PROVISIONAL MEASURE NO. 2128-5, OF December 27, 2000.

Changes the income tax legislation with regard to exemption and reduction tax incentives, sets guidelines for the tax incentives of applying for the installment of the income tax in the Regional Investment Funds, and gives other arrangements.

THE PRESIDENT OF THE REPUBLIC, in the use of the assignment that confers it on art. 62 of the Constitution, adopts the following Provisional Measure, with force of law:

Art. 1º Without prejudice to the remaining standards in force applicable to the mattel, from the calendar year 2000 and to December 31, 2013, the persons legal that have project approved par installation, magnification, modernization or framed diversification, in sectors of the economy considered, in the act of the Executive Power, priority for regional development, in the areas of acting of the Oversight of the Development of Northeast-SUDENE and the Superintendency of Amazonian Development -SUDAM, will be entitled to the reduction of seventy-five percent of the income tax and add non-restitution, calculated on the basis of the profit from the holding.

§ 1º The fruition of the tax benefit referred to in the caput will give it as of the calendar year, subsequent to that in which the project in operation, second laude exclaimed, by SUDAM or SUDENE, until the last working day of the month of March of the year-calendar subsequent to the beginning of the fruition.

§ 2º In the constitutive laude expedition hypothesis after the date referred to in the preceding paragraph the fruition of the benefit will give it from the year-calendar of the expedition of the laude.

§ 3º The term of fruition of the 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 deployment of new producing unit, according to criteria set out in regulations.

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

I-twenty percent, in the cases of infrastructure ventures (Law No. 9.808 of July 20, 1999) or structurers, in the terms and conditions established by the Executive Power: and

II-fifty percent, in the cases of the remaining priority ventures.

§ 6º The provisions of the caput do not apply to the pleas approved or protocolized in the competent body and in the form of the previous legislation, until August 24, 2000, for which it will continue to prevail 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 protocolized diversification in the competent body and in the form of the legislation prior to August 24, 2000, which come to be approved on the basis of the discipline introduced by the caput of the art. 3º of Law No. 9,532, of 1997, and whose activity enquels in economic sector deemed to be a priority, in an act of the Executive Power, will be able to plete for the reduction provided for in this article by the deadline that it remanded to complete the ten-year period.

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

Art. 2º It becomes extinct, regarding 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 the Decree-Law No. 756 of August 11, 1969, execeto for those endeavors of the sectors of the economy that come to be considered, by the Executive Power, priority for regional development, and for those who are based in the area of jurisdiction of the Zona Franca de Manaus.

Art. 3º From the calendar year 2000 and until December 2013, the option of the legal persons taxed on the basis of the Real Profit by the application of instalment of the tax on the income due will be from:

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

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

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

Art. 4º Without prejudice to the remaining standards in force on matter, it shall maintained, until December 31, 2013, the percent of trina per cent predicted in the inciso I of art. 2º of Law No. 9,532, of 1997, for those endeavors of the sectors of the economy that come to be considered, in an 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, they go on to invigorate with the following amendments:

?Art. 5º Investment funds will apply their resources, as of August 24, 2000, in the form of subscribing to convertible debentures in issuance shares of the beneficiary companies, noting that the conversion will only occur:

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§ A 1º As of 1º September 2000, there will only be approval of project that come proven economic-financial viability, attested by updated studies, and that is properly framed in the guidelines and priorities approved by the respective Deliberative Council, by staying the issuance of the debentures conditioned the appropriate constitution of the guarantees provided for in § 4º of this article.

§ 2º Operator banks shall be responsible for the conversion of which it treats the caput, to which it is to take effect, in full, in the period of one year from the date of issuance of the Implanted Venture Certificate (CEI), pursuant to § 12, of this article, it did not admit the secondary placing of the debentures.

§ 3º Ventid the deadline set for conversion, in the terms of the preceding paragraph, it will remain the obligation to rescue the debentures, in the respective maturity, to be carried out by the issuing company.

