In accordance with the Provisional Measure 1924 of October 7 1999, as of January 1 2000, foreign investors will be subject to 15% with holding tax on operations previously exempt, including:

* payments relating to import lease;

* commissions and expenses for the international placement of shares by Brazilian listed companies (in this case the tax rate may be increased to 25% in certain circumstances);

* foreign loans for more than 15 years;

* interest, commissions and expenses relating to international placements of commercial papers for AN average term of 96 months or more.

Provisional Measure 1924 also increases the rate of income tax on many other local operations. In relation to foreign investor´s income on fixed yield investments, should the investor home country apply income tax of less than 20%, the Brazilian rate is increased from 15 to 20%.
Officials at the National Bank for Economic and Social Development (BNDES) declared recently that the Brazilian government will increase the minimum price for 95% of ordinary stocks in the Brazilian Reinsurance Institute (IRB).

The minimum asking price for IRB had originally been fixed at R$ 437 million ($220 million). The announced alteration follows a reduction in the amount of income tax the IRB was supposed to pay, from R$ 325 million to R$ 236 million.

The Brazilian Private Insurance Agency (SUSEP) estimates that IRB will likely be privatised by the first half of the year 2000. Officials of SUSEP believe that lately the international insurance and reinsurance markets have been stagnant, which should spark interest by foreigners in the IRB auction.
The recent wordwide acquisition of Sprint by MCI Worldcom in a deal valued at $129 billion, the largest merger ever, has raised major competition issues in the Brazilian telecommunication market.

Before this operation, MCI owned 100% of Embratel, a company operating in national and international calls. Sprint, in its turn, possessed 25% of Intelig, Embratel´s mirror company and only competitor in that market.

Brazilian antitrust legislation forbids the same owner to control all the companies operating in one market. As for the telecommunications market, authorities consider that any stake over 5% of a company´s shares represents a significant control of that company. Hence, the Brazilian National Telecommunication Agency (ANATEL) is expected to impose a deadline for MCI to decide whether it will keep its stake in local long distance carriers Embratel or Intelig.

Specialists predict that MCI will probably choose to continue its ownership in Embratel. Thus, it will have to sell its 25% stake in Intelig, which is 50% owned and controlled by UK´s National Grid. This will create an opportunity for new companies to enter in the Brazilian telecommunications market, which was privatized last year.