Law 11.371/06 published in the Official Gazette of the Union of 29 November 2006, enacted amendments on the rules concerning the taxation of aircraft leasing transactions, foreign exchange transactions, and registration of foreign capital.

Aircraft leasing operations

Remittances abroad of fees paid for the leasing of capital goods are generally subject to a 15% corporate withholding tax. Law 11.371/06 establishes a withholding tax exemption on payments related to leasing of aircraft and aircraft engines agreements entered into until 31 December 2008 by a passenger or cargo airline. The withholding tax exemption applies to taxable events up to 31 December 2013.

Foreign exchange transaction

Subject to the limits and conditions established by the Brazilian National Foreign Council, foreign exchange funds received by companies or individuals, relating to payments of Brazilian merchandize and service exports, may be maintained in an overseas financial institution. This option is nevertheless conditional upon the exchange of information. Funds maintained abroad may only be used for investment, financial applications or for payment of the exporter's own debts. Loans of any kind are prohibited.

Individuals and companies resident or domiciled in Brazil, which hold foreign currency funds derived from export payments, are also required to declare the use of such funds to the Federal Revenue Service. Failure to comply with these measures will give rise to fines up to 10% of the amount of the funds maintained abroad.

Registration of foreign capital

Foreign capital invested in Brazilian companies, which has not been registered and is not subject to any other type of registration, must be registered in Reals with the Brazilian Central Bank until 30 of June 2007. The amount of foreign capital is required to be registered in the accounts of the Brazilian company. Law 11.371/06 also establishes fines between BRL 1,000 to BRL 250,000 for the failure to comply with these registration rules.