March 30, 2020

Temporary Measures to Deter the Spread of COVID-19 in

I. Brazilian declaration of public health 20, there were already 977 confirmed emergency. The World Health Organization cases in Brazil and 11 confirmed deaths. declared COVID-19 a Public Health Bearing in mind this crisis scenario, the Emergency of International Importance on Brazilian Congress decreed that the January 30, 2020. The Brazilian government, situation in Brazil had reached a "Public in Act No. 188/GM/ MS, declared the Calamity State." outbreak a Public Health Emergency of National Importance on February 4 and, in Federal Law No. 13,979/2020, established III. Temporary measures to deter the measures to deal with the emergency. On spread of COVID-19. After that, the March 12, the Brazilian government president enacted Decree No. 10,282/2020 published Act No. 356/2020, which provides (“Decree”) and Provisional Measure No. for the regulation and implementation of 926/2020 (“Provisional Measure”) measures to deal with the COVID-19 establishing measures such as quarantines coronavirus as a public health emergency. and social distancing to fight the spread of the coronavirus in Brazil. On March 22, Brazilian President, , enacted a Provisional Measure (“MP No. 927/2020”) which establishes a IV. Essential activities. The Decree series of labor-related alternatives and establishes that “essential activities” are the measures to be taken during the state of ones crucial to meeting Brazilian society's emergency caused by the spread of Covid- most urgent needs during this pandemic. 19. These include allowing employers and Because non-performance of the activities employees to execute a written agreement referenced may endanger the population's to ensure the maintenance of employment health and safety, these essential activities relationships, which shall overrule any other may continue subject to appropriate health law or collective bargaining agreement, and safety considerations. For example, the provided that the Brazilian Federal transportation of essential goods to the Constitution provisions are respected. supply (production) chain—goods necessary for performing essential activities—is considered indispensable. II. COVID-19 statistics. On February 26, the first COVID-19 case was confirmed in Additionally, the Provisional Measure the city of São Paulo. Since then, the establishes that any transportation or transit disease has propagated quickly. On March restriction must be based on a technical recommendation issued by the Brazilian’s  (State): Governor Wilson National Agency on Sanitary Surveillance (in Witzel established a series of restrictive Portuguese, Agência Nacional de Vigilância measures, such as the prohibition of Sanitária – "Anvisa") to be deemed lawful. sporting events, concerts, fairs, scientific events, rallies, protests and the like and the opening of cinemas, theaters, and V. State and municipality restrictions. nightclubs to the public and also Each state and municipality, even before the significantly restrictions affecting mobility, enacting of the Federal Decree, adopted including prohibition of: restrictive measures to contain the spread of o Intercity passenger transport that the pandemic. We highlight some of the connects the Rio de Janeiro restrictive measures established by Brazil's Metropolitan Region to the capital state/municipal governments below: itself, except by train or ferry;  São Paulo (State): In the state of São o The use of rideshare services (i.e., Paulo, on March 23, 2020, Governor João Uber) between the capital and other Dória enacted a decree establishing a 15- municipalities; day mandatory quarantine starting on o Interstate passenger transport March 24 and requiring the closure of all originating from the states of São establishments that provide non-essential Paulo, , Espirito Santo or services until April 7. These include (i) , in addition to the Federal commercial establishments and service District and other states in which the providers offering public attendance, outbreak of the virus has been especially nightclubs, shopping centers confirmed or an emergency situation and similar establishments, gyms and has been decreed, as ratified by the fitness centers; and (ii) bars, restaurants, National Land Transport Agency; bakeries and supermarkets, except for o International or national passenger delivery services and “drive thru” services. flights originating from states in which Although these establishments may be the outbreak of the virus has been open to staff, for internal operations, they confirmed or an emergency situation must be closed to the public. has been decreed, as ratified by the The governor considers essential services National Civil Aviation Agency (This to be only the ones related to food measure does not apply to cargo (supermarkets, grocery stores, and delivery operations); or "drive thru" services from bars, o The berthing of cruise ships restaurants and bakeries), healthcare originating from states and countries (hospitals, clinics, pharmacies, laundries with a confirmed outbreak of the and cleaning services), essential good coronavirus or with an emergency supply (transport companies, storage situation decreed, as ratified by the facilities, gas stations, automotive vehicle National Waterway Transport Agency workshops and newsstands) and security (in Portuguese, Agência Nacional de (i.e., private security services), in addition Transportes Aquaviários – ANTAQ). to services considered as essentials by the federal government by the aforementioned Decree No. 10,282/2020. Besides the restrictions above, the following The governor based the decree on the fact is prohibited for the next 15 days in Rio de that São Paulo already has 631 confirmed Janeiro: cases of infection by the Covid-19 and 22 o Operation of gyms, fitness centers and deaths caused by the virus. similar establishments;

