Tax Policies in Brazil:
Taxation of Oil, Natural Gas
and Minerals
Brazil – Russia Dialogue: Economic Policy Challenges
REIDI
International policy workshop
June 2012
04:54:58
Federal Constitution
Relevant information for
understanding the National
Tax System
03:35:57
Political-administrative
structure of Brazil
03:35:57
According to Federal Constituition from
Brazil:
The Federative Republic of Brazil, formed by
the indissoluble union of the states and
municipalities and of the Federal District, is a
legal democratic state and is founded on…
Art. 1, CF
03:35:57
03:35:57
26 states
a Federal District
5565 municipalities
03:35:57
Taxation and Budget
The National Tax System
General Principles
03:35:57
The governmental entities and entities owned by
the Government in any of the powers of the
Union, the states, the Federal District and the
Municipalities shall obey the principles of
lawfulness, impersonality, morality, publicity, and
efficiency, and also the following ...
Art. 37, CF
03:35:57
The Union, the states, the Federal District and
the municipalities may institute the following
tributes:
I – taxes;
II – fees, by virtue of the exercise of police power
or for the effective or potential use of specific
and divisible public services, rendered to the
taxpayer or made available to him;
III – benefit charges, resulting from public works.
Art. 145, CF
03:35:57
Whenever possible, taxes shall have an
individual character and shall be graded
according to the economic capacity of the
taxpayer, and the tax administration may,
especially to confer effectiveness upon such
objectives, with due respect to individual
rights and under the terms of the law, identify
the property, the incomes and the economic
activities of the taxpayer.
Paragraph 1, Art. 145 CF
03:35:57
A supplementary law shall:
I – provide for conflicts of competence
concerning tax matters between the Union,
the states, the Federal District and the
municipalities;
II – regulate the constitutional limitations on
the power to tax;
Art. 146 CF
03:35:57
A supplementary law shall:
III – establish general rules concerning tax
legislation, especially with regard to:
a) the definition of tributes and their types, as
well as, regarding the taxes specified in this
Constitution, the definition of the respective
taxable events, assessment bases and
taxpayers;
Art. 146 CF
03:35:57
A supplementary law shall:
III – establish general rules concerning tax
legislation, especially with regard to:
b) tax liability, assessment, credit, limitation
and laches;
c) adequate tax treatment for the cooperative
acts of cooperative associations.
Art. 146 CF
03:35:57
A supplementary law shall:
III – establish general rules concerning tax
legislation, especially with regard to:
d) the definition of a differentiated and favorable
tax treatment to be given to micro and small
businesses, including special or simplified tax
regimes in the case of the tax set forth in article
155, II , the contributions set forth in article 195,
I, and paragraphs 12 and 13, and the contribution
referred to in article 239.
Art. 146 CF
03:35:57
The supplementary law referred to in
item III, d, may also establish a single
regime for the collection of taxes and
contributions owed to the Union, the
States, the Federal District, and the
Municipalities, with due regard for the
following:
Sole paragraph, Art. 146 CF
03:35:57
I – it shall be optional for the taxpayer;
II – different eligibility requirements may be
established for each State;
III – payment of said tributes shall be unified and
centralized, and the distribution of the share of funds
belonging to the respective units of the Federation
shall be immediate, any withholding or establishment
of conditions being forbidden;
IV – collection, control, and claiming of payment may
be shared by the units of the Federation, a single
national roster of taxpayers being adopted.
Sole paragraph, Art. 146 CF
03:35:57
A supplementary law may establish special
criteria for taxation, with a view to preventing
imbalances in competition, without prejudice
to the power of the Federal Government to
establish, by law, rules for the same purpose.
Article 146-A
03:35:57
The Union shall have the exclusive competence
to institute social contributions regarding
intervention in the economic order and the
interest of categories of employees or
employers, as an instrument of its activity in the
respective areas, observing the provisions of
articles 146, III, and 150, I and III, and without
prejudice to the provisions of article 195,
paragraph 6, as regards the contributions
mentioned in the latter article.
Art. 149
03:35:57
The social contribution taxes mentioned in
the head paragraph of this article, as well as
the contribution taxes regarding intervention
in the economic domain:
I – shall not be levied on export earnings;
II – shall be also levied on the importation of
foreign products or services;
Paragraph 2, Art. 149
03:35:57
The social contribution taxes mentioned in
the head paragraph of this article, as well as
the contribution taxes regarding intervention
in the economic domain:
III – may have the following rates:
a) ad valorem rates, having as basis the
proceeds, gross revenues, or the value of the
transaction, and, in the case of importation, the
customs value;
b) specific rates, having as basis the unit of
measurement adopted.
