BRAZIL Law and Practice Contributed by: Carlos Vilhena, Roberta Bilotti Demange and Marina Bertucci Ferreira, Pinheiro Neto Advogados
security, and reducing inequalities as the foun - dation for Brazil’s evolving energy framework. Additionally, the federal government lifted restric - tions on the exports of lithium in 2022, which was a relevant development for lithium production in the country. As lithium is considered a mineral of interest to the nuclear industry, exports until 2022 were subject to a certain quota, which was a major obstacle to the development of lithium projects in Brazil. 4. Taxation of Mining and Exploration 4.1 Mining and Exploration Duties, Royalties and Taxes Mining activities are taxed in the same way as businesses in general. The Brazilian tax system contains a variety of taxes at the federal, state and municipal levels. In December 2023, the Brazilian National Con - gress successfully passed a comprehensive Tax Reform on Consumption, as detailed below, to take effect in 2026. The approved changes will co-exist with the existing tax legislation outlined in items 4.1 Mining and Exploration Duties, Royalties and Taxes to 4.3 Transfer Tax and Capital Gains on the Sale of Mining Projects until the conclusion of the transition period in 2033. This tax reform does not alter any relevant rule in terms of income taxation in Brazil. Corporate Income Tax Brazilian corporate income tax (IRPJ) is levied at the federal level at the rate of 15% on taxable profits. A 10% surcharge is levied on the actual profits, presumed profits or profits determined by the tax authorities in excess of BRL240,000 per year. Taxable profits are ascertained by deduct -
ing the operating costs and expenses from the gross income originating from the company’s core activity and incidental businesses. Some of these costs and expenses are not deductible because of their nature or the amount involved. There are also provisions for tax exemption once a company’s taxable profit has been ascertained. Brazilian legal entities are allowed to carry for - ward losses indefinitely, which is important for companies that undertake exploration, develop - ment and, later, mining activities. These losses can only offset 30% of taxable profits, which can result in deferral of the utilisation of the losses in the event that the legal entity sustains material losses and profits that are not substantial. As a general rule, the income, capital gains and other earnings paid, credited, delivered, employed or remitted by a Brazilian source to a foreign-based individual or legal entity are subject to withholding tax at a general rate of 15%. The tax rates on capital gains of Brazil - ian individuals or non-residents (both individuals and companies) may vary from 15% to 22.5% depending on the amount of the capital gains. Rates may reach 25% for income paid to a per - son residing in a jurisdiction deemed to be a tax haven or privileged tax regime for Brazilian tax purposes. Social Contribution The social contribution on net profits (CSL) is cal - culated on the net profits before the allowance for income tax, adjusted by the additions, exclu - sions and offsets prescribed by tax law. The CSL rate is 9% and the figures paid are not deduct - ible from the income tax base (actual profits). Other federal contributions – PIS (Programme of Social Integration) and COFINS (Contribution for the Financing of Social Security) – are levied at
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