds from the incentives of the Northeast and Amazon Investment Funds will contain clause predicting that the financial charges set out as remuneration for the debentures to which they are refers to this Act will be reviewed annually and whenever the Long-term Interest Rate-TJLP presents accumulated variation, to more or less, over thirty per cent.

§ 11. The review dealing with the preceding paragraph will be effected in the month of January of each year, and may occur at any time, whenever the cumulative variation of the TJLP, to more or less, from the month of January of the year 2001 or the date of the last revision, reach percent higher than thirty percent.

§ 12. The implantation certificate to which you refer to the art caput . 19 of Decree-Law No. 1,376 of December 12, 1974, passes the denomination of Implanted Venture (CIS), preserving all rights and duties derived from actions and events administered under the now amended denomination. " (NR)

" Art. 9º Regional Development Agencies and Operators Banks shall ensure to legal persons or groups of affiliated companies that, either isolated or jointly, hold at least fifty and one per cent of the voting capital of the titular holding company of sector venture of the economy considered, by the Executive Power, priority for regional development, the application, in this venture, of resources equivalent to seventy percent of the value of the options that it treats art. 1º, inciso I.

§ 1º In the hypothesis that it treats this article, the limits of fiscal incentives contained in the approved financial scheme for the project, which, in addition to adjusted to the annual budget of the Funds, will not include any installment of resources for application in art compliance. 5º of this Act.

§ 2º In cases of joint participation, the minimum threshold of twenty per cent of the voting capital will be obeyed for each legal person or group of affiliated companies, to be integralized with own resources.

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

§ 4º Regarding the infrastructure projects, as per the constant definition of the art caput . 1º of Law No. 9,808 of July 20, 1999, as well as those considered to be structural for regional development, thus defined by the Executive Power, taking as a basis the state and regional development plans, the limit on which it treats § 2º of this article will be five per cent.

§ 5º The provisions of § 1º of the art. 1º of Law No. 9,808, of 1999, will be carried out only in the form of this article or, exceptionally, in composition with art resources. 5º of this Act, upon subscription of convertible debentures in shares, at the discretion of Superintendencies, as it appears to be approved by the respective Deliberative Council.

§ 6º Exceptionally, only for the cases of companies holding the projects constituted in the form of open companies, the rules in force in the inciso II of § 2º of the art will be maintained. 1º of Law No. 9,808, 1999.

§ 7º We consider related companies, for the purposes of the provisions of this article, those whose majority of the voting capital is controlled, directly or indirectly, by the same physical or legal person, understood also, the latter, as member of the group.

§ 8º Investors who fall within the hypothesis of this article should prove ability to port the resources required for project deployment, discounted holdings in other projects in SUDENE's area of acting and of SUDAM, whose shareholder transfer pleas will be submitted to the Deliberative Council of the respective Regional Development Supervision, save in the cases of minority joint participation, when observed any of the conditions provided for in the following paragraph.

§ 9º The application of the resources of legal persons or groups of affiliated companies that fall within the hypothesis of this article will be carried out:

I-when the shareholder control occurs in isolation, under the modality of ordinary or preferred shares, observed the standards of the societies by shares ; and

II-in the cases of minority joint participation, under the modality of shares or convertible debentures in shares.

§ 10. The Deliberative Advice of Regional Development Supervisors may exceptionally authorize, on the basis of a technical opinion of its Executive Officer, the new shareholder's admission with the minimum participation required under § § 2º, 4º and 6º, deducted the commitments made in other projects already approved by SUDENE and SUDAM, with the aim of applying the incentive in the form set out in this article, provided that the new minority shareholding comes to guarantee the previously anticipated incentive resources, in place of the legal person deductions or group of related companies that:

I-be in the process of bankruptcy, bankruptcy or liquidation ; or

II-have not submitted, in the tax returns on the income of the last two exercises, incentive generation capacity compatible with the commitments made on the occasion of the project approval, based on an opinion technician of the Executive Officer of the respective Superintendency of Regional Development.