Paragraph 2, Art. 149, CF
03:35:57
Limitations on the Power
to Tax
(some important)
03:35:57
Without prejudice to any other guarantees
ensured to the taxpayers, the Union, the
states, the Federal District and the
municipalities are forbidden to:
I – impose or increase a tribute without a law
to establish it;
Art. 150, CF
03:35:57
II – institute unequal treatment for taxpayers
who are in an equivalent situation, it being
forbidden to establish any distinction by
reason of professional occupation or
function performed by them, independently
of the juridical designation of their incomes,
titles or rights;
Art. 150, CF
03:35:57
III – collect tributes:
a) for taxable events that occurred before
the law which instituted or increased such
tributes came into force;
b) in the same fiscal year in which the law
which instituted or increased such tributes
was published (there are some exceptions);
Art. 150, CF
03:35:57
V – establish limitations on the circulation of
persons or goods, by means of interstate or
intermunicipal tributes, except for the
collection of toll fees for the use of highways
maintained by the Government;
Art. 150, CF
03:35:57
It is forbidden for the Union:
I – to institute a tribute which is not uniform
throughout the entire national territory or
which implies a distinction or preference
regarding a state, the Federal District or a
municipality to the detriment of another, it
being allowed to grant tax incentives for the
purpose of promoting the balanced social
and economic development of the various
regions of the country;
Art. 151, CF
03:35:57
Federal Taxes
03:35:57
The Union shall have the power to institute
taxes on:
I – importation of foreign products;
II – exportation to other countries of national
or nationalized products;
III – income and earnings of any nature;
IV – industrialized products;
Art. 153, CF
03:35:57
The Union shall have the power to institute
taxes on:
V – credit, foreign exchange and insurance
transactions, or transactions relating to
bonds or securities;
VI – rural property;
VII – large fortunes, under the terms of a
supplementary law.
Art. 153, CF
03:35:57
The income tax:
I – shall be based on the criteria of generality,
universality and progressiveness, under the
terms of the law;
Paragraph 2, Art. 153, CF
03:35:57
The industrialized products tax:
I – shall be selective,
essentiality of the product;
based
on
the
II – shall be non-cumulative, and the tax due
in each transaction shall be compensated by
the amount charged in previous transactions;
III – shall not be levied on industrialized
products intended for export;
Paragraph 3, Art. 153, CF
03:35:57
The industrialized products tax:
IV – shall have its impact reduced, as set
forth by law, in the case of purchase of
capital goods by a taxpayer who is liable to
pay such tax.
Paragraph 3, Art. 153, CF
03:35:57
State and Federal
District Taxes
03:35:57
The states and the Federal District shall have
the competence to institute taxes on:
I – transfer by death and donation of any
property or rights;
Art. 155, CF
03:35:57
The states and the Federal District shall have
the competence to institute taxes on:
II – transactions relating to the circulation of
goods and to the rendering of interstate and
intermunicipal transportation services and
services of communication, even when such
transactions and renderings begin abroad;
Art. 155, CF
03:35:57
The states and the Federal District shall have
the competence to institute taxes on:
III – ownership of automotive vehicles.
Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following:
I – it shall be non-cumulative, and the tax due
in
each
transaction
concerning
the
circulation of goods or rendering of services
shall be compensated by the amount charged
in the previous transactions by the same or
by another state or by the Federal District;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following :
II – exemption or non-levy, except
otherwise determined in the law:
as
a) shall not imply credit for compensation
relative to the amount due in the subsequent
transactions or renderings of services;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following :
II – exemption or non-levy, except
otherwise determined in the law:
as
b) shall cause the annulment of the credit for
the previous transactions;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following :
III – it may be selective, based on the
essentiality of the goods or services;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following :
IV – a resolution of the Federal Senate, on the
initiative of the President of the Republic or
of one-third of the Senators, approved by the
absolute majority of its members, shall
establish the rates that apply to interstate
and export transactions and rendering of
services;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following :
V – the Federal Senate may:
a) establish minimum rates for domestic
transactions, by means of a resolution
on the initiative of one-third and approved by
the absolute majority of its
members;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following :
V – the Federal Senate may:
b) establish maximum rates for the same
transactions to settle a specific conflict
involving the interest of the states, by means
of a resolution on the initiative of the
absolute majority and approved by two-thirds
of its members;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following :
VI – unless otherwise determined by the
states and the Federal District the domestic
rates for transactions concerning the
circulation of goods and the rendering of
services may not be lower than those
established for interstate transactions;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following:
VII – the following shall be adopted for
transactions and rendering of goods and
services to end-users located in another
state:
a) the interstate rate, when it is incumbent
upon the recipient to pay that tax;
b) Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following:
VII – the following shall be adopted for
transactions and rendering of goods and
services to end-users located in another
state:
b) the internal rate, when it is not incumbent
upon the recipient to pay that tax;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following:
VIII – in the case of subitem “a” of the
preceding item, the tax corresponding to the
difference between the internal and the
interstate rate shall be attributed to the state
where the recipient is located;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following:
IX – it shall also be levied:
Paragraph 2, Art. 155, CF
03:35:57
a) on the entry of goods or products
imported from abroad by an individual or
corporate body, even in the case of a
taxpayer who does not pay such tax on a
regular basis, regardless of its purpose, as
