For several years our office has been rendering Services (*2) to the National and International Film Industry (Producers, Distributors, etc.), namely giving legal, comercial and negotial assistance to Feature Films Productions in Brazil (*3) and licensing of distribution rights, Theatrical; non-Theatrical; Television (Free TV, Pay TV, Cable, Pay-per-view); Video (Home Video, Rental, Sales Through, etc.)

After the issuance of Audiovisual Law nr. 8685 of June 20, 1993, we have also specialized in the procedures to utilize the mechanisms of such Law in order to make possible their application into Brazilian Cinematographic Audiovisual works, as defined by Law.

We are since the very beginning, even prior to its issuance, giving a close attention to every detail of Law 8685/93 and all the following legislation, as well as to the interpretation of their actual application with the authorities in charge at the Secretary for the Audiovisual Development of the Ministry of Culture. Mainly, Audiovisual Law nr. 8685/93 and following legislation which rules its application were issued to support and develop the Brazilian Films Industry. From then on Brazilian Producers have been presenting their Projects and applying for the benefits of such legislation, and several feature films are being already produced utilizing such mechanisms.

Basically, Audiovisual Law 8685/93 granted Tax Incentives which should be applied by the tax-payers in Brazilian Cinematographic Audiovisual works, not necessarily feature films. The incentives are defined in two articles, nrs. 1 and 3, of the above mentioned Law. Article 1 - establishes that Brazilian physical persons and juridical persons can deduct from their income tax to pay, respectively 3% (three per cent) and 1% (one per cent) provided this deduction is deposited in a special account and utilized to buy Audiovisual Investment Certificates for a determined Production/Film of their own choice, among those Projects which must be already approved by the Secretary for Audiovisual Development of Ministry of Culture (SDAV-MinC).

The issuance of these Certificates are ruled by the Stock and Exchange Committee and the buyers are entitled to a participation on the film results according to the offer of each Project. Article 3 - (Combined with articles 4 and 5 of Decree 974/93 that regulates Law 8685/93) Establishes that any foreign Producer, Distributor or Intermediate who receives any royalties and/or payments of whatever nature, derived from the exploitation, sale or licensing of foreign audiovisual works (Theatrical, Television, Video, Transmission of Events - Sports, shows, etc, in Brazil, can deduct 70% (seventy per cent) from the withholding tax applicable to any credits or remittances of such royalties and/or payments, provided this deduction is deposited in a public account to be utilized in a Project of a Brazilian Producer for an Audiovisual work (feature film, series, etc.) and this Project is approved by the SDAV-MinC above mentioned.

Normally the withholding tax is of 25% (twenty-five per cent) on the royalties or payments, credited or executed, and once the decision is to utilize the 70% (seventy per cent) under the terms of Law 8685/93, from the date of each deposit, the foreigner has 180 days to elect a Project and allocate the deposited amounts to it. The foreign Producer, Distributor and/or Intermediate may choose his own Project and a contract is signed with the Brazilian Producer defining, case by case, their participation and rights (first negotiation/first refusal for distribution, vehicles, territories, etc.).

The limit of deposits in each Project is of approximately US $1.4 million, and this amount can not represent more than 60% (sixty per cent) of the whole Budget. It is really a good opportunity to participate on potentially good films, with low budgets and at no real cost. And, adding to all this, giving a support to the Brazilian policy to develop the Audiovisual Movie Industry

By now our office has already rendered services to quite some very good projects, by selecting scripts; submitting them to foreign Producer/Distributor or Intermediate who decide to use the incentive of Law 8685/93; adequating the script with the Producer and script-writer; Filing the Project with the authorities (SDAV/MinC) and following all bureaucratic procedures; giving legal assistance to the foreign parties in the whole process as well as to the Project, including the production itself until the film is concluded. Some of the Projects we are participating, among others now being examined: “O QUE E’ ISSO COMPANHEIRO?” by BRUNO BARRETO based on the book of Fernando Gabeira on the political kidnapping of the American Ambassador in Brazil, John Elbrick. “TIETA” by CACA DIEGUES, based on the book of the world famous Brazilian writer Jorge Amado; “QUEM MATOU PIXOTE?” by JOSE’ JOFFILY - Script based on the real story of the actor of the worldwide famous HECTOR’s BABENCO Film, “PIXOTE”, who coming from a poor family has experienced the success as an actor and finally was killed by the police getting back to his original poor and violent world. “FOOLISH HEART” by HECTOR BABENCO .

Apart to our law firm, we have developed an Audiovisual firm, namely DLM PRODUCOES AUDIOVISUAIS LTDA., which is constituted and qualified under the brazilian laws to participate as co-producer, in Audiovisual Productions.