Brazil

Brazil has come a long way in the last 20 years in terms of exploration services, engineering expertise and the manufacture of mining and plant equipment. Today, complete services are offered by contractors not only for exploration drilling, assaying, geochemical and goephysical surveys, but also for mine and mill design. Compared with a few years ago, a much greater range of mining and plant equipment is now manufactured in Brazil. As an example, at the recently completed gold project at Crixas, Goias state, all equipment was manufactured in Brazil.

In order to encourage reinvestment of profits in Brazil, the government subjects dividends remitted abroad to a graduated withholding tax. For remittances of dividends up to 12% of registered capital, the withholding tax is 25%. Supplementary taxes are levied at the following rates based on the foreign registered capital (FRC):

Profit remittances — Based on FRC

Dividends Witholding tax

up to 12% of FRC* 25%

12-15% of FRC 40%

15-25% of FRC 50%

over 25% of FRC 60%

*tax treaty (Brazil-Canada) 15%

Dividends and profits reinvested in Brazil are not subject to these taxes and increase the base for future remittances.

Brazil and Canada signed a bilateral tax treaty in 1985 whereby the withholding tax of 25% was reduced to 15%. The treaty, however, does not reduce taxes on dividends in excess of 12% of FRC.

Brazils potential mineral resources are enormous and large areas have had little or no exploration carried out. The mineral industry is of considerable importance to Brazils economy, but because of current economic uncertainties, there is a severe lack of risk capital, both local and foreign, to carry out exploration activity at the appropriate level. From a paper by TVX Gold Inc., which mines gold in Brazil.