well as on services rendered abroad, and the
tax shall be attributed to the state where the
domicile or the establishment of the recipient
of the product, good, or service is located;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following:
IX – it shall also be levied:
b) on the total value of the transaction, when
goods are supplied with services not
included in the power to tax of the
municipalities;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following:
X – it shall not be levied:
a) on transactions involving goods to be
shipped abroad, nor on services to be
delivered to parties abroad, and tax charges
and credits in preceding transactions
involving such goods or services shall
continue in effect;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following:
X – it shall not be levied:
b) on transactions transferring petroleum,
including lubricants, liquid and gaseous fuels
derived therefrom, and electric energy to
other states;
c) on gold, when defined in law as a financial
asset or an exchange instrument;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following:
X – it shall not be levied:
d) on communications services in the modes
of sound broadcasting and sound and image
broadcasting which are available for
reception by the public free of charge;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following:
XI – its assessment basis shall not include
the amount of the tax on industrialized
products when the transaction carried out
between taxpayers and concerning a product
intended for industrialization or sale
represents a taxable event for both taxes;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following :
XII – A supplementary law shall:
a) define its taxpayers;
b) provide for tax substitution;
c) regulate the system of tax compensation;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following:
XII – A supplementary law shall:
d) establish, for purposes of collection of the
tax and definition of the responsible
establishment,
the
location
of
the
transactions concerning the circulation of
goods and the rendering of services;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following:
XII – A supplementary law shall:
e) exclude from levy of the tax, in exports to
other countries, services and other products
other than those mentioned in item X, a;
f) provide for the event of maintenance of a
credit for services and goods remitted to
another state and exported to other
countries;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following:
XII – A supplementary law shall:
g) regulate the manner in which, through
deliberation by the states and the Federal
District, tax exemptions, incentives and
benefits shall be granted and revoked;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following:
XII – A supplementary law shall:
h) define the fuels and lubricants on which
this tax shall be levied only once, regardless
of its purpose, in which case the provision of
item X, b, shall not apply;
Paragraph 2, Art. 155, CF
03:35:57
The circulation of goods tax shall observe
the following:
XII – A supplementary law shall:
i) stipulate the assessment basis so as to
include the amount of the tax, also in the
event of importation of goods, products, or
services from abroad.
Paragraph 2, Art. 155, CF
03:35:57
In the event of item XII, h, the following shall
apply:
I – in transactions involving lubricants and
petroleum-derived fuels, the tax shall be
attributed to the state where consumption
takes place;
Paragraph 4, Art. 155, CF
03:35:57
In the event of item XII, h, the following shall
apply:
III – in interstate transactions involving
natural gas and its by-products, and
lubricants and fuels not included in item I of
this paragraph, when it is not incumbent
upon the recipient to pay the tax, such tax
shall be attributed to the state of origin;
Paragraph 4, Art. 155, CF
03:35:57
In the event of item XII, h, the following shall
apply:
IV – the tax rates shall be defined by joint
decision of states and the Federal District,
under the terms of paragraph 2, XII, g, with
due regard for the following:
a) they shall be uniform throughout the
national territory, and they may be different
for each product;
Paragraph 4, Art. 155, CF
03:35:57
In the event of item XII, h, the following shall
apply:
IV – the tax rates shall be defined by joint
decision of states and the Federal District,
under the terms of paragraph 2, XII, g, with
due regard for the following:
a) they shall be uniform throughout the
national territory, and they may be different
for each product;
Paragraph 4, Art. 155, CF
03:35:57
b) they may be specific, according to the unit
of measurement adopted, or ad valorem,
levied on the value of the transaction or on
the price the product or a similar product
would be sold for in free competition
circumstances;
Paragraph 4, Art. 155, CF
03:35:57
In the event of item XII, h, the following shall
apply:
IV – the tax rates shall be defined by joint
decision of states and the Federal District,
under the terms of paragraph 2, XII, g, with
due regard for the following:
c) they may be lowered and restored to their
original levels, and the provision of article
150, III, b, shall not apply there to.
Paragraph 4, Art. 155, CF
03:35:57
The rules for the enforcement of the
provisions of paragraph 4, including those
concerning the collection and assignment of
the tax, shall be established by joint decision
of states and the Federal District, under the
terms of paragraph 2, XII, g.
Paragraph 5, Art. 155, CF
03:35:57
Municipal Taxes
03:35:57
The municipalities shall have the competence
to institute taxes on:
I – urban buildings and urban land property;
Art. 156, CF
03:35:57
The municipalities shall have the competence
to institute taxes on:
II – inter vivos transfer, on any account, by
onerous acts, of real property, by nature or
physical accession, and of real rights to
property, except for real security, as well as
the assignment of rights to the purchase
there of;
Art. 156, CF
03:35:57
The municipalities shall have the competence
to institute taxes on:
III – services of any nature not included in
article 155, II, as defined in a supplementary
law;
Art. 156, CF
03:35:57
The tax of service set forth in item II:
I – shall not be levied on the transfer of
goods or rights incorporated into the assets
of a corporate body to pay up its capital, nor
on the transfer of goods or rights resulting
from the merger, incorporation, division or
dissolution of corporate bodies, unless, in
such cases, the predominant activity of the
purchaser is the purchase and sale of such
goods or rights, the lease of real property or
leasing;
Paragraph 2Art. 156, CF
03:35:57
The tax of service set forth in item II:
II – is within the competence of the
municipality where the property is located.