§ 11. In the hypotheses of merger, incorporation or spation of legal person holder of shareholding, the right to use of the incentive, in the form established in this article, will automatically be transferred to the successor legal person, who must the percentage of which they treat § § 2º, 4º and 6º of this article.

§ 12. Proceeds deducted from income tax for application on own project, as set out in this article, should be applied by December 31 of the second subsequent year to the calendar year to match the option, under penalty of reversal to the respective Fund with the corresponding allocation of quotas in favour of the opting.

§ 13. The time limit for dealing with the preceding paragraph may be extended, at the discretion of the Superintendence, when the application of the appeals is pending judicial or administrative decision.

§ 14. The application of the resources in the modality provided for in this article shall not exceed sixty per cent of the total investment value provided for in the project or, exceptionally, seventy per cent for the case of infrastructure projects, at the discretion of the Supervision of Regional Development, obeyed at the limits of fiscal incentives constants of the Calendar of Inversions and Mobilization of Approved Resources. " (NR)

" Art. 21. ....................................................................

§ 1º The beneficial companies of tax incentives, which have net worth equal to or less than R$ 10,000,000.00 (ten million reais), are waived:

I-of registration in the Securities Commission-CVM ;

II-of the independent audit realization of its financial statements ; and

III-of the submission of copy of the financial statements to the CVM.

§ 2º The securities of issuance of tax incentives benefiting from tax incentives using some of the colleges provided for in the preceding paragraph and integrate the portfolios of FINOR, FINAM and FUNRES will only be negotiated:

I-in special auctions on stock exchange, upon process of conversion of Investment Certificates, veded, in this case, the faculty established in § 2º of the art. 8º of this Act, of stipulation of the payment in current currency of share of the price of the offered securities ; or

II-privately, following its acquisition in the special auctions.

§ 3º In the case described in the inciso I of the preceding paragraph, of the special auction editals should appear:

I-the condition of company beneficial of tax incentives with equal or less than R$ 10,000,000.00 (ten million reais) unregistered and unchecked by CVM ; and

II-the warning that the securities under the conditions described in the earlier incision are not traded on a stock exchange or counter market and that its acquirers will only be able to negotiate them in private transactions.

§ 4º The colleges provided for in § 1º and incisos of this article do not apply to the beneficial undertakings of tax incentives that have disseminated securities on the market, until they proceed to the cancellation of their registration in the CVM, upon public offer of the acquisition of the entirety of those securities, pursuant to the standards set by it. " (NR)

Art. 6º The project holders approved by SUDENE and SUDAM, which have obtained the Implanted Venture Certificate (CIS), at its discretion and with approval of the respective Superintendency, regarding the part or to the entirety of the vincendas, convertible and non-convertible debentures, subscribed in favor of FINOR and FINAM, will be able to:

I-to rescue non-convertible debentures upon conversion operation of these papers in convertible debentures, met the same conditions and limits set out in § § 1º and 2º of the art. 5º of Law No. 8,167, 1991, in what couber ;

II-authorize the Superintendency and the respective Operator Bank to promote secondary distribution of these securities or to include them in the special auctions held on stock exchanges, referred to in art. 8º of Law No. 8,167, 1991, met the specific standards regarding matter ;

III-quieting these securities upon renegotiation of the debit, based on their current value, under conditions similar to those in the rural credit securitization process regulated by the National Monetary Council ; or

IV-renegotiating these securities by means of grace and maturity more appropriate to the updated payment capacity of the project, with financial charges equivalent to those of the Financing Constitutional Funds, required in the cases of medium-size ventures.

§ 1º For the purpose of this Provisional Measure, they are deemed to be debts won only those debentures won and not settled on the date fixed for their payment.

§ 2º With respect to debts in convertible and non-convertible debentures in accrued shares, of issue of the companies referred to in the caput, these may be able to quip or renegotiate the debtor balance, for their current value, the criteria set out in the incisos III and IV of this article.