§ 4º The debentures to be subscribed to the Funds ' resources are to have real or floating warranty, cumulatively or not, admitted, in relation to the first, its constitution in competition with other credits, at the discretion of the Operator Bank, in addition to bail provided by the controlling shareholders.

§ 5º In the hypothesis of debentures with floating warranty, the issuing company shall assume, in the issuing deed, the obligation not to divest or otherwise burdensome real estate of the project, without the prior and express authorization, of the Superintendence of Development Regional, what should be averaged in the competent registry.

§ 6º The issuing of debenture issuance will be made by public or particular instrument.

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

§ 8º The maximum and minimum limits for the grace, amortization and maturity deadlines and other conditions of the issued debentures based on the willing in this article will be established by the Ministry of National Integration, from propositions advindas from the Superintendencies, which will take into consideration the sectoral and local peculiarities of the endeavors to be encouraged.

§ 9º The remuneration for 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 a reference the charges financial from the financing provided with resources from the Northern, Northeast and Midwest Financing Constitutional Funds.

§ 10 The contracts regarding the projects to be benefited from the resources of the incentives of the Investment Funds of the Northeast and the Amazon will contain clause predicting that the financial burdens set forth as remuneration to the debentures referred to in this Act will be reviewed annually and whenever the Long-Term Interest Rate- TJLP to present accumulated variance, for more or less, more than thirty percent.

§ 11 A review of which treats the preceding paragraph will be effected in the month of January each year, and may occur at any time, always that the accumulated variation of the TJLP, for more or less, from the month of January 2001 or the date of the last revision, reach a percent higher than thirty percent.

§ 12 The certificate of implantation referred to in the caput of the art. 19 of the Decree-Law No. 1,376 of December 12, 1974, passes to be named Implanted Undertaking Certificate (CEI), preserving all rights and duties derived from actions and events administered under the denomination now amended?. (NR)

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

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

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

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§ 4º Relatively to the projects of infrastructure, as per the constant definition of the art's caput . 1º of Law No. 9,808 of July 20, 1999, as well as those considered structurers for regional development, thus defined by the Executive Power, taking as a basis the state and regional development plans, the limit of which deals with § 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 Law, upon subscription of convertible debentures in shares, at the discretion of the Superintendances, as it appears to be approved by the respective Deliberative Council

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

§ 7º We consider affiliated 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 as well, the latter as an integral of the group.

§ 8º Investors who fall into the hypothesis of this article are expected to substantiate capacity to port the necessary resources to the deployment of the project, discounted the shareholdings in other projects in the acting area of SUDENE and SUDAM, whose transfer pleas from the shareholding control will be submitted to the Deliberative Council of the respective Regional Development Superintendency, save in the cases of joint minority participation, when observed any of the conditions laid down in the following paragraph.

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

I-when the actuary control occurs in an isolated manner, under the modality of common or preferred shares, observed the norms of the societies by actions; and

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

§ 10 The Deliberative Councils of Regional Development Superintendances will exceptionally be able to authorize, on the basis of technical advice from its Executive Secretariat, the new shareholder's ticket with the minimum participation required under § § 2º, 4º and 6º, deducted the commitments made on other projects already approved by SUDENE and SUDAM, with the aim of application of the incentive in the form set out in this article provided that the new minority shareholding comes in to guarantee the previously planned incentive resources, in place of the deductions of legal person or group of companies collated that:

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

II-have not filed, in the income tax returns of the last two financial years, generating capacity of incentive compatible with the commitments made on the occasion of the approval of the project, based on technical advice from the Executive Secretariat of the respective Superintendency of Regional Development.

§ 11. In the hypotheses of merger, incorporation or spin-off of legal person holder of shareholding, the right to the use of the incentive, in the form set out in this article, shall automatically be transferred to the successor legal person, who shall keep the percent of them dealing with § § 2º, 4º and 6º of this article.