Paragraph 2Art. 156, CF
03:35:57
As regards the tax of service established in
item III of the head paragraph of this article, a
supplementary law shall:
I – establish its maximum and minimum
rates; (maximum 5% - LC 116)
II – exclude exportations of services to other
countries from levy of the said tax;
III – regulate the manner and conditions for
the granting and revocation of fiscal
exemptions, incentives, and benefits.
Paragraph 2Art. 156, CF
03:35:57
THE GENERAL PRINCIPLES
OF ECONOMIC ACTIVITY
deposits, under exploitation
or not, and other mineral
resources
03:35:57
Mineral deposits, under exploitation or not,
and other mineral resources and the
hydraulic energy potentials form, for the
purpose of exploitation or use, a property
separate from that of the soil and belong to
the Union, the concessionaire being
guaranteed the ownership of the mined
product.
Art. 176, CF
03:35:57
The prospecting and mining of mineral resources
and the utilization of the potentials mentioned in the
head paragraph of this article may only take place
with authorization or concession by the Union, in the
national interest, by Brazilians or by a company
organized under Brazilian laws and having its headoffice and management in Brazil, in the manner set
forth by law, which law shall establish specific
conditions when such activities are to be conducted
in the boundary zone or on Indian lands.
Paragraph 1, Art. 176, CF
03:35:57
The owner of the soil is ensured of
participation in the results of the mining
operation, in the manner and amount as the
law shall establish.
Paragraph 2, Art. 176, CF
03:35:57
Authorization for prospecting shall always be
for a set period of time and the authorization
and concession set forth in this article may
not be assigned or transferred, either in full
or in part, without the prior consent of the
conceding authority.
Paragraph 3, Art. 176, CF
03:35:57
Exploitation of a renewable energy potential
of small capacity shall not require an
authorization or concession.
Paragraph 4, Art. 176, CF
03:35:57
The following are the monopoly of the Union:
I – prospecting and exploitation of deposits of
petroleum and natural gas and of other fluid
hydrocarbons;
II – refining of domestic or foreign petroleum;
III – import and export of the products and basic byproducts resulting from the activities set forth in the
preceding items;
Art. 177, CF
03:35:57
The following are the monopoly of the Union:
IV – ocean transportation of crude petroleum of
domestic origin or of basic petroleum by-products
produced in the country, as well as pipeline
transportation of crude petroleum, its by-products
and natural gas of any origin;
Art. 177, CF
03:35:57
The following are the monopoly of the Union:
V – prospecting, mining, enrichment, reprocessing,
industrialization, and trading of nuclear mineral ores
and minerals and their by-products, with the
exception of radioisotopes whose production, sale,
and use may be authorized under a permission, in
accordance with letters b and c of item XXIII of the
head paragraph of article 21 of this Federal
Constitution.
Art. 177, CF
03:35:57
The Union may contract with state-owned or with
private enterprises for the execution of the activities
provided for in items I through IV of this article, with
due regard for the conditions set forth by law.
Paragraph 1, Art. 177, CF
03:35:57
The law referred to in paragraph 1 shall provide for:
I – a guarantee of supply of petroleum products in
the whole national territory;
II – the conditions of contracting;
III – the structure and duties of the regulatory agency
of the monopoly of the Union.
Paragraph 2, Art. 177, CF
03:35:57
The law shall provide with respect to the
transportation and use of radioactive materials
within the national territory.
Paragraph 3, Art. 177, CF
03:35:57
The law which institutes a contribution tax of
intervention in the economic domain regarding
activities of importation or sale of petroleum and
petroleum products, natural gas and its by-products,
and fuel alcohol shall include the following
requirements:
Paragraph 4, Art. 177, CF
03:35:57
I – the contribution rate may be:
a) different for each product or use;
b) lowered and restored to its original level by an act
of the Executive Branch, and the provision of Article
150, III, b (in the same fiscal year), shall not apply
there to;
Paragraph 4, Art. 177, CF
03:35:57
II – the proceeds from the collection of the
contribution shall be allocated:
a) to the payment of price or transportation
subsidies for fuel alcohol, natural gas and its byproducts, and petroleum products;
b) to the financing of environmental projects related
to the petroleum and gas industry;
c) to the financing of transportation infrastructure
programs.
Paragraph 4, Art. 177, CF
03:35:57
II – the proceeds from the collection of the
contribution shall be allocated:
a) to the payment of price or transportation
subsidies for fuel alcohol, natural gas and its byproducts, and petroleum products;
b) to the financing of environmental projects related
to the petroleum and gas industry;
c) to the financing of transportation infrastructure
programs.