§ 3º The companies holding the projects referred to in this article will have the deadline of ninety days, counted from August 24, 2000, to express their preferences in relation to the alternatives provided for in this article, fining which shall comply with the obligations assumed, in accordance with the previous legislation.

Art. 7º Companies with projects in deployment phase and have registration of delay occurrence in incentive resource releases, regarding the approved original schedule, without being able to impute to them responsibility for that occurrence, they will be able to request the re-evaluation and, eventually, the restructuring of their project by the respective Regional Oversight.

§ 1º Companies that fall within the hypothesis provided for in this article, of conformity with the opinion of the Executive Officer of the respective Superintendency, which shall set out, inclusive, the deadline for completion of the project, may have the balance of their debts in convertible and non-convertible debentures, beaten and vincendas, dispensed with the incidence of the anticipated financial burden, including those of mora, since August 24, 2000 until the project obtain the respective CIS, when, then, these companies will be framed in the situations provided for in art. 6º.

§ 2º The vincensed debentures object of the preceding paragraph will have their amortization and maturity deadlines automatically extended from August 24, 2000, upon the granting of new grace period, under the anticipated terms in § 1º of the art. 2º of Law No. 9,126 of November 10, 1995.

Art. 8º In the other cases of projects in a deployment phase, where there is a timely receipt of the incentives provided for in the original schedule, the respective holding companies, when receiving the CIS, will be able to, for their debts in debentures, won and vincendas, opt for the alternatives envisaged in art. 6º, under conditions that are to be set out in opinion of the respective Regional Superintendency-Executive Secretariat.

Art. 9º The companies to which the arts refer. 7º and 8º should apply for what they provide the quoted devices to the respective Superintendency, within the maximum period of one hundred and eighty days, counted, in the case of art. 7º, as of August 24, 2000, and, in the case of art. 8º, as of the date of receipt of the CIS, under penalty of loss of the right to those faculties.

Art. 10. Should the Executive Secretariat of the respective Regional Superintendent constate irregularities in the projects of the companies referred to in the arts. 7º and 8º, they shall be subjected to the special audit procedure with a view to the collection of the resources until then released and to the exclusion of the system in accordance with the regulatory provisions in force.

Art. 11. The remunerations provided for in art. 20 of Law No. 8,167 of 1991 in favor of the organs managers of the Investment Funds will apply until December 31, 2000.

§ 1º As of 2001, the remuneration of Superintendencies by the administration of the Funds shall be three per cent calculated on the basis of the value of each release effected by the respective Fund, and intended for the cost of the activities of research and development, qualification and improvement of human resources, considered to be priority in relation to the sectors and endeavors recipient of the incentives, as well as the institutional promotion of the Funds.

§ 2º The value of the remuneration provided for in the preceding paragraph shall constitute direct charge to be covered with resources from the Funds, so there will be no issuance of Investment Certificates in respect of the value of the remuneration mentioned.

§ 3º The schedule of the use of the proceeds raised, as per § § 1º and 2º, will be submitted to the respective Deliberative Council, and by this approved, obliging the Regional Oversight to submit periodic reports of provison of accounts and results.

§ 4º The remuneration that is up to the Banks Operators by the administration of these Funds, as of January 2001, will be established by joint initiative of the Ministries of National Integration and the Finance.

Art. 12. The administration of the handling of financial resources earmarked for the execution of ventures supported by the Regional Investments Funds shall comply with specific rules, to be established by the Executive Power, on the joint initiative of the Ministries of the Farm and National Integration.

Art. 13. Legal persons taxed on the basis of real profit will be able to express the option for the application of the tax on regional investments in the Statement of Economic Information-Legal Person-DIPJ or in the course of the calendar year, on the dates of payment of the tax based on the estimated profit, ascertained monthly, or in real profit, ascertained quarterly.

§ 1º The option, in the course of the calendar year, will be manifested by collecting part of the tax on income, amounting to eighteen per cent to FINOR and FINAM and twenty-five per cent for FUNRES, by means of Specific Federal Revenue Collection (DARF) document.

