EFTA01367034.pdf

Amendment #4 Page 605 of 868 lehlr .0..(3etxr Income and Social Contribution Taxes—The legal ernes ocirraisng Ire Group Ise separate tax returns as regaled by Brazilian tax ewe As such, income taxes rave been determined for purposes d the cornered Inanoel statements on a separate return basis Use of the method may realt in differences wren the stns of the amourts allocated to the Group is compared with anoints presented in the Parent% consolidated statements in general, income tax expense Si Brazil is compiled based onIre cone:mod statutory lax rate of 34% applied to adjusted taxable income. comprised of 25% for income fax (15% base rate pus a 10% surtax for income in excess of R5240) and 9% for social cora nbution tax (a tax levied on income) This Metr100 Is referred to as We 'real profit' netted. As permitted ureter Brazilian lax legislation, all of the Groups operating project compa nes. where virtually all of tie Groups revenue and substantially all of its operating volt is generated have elected to be taxed under an allernatwe'deemed profit' method Under Iris regime, ent ties with annual gross revenues rot in excess of RS 78 COO may elect to be taxed WWI on deemed taxable income dewed from a defined percentage of revenues Taxable ocorne is computed based on 8% of annual gross operating reverxesard 100% of annual finance revenues This deemed taxable income rs then subecl to income tax al the rate of 15% pils$ alatax of 10% for deemed income in excess of R5240 and social Cortritoban tax at the rate of 12% The Group's tax expense for the year is comprised of current and deterred mom* tax as applicable. in accordance with the applicable tax regime erected by Ire Group legal entities Cunent income tax—The current income tax expense is calculated on the basis of the tax laws enacted or stbstantively enacted at the balance sheet date in accordance wen the applicable elect ons made by roe Grow legal entities The Group reccgraes liabilities for uncertain tax posiOcrs when it is more likely roan not that an outflow will occur to settle the post on, based on management's estimaton of the expeciedsetlemert isecome These liabilities. along with related interest and penalties as applicable. are recorded as pan of taxes payable in the combined balance sheets Delo-rod "mane tax —Deferred income tax is reccgrxzed as applicable. using the teblity method. for lax loss carnefcweards and temporary Of ferences arising between the tax basis of assets and liabilities and their carrying amounts in the combined financial statements Deferred room* tax es not =Courted for if it arises from inlet omega bon of an asset or lately in a transactons, other than a business combination. that at the bins of the transaction does rot affect ether accounting or tax profit or ICU Deferred income tax assets are recognized only to the extent that S is probable that future taxable profit will be avarable against which the temporary difference or tax loss car firfaward can be utilized In Brut tax loss canyforwards do not expire. but their utilization is Invited to 30% of taxable trioome in a given year. under the real profit method Deferred income tax assets and salsehes, when recognzed, are offset when there is a legally enforceable ngit to offset and relate to income taxes levied try the same taxing authority on the same taxable entity and are classfed as Ong-term in the combined balance sheets For those legal enttes of the Group who have elected the deemed profit regime ro deferred income tax assets or liabilities have been recognized. Additionally. gwen the deemed profit election, no related tax impacts current a deferred nave been recorded for the allocabon of expenses from Parent n tre combined framer statements For mere infarrefion on income and socal cordnaut in taxes see note 10 F-285 http://cfdocs.btogo.com:27638/cf/drv7/pub/edgar/2015/07/20/0001193125-15-256461/d78... 7/20/2015 CONFIDENTIAL - PURSUANT TO FED. R. CRIM. P. 6(e) DB-SDNY-0058562 CONFIDENTIAL SDNY_GM_00204746 EFTA01367034