Paragraph 4, Art. 177, CF
03:35:57
SOCIAL SECURITY
GENERAL PROVISIONS
03:35:57
Social welfare comprises an integrated whole
of actions initiated by the Government and by
society, with the purpose of ensuring the
rights to health, social security and
assistance.
Art. 194, CF
03:35:57
It is incumbent upon the Government, as
provided by law, to organize social welfare,
based on the following objectives:
I – universality of coverage and service;
II – uniformity and equivalence of benefits
and services for urban and rural populations;
Sole paragraph , Art. 194, CF
03:35:57
It is incumbent upon the Government, as
provided by law, to organize social welfare,
based on the following objectives:
III – selectivity and distributiveness in the
provision of benefits and services;
IV – irreducibility of the value of the benefits;
Sole paragraph , Art. 194, CF
03:35:57
It is incumbent upon the Government, as
provided by law, to organize social welfare,
based on the following objectives:
V – equitable participation in funding;
VI – diversity of the financing basis;
Sole paragraph , Art. 194, CF
03:35:57
It is incumbent upon the Government, as
provided by law, to organize social welfare,
based on the following objectives:
VII – democratic and decentralized character
of administration, by means of a quadripartite
management, with the participation of
workers, employers, retirees, and the
Government in the collegiate bodies.
Sole paragraph , Art. 194, CF
03:35:57
Social welfare shall be financed by all of
society, either directly or indirectly, as
provided by law, with funds coming from the
budgets of the Union, the states, the Federal
District and the municipalities and from the
following welfare contributions:
Art. 195, CF
03:35:57
I – of employers, companies, and entities
defined by law as being comparable to
companies, assessed on:
a) the payroll and other labour earnings paid
or credited, on any account, to individuals
who render services to them, even when
there is no employment bond;
b) income or revenues;
c) profits;
Art. 195, CF
03:35:57
II – of workers and other persons insured by
social security, no contribution being
assessed on retirement pensions and other
pensions granted by the general social
security scheme referred to in article 201;
Art. 195, CF
03:35:57
III – on the revenues of lotteries;
IV – of importers of goods or services from
other countries, or of other parties defined by
law as being comparable to such importers.
Art. 195, CF
03:35:57
The law may institute other sources intended
to guarantee the maintenance or expansion
of social welfare, with due regard to the
provisions of article 154, I.
Paragraph 4, Art. 195, CF
03:35:57
The welfare contributions set forth in item I of
the head paragraph of this article may have
differentiated rates or assessment bases,
according to the economic activity, the
intensive use of labour, the size of the
company, or the structural situation of the
labour market.
Paragraph 9, Art. 195, CF
03:35:57
The law shall define the sectors of economic
activity for which the contributions stipulated
under the terms of items I, b; and IV of the
head paragraph, shall be non-cumulative.
Paragraph 12, Art. 195, CF
03:35:57
The provision of paragraph 12 shall also
apply in the case of gradual replacement,
either total ou partial, of the contribution
stipulated under the terms of item I, a, by the
contribution due on income or revenues.
Paragraph 13, Art. 195, CF
03:35:57
Federal Taxes
Relevant for O & G
03:35:57
IRPJ – Company income tax. Applies to
company profits
CSLL – Company contribution on net profit
IOF – Tax on financial operations. Applies to
loans,
financing
and
other
financial
operations, and shares
03:35:57
IPI – Tax on industrialized products. Charged
to industries
Cide – Contribution for intervention in the
economic domain. Applies to petroleum and
natural gas and their derivatives, and upon
fuel alcohol.
03:35:57
Cofins – Contribution for the financing of
social security. Charged to companies
PIS/Pasep – Programs for social integration
and formation of a public servant’s
patrimony. Charged to companies
03:35:57
INSS – National Social Security Institute.
Percentage of each employee’s salary
charged to a company and the employee for
health care. The value of the contribution
varies according to the range of activities
FGTS – Time of service guarantee fund.
Percentage of the salary of each employee
who has signed a work logbook, deposited
by the company
03:35:57
IRPJ
Corporate income tax is charged on net
taxable income.
The main methods to calculate corporate
income tax on profits foreseen by legislation
are: actual profit and presumed profit.
03:35:57
IRPJ
Actual profit system
It applies at a basic rate of 15%, plus a surtax
of 10% on annual income that exceeds R$
240,000.00 (U$120.000,00) per year.
03:35:57
IRPJ
Actual profit system
Under this system, net taxable income
corresponds to the company’s net book
profit, with certain inclusions and deductions
provided by the Brazilian legislation.
03:35:57
IRPJ
Actual profit system
Usually deductible expenses are all items
related to the ordinary business of a
company and necessary to maintain its
source of income.
