The Brazilian tax authorities issued on 20 March 2006 Declaratory Interpretative Act 3 concerning the Brazil-Korea income tax treaty of 7 March 1989 (which serves as an official interpretation issued by the Brazilian tax authorities), setting forth their understanding in connection with payments of dividends, royalties and technical service fees under the treaty.
As a result of the application of the most favoured nation clause included in the protocol to the treaty and according to the terms set out in the treaties between Brizil-Finland and Brazil-Israel, the treaty rates applicable as of 1 January 2006 are as follows:
|-||Art. 10 (Dividends). The applicable withholding tax rate for Brazilian source dividends and branch profits is reduced from 15% to 10%. Nevertheless, it should be noted that under Brazilian domestic law, dividends and other profit distributions paid to non-residents are exempt from income tax; and|
|-||Art. 12 (Royalties). The withholding tax rate for payments of royalties (excluding trademark royalties) as well as for payments of any kind received as a consideration for the rendering of technical assistance and technical services is reduced from 15% to 10%.|