Please be advised that, on September 30 2016 (today), the Social Security Department website released on the Internet, the new "Accident Prevention Factor" ("FAP") rate for each company, applicable for the year 2017. This rate will have a direct impact on company′s payroll taxes and contributions for the year 2017.

FAP is a multiplication factor – that varies from 0,5 to 2,0 points) applied upon the tax rate of the "Labor Accident Contribution" ("SAT") and it is calculated based on the frequency, level of importance, and treatment cost of the labor illnesses and labor accidents of each company.

Thus, in order to obtain the SAT rate for the year 2017, the taxpayers must multiply the SAT rate by the FAP released.

Example of Calculation:

• Company′s branch SAT = 3%
• Company′s branch FAP = 1.5
• SAT for 2017: SAT x FAP = 3 x 1.5 = 4.5%

Accordingly, the companies that present low incidence of labor illnesses and accidents (consequently, low FAP) may reduce their SAT tax rate (either 1%, 2% or 3%) down to 50% (fifty per cent), according to the security measures adopted by the company.

On the other hand, the legal entities that present high incidence of labor illnesses and accidents (consequently, high FAP), may suffer the increase of their SAT tax rate, up to 100% (a hundred per cent).

Therefore, we alert that each company should verify its FAP rate applicable to 2017 as well as verify and analyze the list (released with the FAP) of labor accidents and illnesses occurred during this period.

In addition, we also inform that FAP rate will be individually calculated for each of the company's branch that has its on CPNJ register.

The consultation of the FAP applicable to 2017 is made through the link: https://www2.dataprev.gov.br/FapWeb/pages/login.xhtml. In order to have access to its personal data on the website, the company must present its register number before the Federal Revenue Department ("CNPJ") and the pin code provided by the Social Security Agency.

In case the company disagrees with the data disclosed by the Social Security Ministry (in which was based the FAP calculation), the company will be allowed to file an administrative defense before the Department of Health Politics and Labor Security (Social Security Ministry Department) during the period of November 01 to November 30, 2016, through an electronic form available on the Social Security Department website on the Internet.

In addition, the companies that were not allowed to apply a FAP lower than 1.0 (as a result from employee′s deaths, permanent disabilities and/or high turnover) shall file other electronic form to avoid such limitationduring the period of October 3rd, 2016 to November 30, 2016. This procedure shall be taken by each of the company′s branch.

In addition, the forms shall be electronic approved/homologated by the Labor Union until November 30, 2016.

Finally, we stress that the companies may also challenge the application of FAP on the Judicial level, as from the application related to the year 2010, as well as the unduly increase of the SAT tax rate since 2009.