§ 2º In the DARF referred to in the preceding paragraph, the legal person shall indicate the revenue code relating to the Fund for which there is opting.

§ 3º The resources of which it treats this article, in any of the option modalities provided for in the caput, will be considered available for application in the recipient legal persons.

§ 4º The release of the resources regarding the option provided in the caput, in the case of the legal persons referred to in art. 9º of Law No. 8,167, 1991, shall be effected by the respective Fund, upon submission of the DARF validated by the Office of the Federal Revenue Office, and proof of tax regularity of the opting legal person in respect of tributes and contributions feds.

§ 5º The option manifested in any of the forms provided for in the caput of this article is irreplaceable, and may not be changed.

§ 6º If the values intended for the Funds, in the forms provided for in § § 1º and 4º of this article, exceed the total to which the legal person is entitled, ascertained in DIPJ, the surplus share shall be considered:

a) in relation to the companies that it treats art. 9º of Law No. 8,167, 1991, as own resources applied in the respective project ; and

b) in relation to the other companies, as a voluntary subscription to the recipient Fund of the option, by making jus the subscriber to the Investment Certificates to be issued by the respective recipient Funds.

§ 7º In the payment hypothesis the lower tax by virtue of excess value intended for the Funds, the difference should be paid with addition of fine and interest, calculated in accordance with the income tax legislation.

Art. 14. The option for the application of tax repayment on the income of legal persons taxed on the basis of the actual profit of which it treats the previous article, is to be confirmed by the Office of the Federal Revenue Office after processing of the DIPJ.

§ 1º The confirmation of the options is subordinated to the regularity of the calculation of the incentive and the fiscal regularity of the opting contributors, in relation to federal tributes and contributions.

§ 2º The opers will be notified of the reasons that motivated the reduction of the incentive or on the existence, on the date of the processing of their statements, of fiscal irregularity, in relation to federal tributes and contributions, impediment to its fruition.

§ 3º In the case of reduction of the incentive by error of calculation, the opting may plead its amendment, within thirty days, counted from the notification, in due process, with the unit of the Office of the Office of the Federal Revenue Office with jurisdiction over the taxpayer's domicile for considerati

§ 4º In the hypothesis of the existence of fiscal irregularity, the taxpayer is expected to proceed to regularization within ninety days, under penalty of the value of the option being treated as tax.

§ 5º The Registry of the Federal Revenue Office, upon compliance with the measures provided for in § § 3º and 4º, shall forward to the Secretary of the National Treasury and to the Minister of State for National Integration the information concerning the amount of the actor incentives and the plots regarding each of its opers.

§ 6º The release of stock balances from unrepassed incentives to Regional Investment Funds will occur second programming to be established by the Finance and National Integration Ministries, met the limitations imposed by the need for public sector funding.

Art. 15. They apply to FUNRES and the Executive Group for Economic Recovery of the State of Espirito Santo-GERES, in what couber, the provisions of this Provisional Measure.

Art. 16. The trustees of the Financing Constitutional Funds will make jus, starting from 1º January 2001, at the rate of administration of three per cent per year on the net worth of the respective Funds, appropriate monthly.

Single Paragraph. The administration fee that it treats the caput is limited, in each financial year, to twenty percent of the value of the transfers of which it treats the article "c", inciso I, of the art. 159 of the Federal Constitution, held by the National Treasury to each of the bank administrators.

Art. 17. The acts practiced on the basis of the Provisional Measure No. 2.128-5, of December 27, 2000, shall be convalidated.

Art. 18. This Provisional Measure shall come into force on the date of its publication, producing effects, regarding the standards introduced by the arts. 13 and 14, as of 1º January 2000.

Art. 19. Revoke the art. 4º of Law No. 9,532 of December 10, 1997.

Brasilia, January 26, 2001 ; 180º of Independence and 113º of the Republic.

FERNANDO HENRIQUE CARDOSO

Pedro Malan

Fernando Bezerra