§ 12. The proceeds deducted from the income tax for application in own project, as set out in this article, should apply by December 31 of the second year subsequent to the calendar year to which it corresponds to the option, under penalty of reversal to the respective Fund with the corresponding issuing of quotas in favour of the optant.

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

§ 14. The application of the resources in the modality provided for in this article will not be able to exceed sixty percent of the value of the total investment provided for in the project or, exceptionally, seventy percent for the case of infrastructure projects, at the discretion of the Oversight of Regional Development, obeyed to the fiscal incentive limits set out in the Calendar of Approved Inversions and Mobilizations.? (NR)

?Art. 21. ...................................................................................................................................

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

I-de-registration in the Securities Commission-CVM;

II-of conducting independent audit of its demonstrations financial; and

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

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

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

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

§ 3º In the case described in the inciso of the preceding paragraph, of the special auction editions shall appear:

III-the condition of beneficial tax incentive company with equities equal to or less than R$ 10,000,000.00 (ten million reais) unregistered and unsupervised by the CVM; and

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

§ 4º The faculties provided for in § 1º and incisies of this article do not apply to the beneficiary expenditure of tax incentives that have disseminated securities on the market, until proceed to the cancellation of your registration at the CVM, upon public offer of acquisition of the entirety of those securities, pursuant to the standards by it fixed.? (NR)

Art. 6º The company holding companies approved by SUDENE and SUDAM, which have obtained Implanted Venture Certificate (CEI), at their discretion and with approval of the respective Superintendency, concerning the part or the totality of the vicarious, convertible and non-convertible debentures, subscribed in favor of FINOR and FINAM, will be able to:

I-effectuate the rescue of the non-convertible debentures upon conversion operation of these roles in convertible debentures, met the same conditions and limits as set out in § § 1º and 2º of the art. 5º of Law No. 8,167, of 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 carried out on stock exchanges, referred to in art. 8º of Law No. 8,167, 1991, met the specific standards regarding matter;

III-quitting this securities upon negotiation of the debit, on the basis of its current value, in the conditions similar to those of the securatization process of rural credit regulated by the National Monetary Council; or

IV-renegotiate these securities upon grace and maturity deadlines most appropriate to the upgraded payment capacity of the project, with financial burdens equivalents to the Financing Constitutional Funds, required in the cases of mid-sized ventures.

§ 1º For effect of this Interim Measure, consider debts due only to those debentures won and not settled on the date fixed for their payment.

§ 2º With respect to the debt without convertible and non-convertible debentures in overdue shares, of issuance of the companies referred to in the caput, these will be able to quell or renegotiate the debtor balance, by its current value, second criteria set out in the incisies III and IV of this article.

§ 3º The companies holding the projects referred to in this article will have the ninety-day-time limit, counted from of August 24, 2000, to express their preferences in relation to the alternatives provided for in this article, fining which they should comply with the obligations assumed, in the compliance of the previous legislation.

Art. 7º As companies with projects in deployment phase and have record of occurrence of delay in the resource releases of the incentives, regarding the original approved schedule, without which they can be charged with responsibility for that occurrence, will be able to request the re-evaluation and, possibly, the restructuring of their project by their respective Regional Superintendency.

§ 1º The companies that fall under the hypothesis provided in this article, of conformity with opinion of the The Executive Secretariat of the respective Superintendency, which will set, inclusive, the deadline for the completion of the project, will be able to have the balance of its debts without convertible and non-convertible debentures, overdue and vicarious, waived from the incidence of the anticipated financial burdens, including those of mora, since August 24, 2000 until the project obtains the respective CIS, when, then, those companies will become framed in the situations foreseen in the 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, in the terms provided for in § 1º of the art. 2º of Law No. 9,126, of November 10, 1995.

Art. 8º In the remaining cases of projects in phase of implantation, where the timely receipt of the incentives provided in the original schedule, the respective holding companies, when the receipt of the CIS, will be able, in respect of their debts in debentures, overdue and vicendas, to opt for the alternatives provided for in the art. 6º, under the conditions that appear to be set in opinion of the Executive Secretariat of the respective Regional Superintendency.

