Corporate Income Tax Burden

AS OF 1 JANUARY 1997

Provisional Measure (PM) 1516 of 29 August 1996 amended the rules on corporate taxation. Effective for tax periods beginning on or after 1 January 1997, the social contribution may not be deducted either for income tax purposes or for purposes of calculating the taxable base of the social contribution itself. The following is an example of the effective corporate tax burden:

                                          (BRL)

Net profits                           1,000,000
Social contribution (8%)                (80,000)
                                      ---------
Taxable base for CIT and AIR          1,000,000
15% CIT                                (150,000)
10% AIR (from BRL 240,000)              (76,000)
                                      ---------
Total effective corporate taxes         306,000
Amount available for distribution       694,000