03:35:57
IRPJ
Presumed profit system
Brazilian companies may elect to presumed
net profits, provided they:
do not have total revenues in the preceding
year higher than R$ 48 million (U$24 million);
are not financial institutions;
03:35:57
IRPJ
Presumed profit system
Brazilian companies may elect to presumed
net profits, provided they:
do not earn foreign profits, income or gains;
do not qualify for an exemption or reduction
of the corporate income tax.
03:35:57
IRPJ
Presumed profit system
the percentage for the revenues derived from
the sale of products is 8%, while the
percentage for service revenue is 32%.
The choice is made annually, at the
beginning of the year and may be renewed
every year.
03:35:57
IRPJ
from the perspective of income tax, there are
no specific provisions for companies
involved in Oil & Gas industry
03:35:57
CSLL
created to fund social and welfare programs
and is paid in addition to the corporate
income tax.
is a tax levied on net taxable income and is
applied at a rate of 9%.
CSLL’s tax base is similar to the tax base of
the corporate income tax.
03:35:57
IOF
Focuses on:
Creddit for companies engaged in activities to
provide cumulative and continuous advisory
services credit, marketing, credit management, risk
selection, management of accounts payable and
receivable, purchase of receivables resulting from
sales market in the long term or provision of services
(factoring);
03:35:57
IOF
Credit operations for financial institutions;
Between legal entities or between legal
entities and individuals;
Foreign exchange transactions;
Insurance operations by insurers;
03:35:57
IOF
Transactions in securities or securities;
Operations with gold as a financial asset or
exchange instrument.
Between legal entities or between legal
entities and individuals;
Foreign exchange transactions;
03:35:57
IOF
Insurance operations by insurers;
Transactions in securities or securities;
Operations with gold as a financial asset or
exchange instrument.
There are no specific provisions for
companies involved in Oil & Gas industry
03:35:57
IPI
Are immune from the tax:
....
Electric power, petroleum, fuels and minerals
in the country
03:35:57
IPI
Is defined as “petroleum products” from the
processing oil, through the overall process
generally known as refining chemically
classified as hydrocarbons
03:35:57
CIDE
The Contribution of Intervention in the
Economic levied on the importation and
marketing of petroleum and its derivatives,
natural gas and their derivatives, and ethyl
alcohol fuel (CIDE), referred to the arts. 149
and 177 of the Constitution.
03:35:57
CIDE
The Cide will have on imports and the
domestic market the following specific rates:
Gasoline, R $ 860.00 (U$ 430.00) per m³;
(U$ 1.00 = R$ 2.00)
Diesel, R $ 390.00 (U$ 195.00) per m³;
03:35:57
CIDE
The Cide will have on imports and the
domestic market the following specific rates:
Aviation fuel, R$ 92.10 (U$ 46.05) per m³;
Other kerosene, R$ 92.10 (U$ 46.05) per m³;
03:35:57
CIDE
The Cide will have on imports and the
domestic market the following specific rates:
Fuel oils with high sulfur content, R$ 40.90
(U$ 20.45) per ton;
Fuel oils with low sulfur, R$ 40.90 (U$ 20.45)
per ton;
03:35:57
CIDE
The Cide will have on imports and the
domestic market the following specific rates:
Liquefied petroleum gas, R$ 250.00
(U$125.00) per ton;
Ethanol fuel, R$ 37.20 (U$ 18.60) per m³.
03:35:57
CIDE
Act of the Executive Branch can lowered and
restored to its original level
03:35:57
CIDE
Decree 5060 of April 30, 2004
The rates of CIDE are reduced to:
R$ 91.00 (U$ 45.50) per m³ of gasoline and its
currents, and
R$ 47.00 (U$ 23.50) per per m³ of diesel and
its currents. (Text given by Decree No. 7591 of October 28, 2011)
03:35:57
CIDE
Are reduced to zero tax rates apply to:
Aviation fuel, other kerosene, fuel oils with
high sulfur content, fuel oils with low sulfur,
liquefied petroleum gas, including that
derived from natural gas and naphtha, and
ethanol fuel. (Decree No. 7591)
03:35:57
Gasoline and diesel will be more expensive in
refineries. Petrobras recently announced an
adjustment of 7.83% to 3.94% for gasoline and diesel.
The increase, however, will not impact the price at
the pumps because the economic team has zeroed
the rate of CIDE (Contribution for Intervention in
Economic Domain) for the two fuels.
In a statement, the Ministry of Finance announced a
reduction of tax to prevent the increase to reach
consumers and affect inflation. The folder did not
report the impact of release on the public coffers
Source: Agência Brasil, 22, jun, 2012
03:35:57
PIS/Pasep and Cofins
Charged on revenues, on a monthly basis,
under two regimes:
Cumulative
non-cumulative
0.65%
<<
PIS/Pasep
>>
1.65%
3.00%
<<
Cofins
>>
7.60%
03:35:57
PIS/Pasep and Cofins
The PIS/Pasep and
regime is mandatory
to the actual profit
corporate income
exceptions.