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

Art. 10. Should the Secretariat-Executive of the respective Regional Superintendence constate irregularity 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 remuneration provided for in art. 20 of Law No. 8,167, 1991, in favor of the managing bodies of the Investment Funds, will apply until December 31, 2000.

§ 1º As of 2001, the remuneration of the Superintendances by the administration of the Funds will be three percent calculated based on the value of each release effected by the respective Fund, and intended for the costing of the research and development activities, qualification and improvement of human resources, considered to be priority in relation to the sectors and ventures beneficiary of the incentives, as well as to 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 the resources of the Funds, so there will be no issuance of Investment Certificates regarding the value of the mentioned remuneration.

§ 3º The programming of the use of the resources raised, as per § § 1º and 2º, will be submitted to the respective Deliberative Council, and by this approved, obliging Regional Superintendence to it to submit periodic reporting of benefit reporting.

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

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

Art. 13. Legal persons taxed on the basis of actual profit will be able to express the option by applying the tax on regional investments in the Declaration of Economic-Fiscal Information of the Legal Person-DIPJ or in the course of the calendar year, on the dates of payment of the taxes on the basis of the estimated profit, ascertained monthly, or in the actual profit, ascertained quarterly.

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

§ 2º In the DARF referred to in previous paragraph, the legal person shall state the code of revenue relating to the Fund by which there is optioned.

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

§ 4º The release of the resources regarding the option provided for in the caput, in the case of the legal person referred to in art. 9º of Law No. 8,167, of 1991, shall be effected by the respective Fund, upon presentation of the DARF validated by the Registry of the Federal Revenue Officer, and proof of tax regularity of the optant legal person concerning tributes and contributions federal.

§ 5º The option manifested in any of the forms foreseen in the caput of this article is irredeemable, and may not be altered.

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

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

b) in relation to the remaining companies, such as voluntary underwriting for the recipient fund of the option, by making jus the underwriter to the Certificates of Investments to be issued by the respective beneficiary Funds.

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

Art. 14. The option by the application of tax tranche on the income of legal persons taxed on the basis of the actual profit that it treats the previous article, should be confirmed by the Federal Revenue Office after processing of the DIPJ.

§ 1º The confirmation of the options becomes subordinate to the regularity of the calculation of the incentive and the tax regularity of the optant taxpayers, in relation to the federal tributes and contritions.

§ 2º The opters 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 tax irregularity, in relation to the federal tributes and contributions, impediment to their fruition.

§ 3º In the case of reduction of the incentive by calculation error, the optant will be able to plete for its amendment, within thirty days, counted from the notification, in own process, by fully fit the unit of the Federal Revenue Secretary with jurisdiction over the domicile of the taxpayer the assessment of his reasons.

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

§ 5º The Secretary of the Federal Revenue Officer, after fulfilment of the measures provided for in § § 3º and 4º, shall refer to the Secretary of the National Treasury and to the Minister of State for National Integration as information regarding the amount of the incentives aced and to the plots concerning each of its opters.

§ 6º The release of unpassed incentive inventory balances for the Regional Investment Funds will occur second programming to be established by the Ministries of Finance and National Integration, 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 the Holy Spirit-GERES, in what couber, the provisions of this Provisional Measure.

Art. 16. They are convalidated the acts practiced on the basis of the Provisional Measure No. 2.058-4, of December 14, 2000.

Art. 17. This Interim Measure shall come into force on the date of its publication, producing effects, concerning the standards introduced by the arts. 13 e14, as of 1º January 2000.

Art. 18. The art is revoked. 4º of Law No. 9,532 of December 10, 1997 and the Provisional Measure No. 2.058-4 of December 14, 2000.

Brasilia, December 27, 2000; 179º of Independence and 112º of the Republic.

FERNANDO HENRY CARDOSO

Pedro Malan

Fernando Bezerra