BRAZIL Law and Practice Contributed by: Roberta Bilotti Demange and Marina Bertucci Ferreira, Pinheiro Neto Advogados
offset these effects over time, with the main impact being financial rather than structural. In addition, there are tax breaks available in connec - tion with IRPJ assessed in projects located in the Amazon or the north-eastern regions of the country. These tax breaks may represent a deduction of 75% in IRPJ tax. 4.3 Transfer Tax and Capital Gains on the Sale of Mining Projects As a general rule, if the seller of a mining project has a capital gain arising from the transaction, the seller shall pay capital gains tax. In the case of corporate structures outside Brazil, Bra - zilian tax rules provide that if a non-Brazilian entity has any capital gain arising from the disposal of a Brazilian asset, then such gain could be subject to withholding tax at a sliding scale rate between 15% and 22.5%, as described in 4.1 Mining and Exploration Duties, Roy- alties and Taxes . (If the seller is based in a tax-haven jurisdiction, the applicable rate will actually be 25%.) 5. Mining Investment and Finance 5.1 Attracting Investment for Mining Attracting investments for mining is crucial for the development of the Brazilian economy, since the min - ing sector contributes to the creation of direct and indirect jobs, the expansion of infrastructure and the increase of the Brazilian trade balance. Since Brazil does not have any bilateral investment treaties in place, the federal government relies on gen - eral policies and legislation applicable to businesses in general (eg, exemption of export tax in the expor - tation of non-manufactured goods, and exemption of ICMS tax on exported goods before the full transition to the new rules of the tax reform). 5.2 Foreign Investment Restrictions and Approvals in the Exploration and Mining Sectors Foreign capital in Brazil is governed by Law No 4131/1962 (the “Foreign Capital Law”). As a general rule, foreign capital can enter Brazil freely, without
constraints over the total amount to be invested and without the need of prior approval by the government. The registration of foreign capital with the Central Bank of Brazil is required when bringing funds into Brazil, remitting profits abroad, repatriating capital and reinvesting proceeds. Investment is registered in the foreign currency in which it is made, or in Brazil - ian currency if the funds originate from a non-resident account properly kept in Brazil or from assets located in the country. The main restriction with regard to foreign invest - ment in the Brazilian mining sector relates to foreign ownership of mining companies that have rights in certain areas. The current interpretation of the federal government is that legislation does not allow mining companies that have at least 51% equity interest held directly or indirectly by non-Brazilians to hold mineral rights and perform exploration and/or mining activities within the country’s border area (ie, the 150 km strip of land parallel to the country’s dry borders). 5.3 International Treaties Related to Exploration and Mining Brazil has not ratified any bilateral or multilateral invest - ment treaties. Brazilian authorities, at some point, considered that those treaties might lead to interna - tional disputes and could limit the government’s ability to change policies and regulations. In this context, Brazil chose to rely exclusively on domestic legislation to protect investment and private property in general (both Brazilian and foreign). 5.4 Sources of Finance for Exploration, Development and Mining The main financing options for mining development in Brazil are the banking system, the São Paulo stock exchange (although very few mining companies are listed on that exchange), the international capital markets and the international financing markets. The Canadian, United States, British and Australian mar - kets are important sources of investment (both equity and debt). In early 2024, the National Bank for Economic and Social Development (BNDES) announced the Strate - gic Minerals Investment Fund, designed to support
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