03:35:57
Cofins non-cumulative
for companies subject
method of computing
taxes, with a few
PIS/Pasep and Cofins
Exemple of cumulative system still applies:
For certain entities such as companies under
the presumed profit system or to revenues
deriving from telecommunications, transport
and software development services.
03:35:57
PIS/Pasep and Cofins
Under the non-cumulative system, taxpayers
may generally recognize PIS and COFINS
credits corresponding to 1.65% and 7.60% of
certain inputs which may be also used to
offset future PIS/Pasep and Cofins or other
federal taxes due.
03:35:57
PIS/Pasep and Cofins
The most important products derived from oil
and gas are subject to a tax concentration
special regime of PIS and Cofins.
Under this special regime, also known as
“PIS/Cofins Monofásico”, the contribuitions
are levied at specific rates on the sale of
certain products derived from oil.
03:35:57
PIS/Pasep and Cofins
Under the regime "PIS/Cofins Monofásico“,
The calculation and payment of social
contributions are concentrate in one specific
taxpayer within the operational chain.
03:35:57
PIS/Pasep and Cofins
If the calculation is made "ad valorem" shall
apply the following rates from PIS/Pasep and
Cofins, respectively:
5.08% and 23.44%, levied on gross revenue from
the sale of gasoline and its currents, except AVGAS;
4.21% and 19.42%, levied on gross revenue from
the sale of diesel and its currents;
03:35:57
PIS/Pasep and Cofins
If the calculation is made "ad valorem" shall
apply the following rates from PIS/Pasep and
Cofins, respectively:
10.20% and 47.40% levied on gross revenue
from the sale of liquefied petroleum gas LPG derived from oil and natural gas;
03:35:57
PIS/Pasep and Cofins
If the calculation is optionally done "ad rem"
shall apply the following rates from
PIS/Pasep and Cofins, respectively:
I - R$ 46,58 e R$ 215,02 per cubic meter of
gasolines and its currents, except AVGAS;
03:35:57
PIS/Pasep and Cofins
If the calculation is made "ad rem" shall
apply the following rates from PIS/Pasep and
Cofins, respectively:
R$ 26.36 and R$ 121.64 per cubic meter of
diesel and its currents;
R$ 29.85 and R$ 137.85 per tonne of liquefied
petroleum gas (LPG) and
03:35:57
PIS/Pasep and Cofins
If the calculation is made "ad rem" shall
apply the following rates from PIS/Pasep and
Cofins, respectively:
R$ 12.69 and R$ 58.51 per cubic meter of
aviation fuel.
03:35:57
INSS
the employer have to pay monthly to the
INSS the rate of 20% applied on gross
salaries without limits.
03:35:57
INSS
Still need to pay additional insurance from
accidents at work and contributions to other
government institutions, such as the National
Commercial Learning (Senac), Social Service
Trade (SESC) and Service Support for Micro
and Small Enterprises (Sebrae)
The total to be collected for social security is
between 27% and 29% of total payroll
03:35:57
FGTS
Monthly, the employer shall deposit the
equivalent of 8% of total salary of each
employee for FGTS purposes.
This amount is deposited in each employee’s
name in a separate.
03:35:57
FGTS
the employee may only use this fund in
special circumstances, such as retirement or
dismissal without just cause.
In any case, the employer must pay the
employee 40% of the actual balance of the
FGTS account as well as an additional of 10%
to the federal government.
03:35:57
States & Municipal
Taxes
(Relevant for O & G)
03:35:57
ICMS
A state tax levied on the import of products
and transactions involving the movement of
goods,
inter-municipal
and
interstate
transportation services and communication
services.
Tax rates may be selective, based on the
essentiality of the goods or services;
03:35:57
ICMS
When transactions involve two different
states, the interstate rates are:
7% when the purchaser is located in the
states of the North, Northeast and Center
West regions or in the state of Espírito Santo;
12% for purchases located in the South and
Southeast regions.
03:35:57
ICMS
When transactions involve two different
states, the interstate rates are:
The difference between the local
interstate rate is to the state of taxpayer
03:35:57
and
ICMS
Rates may vary depending on the product,
taking values as 17%, 25% or other
Usually, ICMS taxpayers are entitled to a tax
credit in the amount of the tax paid in the
previous transaction and may be offset
against future ICMS payables.
03:35:57
ICMS
There are a special tax treatments in regard
to ICMS for activities related to the Oil & Gas
industry.
the interstate operations involving sale of oil,
natural gas and biofuel should be assessed
by ICMS only in the State where the product
is consumed.
03:35:57
ICMS
Downstream-related activities are usually
subject to a tax substitution/concentration
system where oil refineries are supposed to
compute and collect the ICMS provided in the
future operations.
03:35:57
ISS
ISS is a municipal tax levied on the revenues
derived from the provision of services.
The services subject to the ISS are listed in
Federal Suplementary Law (LC nº 116/03).
03:35:57
ISS
The tax base is the price of the service.
The rates vary from 2% to 5%, according to
the municipality where the service provider is
located, where the service is provided and
the type of the service.
