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4. Barriers to investment
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Restrictions to foreign investment apply in a number of areas. The prospecting and mining of mineral resources may take place only with authorization or concession by the Union, in the national interest, by Brazilians or by a company organized under Brazilian laws and having its head-office and management in Brazil. The prospecting and exploitation of hydrocarbons, as well as their refining, importation and exportation, and ocean and pipeline transportation are under State monopoly.

However, with the exception of activities linked to nuclear energy, the State may contract out the execution of these activities to state-owned or private enterprises. Foreign investment in highway freight transport is limited to no more than one fifth of the capital stock with voting rights. The enterprise must be organized as a joint-stock company and its capital must be represented by registered shares. In road transport, foreign ownership is limited to 20 percent of capital without voting rights, for companies established in Brazil after 7 November 1980. International road transport is reserved to companies with more than half of capital with voting rights held by citizens of the seven member countries of the International Land Transport Agreement (ATIT), and of the Latin-American Integration Association (LAIA).

Direct participation in air transport public domestic services is restricted for foreign investors that have no companies, representative offices or presence in any other forms in Brazil. Only Brazilian individuals or corporations established in the country with principle domicile and real effective seat in Brazil may own Brazilian flag vessels. In telecommunications, concessions to provide mobile telephone services or transmission through satellites may only be granted to companies established and administered in Brazil. General mail services are under Federal Government monopoly. Special deliveries may be provided by enterprises operating in Brazil under Brazilian legislation.

Brazil's tax revenue, as revealed in a survey report by a Brazilian Revenue Program Institute, accounted for 36.5 percent of its GDP in 2004. The Brazilian governments at all levels promulgated 219,795 rules and regulations concerning taxation during the six years from October 1998 to October 2004. The development of Brazilian domestic enterprises and foreign investment has been impeded by such factors as heavy tax burdens and countless tax regulations that are not only intricate but also contradictory to each other sometimes.

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