2 Tauil & Chequer Advogados | Temporary Measures to Deter the Spread of COVID-19 in Brazil o Operation of malls, shopping centers o Services and masses of any creed or and other retail venues, with the religion; exception of supermarkets, pharmacies o Commercial establishments of any and health service providers such as kind, including bars, restaurants, hospitals, clinics, laboratories and convenience stores and other stores, similar establishments; except for medical clinics, laboratories, o Going to a beach, lagoon, river or drugstores, supermarkets and building public swimming pool; materials and home products stores o Operation of bars, restaurants, (retailers and wholesalers), cafeterias and similar establishments minimarkets, grocery stores and the (exceptions: these types of like, bakeries (exclusively for product establishments inside hotels, inns and selling, not eating in), butcher shops, similar institutions that are under fish markets, gas stations, and delivery quarantine, operating only for guests operations; and employees as a way of ensuring o Beauty salons. quarantine.  Brasília (Federal District): Governor In addition to the measures referred to Ibaneis Rocha enacted Decree No. 40,539 above, several other states and cities in on March 19, establishing measures to Brazil (, Bahia, Espírito Santo, deal with the healthcare emergency Minas Gerais and others) also have arising from COVID-19. Pursuant to art. 2, established restrictive measures in order to the following activities shall remain fight against the global spread of the virus: suspended until April 5: State of : Decree No. 5,496 of o Gatherings of any nature that require a o permit from governmental authorities; March 20; State of Amazonas: Decree No. 42,099, o Collective activities regarding cinema o and theater; of March 21; State of Amapá: Decree No. 1,414, of o Educational activities in every school, o college and university, whether public March 20; or private; o State of Pará: Decree No. 609, of March 16; o Gyms and fitness centers of any nature; o State of Rondônia: Decree No. 24,887, of March 20; o Museums; State of : Decree No. 6,072, o Zoos and parks; o of March 21; o Nightclubs; o State of : Decree No. 69,541, of o Service to the public in malls, fairs and March 19; recreational clubs, except related to laboratories, healthcare clinics, o State of Bahia: Decree No. 19,529, of drugstores and delivery operations; March 16; State of : Decree No. 33,510, of o Service to the public in all bank o agencies and credit unions in the March 16; Federal District, except for assistance o State of Maranhão: Decree No. 35,677, related to banking programs designed of March 21; to alleviate the economic o State of : Decree No. 40,134, of consequences of COVID-19, as well as March 20; financial assistance to people with serious illnesses;

3 Tauil & Chequer Advogados | Temporary Measures to Deter the Spread of COVID-19 in Brazil o State of : Decree No.  Actions for vulnerable people: 48,834, of March 20; o Anticipation of the first installment of o State of Piauí: Decree No. 18,901, of the Christmas Bonus of retirees and March 19; pensioners for April (R$23 billion); o State of do Norte: Decree o Anticipation of the second installment No. 29,541, of March 20; of the Christmas Bonus of retirees and o State of : Decree No. 40,560, of pensioners for May (R$23 billion); March 16; o Amounts not withdrawn from the o State of Goiás: Decrees No. 9,633, of Social Integration Program (known in March 13, No. 9,637, of March 17 and Brazil as “PIS / PASEP”) will be No. 9,638, of transferred to FGTS to allow new March 20; withdrawals (up to R$21.5 billion); o State of do Sul: Decree o Anticipation of Unemployment No. 15,391, of March 16; Benefits for June (R$12.8 billion); o State of Mato Grosso: Decree No. 419, o Expanding the Bolsa Família program of March 20; (responsible for the transfer of resources to low-income families in o State of Espírito Santo: Decrees No. Brazil) to increase its beneficiaries by 4,593-R, of March 13; No. 4,599-R, of more than 1 million people (up to March 17; No. 4,600-R, of March 18; R$3.1 billion); No. 4,601-R, of March 18; and No. 4,604-R, of March 19; o Reduction of the payroll interest ceiling, an increase in the margin and a o State of Minas Gerais: Decree NE No. change in the payment period; 113, of March 12; Deliberation No. 8, of March 19, of the Extraordinary o R$150 billion to stimulate the Committee COVID-19; and Decree No. economy; 47,891, of March 20; o Money vouchers for the most needy o State of Rio de Janeiro: Decrees No. (income supplementation). 46,973, of March 16 and No. 46,980, of  Maintenance of employment: March 19. o Deferral of the FGTS payment term for o State of São Paulo: Decrees No. 3 months (R$30 billion); 64,862, of March 13 and No. 64,879, of o Deferral of collection of federal tax by March 20; the Simples Nacional for 3 months o State of Paraná: Decrees No. 4,230, of (R$22.2 billion) and delay in the March 16 and No. 4,298, of March 19; payment of the Service Guarantee o State of : Decrees Fund (FGTS) and Simples Nacional for No. 55.128, of March 19, and No. three 3 months, to reinforce the 55,130, of March 20; companies' cash; o State of Santa Catarina: Decrees No. o More R$5 billion in PROGER / FAT 509 and 515, of March 17. credit for micro and small companies; o 50% reduction in contributions to Sistema S for 3 months (R$2.2 billion); VI. Additional Federal measures. In order to minimize the impact of the COVID-19 o Simplification of the requirements for pandemic on public health and the contracting credit and dispensing with economy, the federal government has documentation (CND) for credit announced several restrictive measures, renegotiation; including:

4 Tauil & Chequer Advogados | Temporary Measures to Deter the Spread of COVID-19 in Brazil o Facilitation of the clearance of application of labor inspection fines; (v) imported industrial raw materials and suspension, during the crisis, of inputs before landing; administrative record requirements; (vi) o Release of R$24 billion for personal extension of the term for carrying out credit lines (in order to help self- workplace inspections; and (vii) exclusion of employed workers) and R$48 billion the coronavirus as a work-related disease. for companies; These and other measures are pending negotiation, analysis and approval of a law o Aid to civil aviation; or provisional measure on each. o Cutting SELIC to 3.5%; o Interest reduction and authorization to pause debt payments by Caixa VII. National Bank for Economic and Econômica Federal. Social Development measures. Finally, last Sunday, March 22, the president of the  Fighting the pandemic: National Bank for Economic and Social o Moving the DPVAT fund balance to Development (in Portuguese, Banco SUS (R$4.5 billion); Nacional de Desenvolvimento Econômico e o Reduction of import tax rates for Social – BNDES), Gustavo Montezano, products for medical and hospital use announced 4 financial support measures to to zero (until the end of the year); inject funds into the economy, which will o Temporary exemption from IPI for have an initial duration of listed imported goods that are 6 months: necessary to combat COVID-19;  Transfer of R$20 billion from the PIS- o Temporary exemption from IPI for PASEP Fund to the Brazilian Social domestically produced listed goods Security Fund (FGTS), intended to assist that are necessary to combat COVID- workers; 19;  Temporary suspension of payment of o Suspension of the proof of life interest and principal installments (a requirement for the INSS beneficiaries standstill) for direct financing granted by for 120 days; BNDES to companies, in the amount of o Tariff preference for products for R$19 billion, in addition to the medical and hospital use; capitalization of the outstanding balance; o Prioritization of customs clearance of  Temporary suspension of payment of products for medical and hospital use; interest and principal installments (a o Temporary exemption of medical standstill) of direct indirect financing products from taxation; granted by financial agents with funds from BNDES (lending operations), in the o Closing . amount of R$11 billion, in addition to the capitalization of the outstanding balance; Several other measures are being discussed and by public authorities, and many will have an  Availability of resources for new working impact on economic and labor relations. capital financing operations for micro, Among these measures are: (i) express small and medium-sized companies permission by law for a company to change (MSMEs), in the amount of R$5 billion, its working hours; (ii) reactivation of the which will be contracted through lending unemployment insurance program; (iii) operations. permission to compensate for unworked days during a vacation period; (iv) non-

5 Tauil & Chequer Advogados | Temporary Measures to Deter the Spread of COVID-19 in Brazil The transfer of resources to the FGTS and Please visit www.tauilchequer.com.br for comprehensive contact information for all Mayer Brown offices. the new lines to MSMEs aim to provide Any tax advice expressed above by Mayer Brown LLP was not intended or direct support to Brazilian workers and written to be used, and cannot be used, by any taxpayer to avoid U.S. federal tax penalties. If such advice was written or used to support the promotion or companies that represent a relevant portion marketing of the matter addressed above, then each offeree should seek advice from an independent tax advisor. of jobs in the country. This Mayer Brown publication provides information and comments on legal issues and developments of interest to our clients and friends. The foregoing Non-performing companies will be eligible is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek legal advice before for the standstill for direct and indirect taking any action with respect to the matters discussed herein. financing already contracted and this will Mayer Brown is a global services provider comprising associated legal practices that are separate entities, including Mayer Brown LLP (Illinois, USA), not change the final term of the operation. Mayer Brown International LLP (England), Mayer Brown (a Hong Kong partnership) and Tauil & Chequer Advogados (a Brazilian law partnership) The installments of interest and principal (collectively the “Mayer Brown Practices”) and non-legal service providers, which provide consultancy services (the “Mayer Brown Consultancies”). The that would be due during the 6-month Mayer Brown Practices and Mayer Brown Consultancies are established in period the suspension will be automatically various jurisdictions and may be a legal person or a partnership. Details of the individual Mayer Brown Practices and Mayer Brown Consultancies can be incorporated into the outstanding balance found in the Legal Notices section of our website. “Mayer Brown” and the Mayer Brown logo are the trademarks of Mayer and diluted in the other installments of the Brown. financing. © Copyright 2020 Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. All rights reserved. When announcing these measures, Mr. Montezano reinforced that the BNDES is an important instrument for implementing federal government policies and that it will work together with other bodies to minimize the effects of the pandemic. He also highlighted that the 4 measures announced will be complementary to other actions already announced or to be developed to support specific sectors of the economy, especially those most affected by traffic restrictions, such as airlines (Provisional Measure No. 925/2020), bars and restaurants and the hotel sector.

For more information about the topics raised in this Legal Update, please contact any of the following lawyers. Victor Galante + 55 21 2127 4275 [email protected] Mario Saadi + 55 11 2504 4288 [email protected] Aline M. Fidelis + 55 11 2504 4666 [email protected]

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