03:35:57
Taxation of Oil, Natural
Gas and Minerals
03:35:57
Industry activities in exploration and
production of Oil
Exploration
03:35:57
Development
Commercial
Production
Exploration
And
Development
03:35:57
03:35:57
EXPLORATION and DEVELOPMENT
In these stages of oil production, a large amount
of resources are necessary because the
activities are quite complex, requiring expensive
equipment and considerable time is required to
perform them.
Among the resources spent, a portion is
composed of taxes paid by suppliers of products
and services. Taxes as IPI, PIS/Pasep, Cofins,
ICMS, ISS and others.
03:35:57
As a part of these taxes are entitled to credit in
the stage of commercial exploitation, the
government has established certain procedures
that suspend the collection of some of these
taxes, making acquisitions less expensive and
reducing the need for resources.
Among the special regimes designed with this
feature there is a special customs regime of
export and import of goods intended for
research and exploitation of deposits of oil and
natural gas (Repetro).
03:35:57
Repetro
The Repetro applies to the following items:
Vessels intended to research and production of
petroleum or natural gas and for the support and
storage in these activities.
Electrical machinery, apparatus, instruments,
tools and equipment for the research and
production of petroleum or natural gas.
03:35:57
The Repetro applies to the following items:
Drilling rigs and production of oil or natural gas,
as well as for support in these activities.
Vehicles fitted with machinery, apparatus,
instruments, tools and equipment for the
research and production of petroleum or natural
gas.
Structures
platforms.
03:35:57
specially
designed
to
support
The Repetro can be applied also to machines,
apparatus, instruments, tools, equipment and
other pieces or parts, including spares, intended
to:
I - ensure the operability of goods admitted in
Repetro;
II - rescue, accident prevention and fire fighting,
and
III - protection of the environment.
03:35:57
There are other special tax regimes. Among
them:
Repenec
Is Repenec's beneficiary the entity that has
approved a project for deployment of
infrastructure in the North, Northeast and
Midwest, in petroleum refining, petrochemical
and production of ammonia and urea from
natural gas, for the incorporation of their fixed
assets..
03:35:57
Is Repenec's beneficiary the entity that has
approved a project for deployment of
infrastructure in the North, Northeast and
Midwest, in petroleum refining, petrochemical
and production of ammonia and urea from
natural gas, for the incorporation of their fixed
assets.
03:35:57
Incumbent upon the Ministry of Mines and
Energy to approve project and definition, by
decree, the projects that fall within the
provisions.
Repenec may be applied to projects registered
until 31 december 2010 and approved by June
30, 2011.
03:35:57
In case of domestic sale or importation of
machinery,
apparatus,
instruments
and
equipment, new, and building materials for use
or incorporation in the works shall be
suspended:
I - Contribution of the PIS/Pasep and COFINS on
revenue from corporate seller, when the
acquisition is effected by a legal beneficiary of
Repenec;
03:35:57
In case of domestic sale or importation of
machinery,
apparatus,
instruments
and
equipment, new, and building materials for use
or incorporation in the works shall be
suspended:
II - the requirement of the Contribution to
PIS/Pasep-Import and Cofins-Import, when the
importation is effected by a legal beneficiary of
Repenec;
03:35:57
In case of domestic sale or importation of
machinery,
apparatus,
instruments
and
equipment, new, and building materials for use
or incorporation in the works shall be
suspended:
III - Excise Tax - IPI output in the industrial or
similar, when the acquisition is made in the
internal market by industrial establishment of a
legal entity receiving the Repenec;
03:35:57
In case of domestic sale or importation of
machinery,
apparatus,
instruments
and
equipment, new, and building materials for use
or incorporation in the works shall be
suspended:
IV - the IPI on imports when the import is
performed by an industrial establishment of a
legal beneficiary of Repenec;
V - Import Duty when goods or building materials
are imported by a legal beneficiary of Repenec.
03:35:57
Another regime
REPORTO
Tax Incentive Regime for Modernization and
Expansion of the Port Structure
03:35:57
Will be made ​with Suspension of the Tax on
Industrialized Products - IPI, Contribution to PIS/
PASEP, COFINS and, when appropriate, Import
Tax - II, sales and imports of machinery,
equipment, spare parts and other goods on the
domestic market, when purchased and imported
directly by the beneficiaries of REPORTO and
intended for its fixed assets for the exclusive use
in performing services:
03:35:57
I - loading, unloading, storage and handling of
goods and products;
II - additional operational support systems;
III - environmental protection;
IV - security systems and monitoring the flow of
people, goods, products, vehicles and vessels;
V - dredging; VI - education and training of
workers, including the establishment of training
centers Profissional.
03:35:57
For a period of 10 years from the effective date
of Law in 9432, to January 8, 1997, will not apply
the Additional Freight for the Renewal of the
Merchant Marine - AFRMM on goods whose
origin or whose destination is located in North
Port and Northeast, except for single-hull
vessels with double bottom for the transport of
fuel, whose term is 25 years
03:35:57
THE END
03:35:57