Programa de Parcerias de InvestimentosPPI

23 de outubro de 2017

Repetro approved for Brazil’s parliament commission

Brazil’s Federal Government expects to approve text until next week, when Pre-Salt public sales occur

The Provisional Measure (MP) 795/2017 (Repetro) was approved today (19), by  a joint committee of Brazil’s parliament. The MP improves legislation taxes applied to oil companies by establishing clear taxation rules, ensuring legal security to companies and tax administration, and encouraging investments in the oil industry.

Two rounds of public sales for production-sharing of Pre-salt are scheduled for next Friday (27) in Rio de Janeiro. The government's intention is to approve the text in Brazil's parliament plenary before that date.

As part of measures adopted by the country's Federal Government to improve business environment in oil and gas sector, in August of this year, Decree 9.128/17 was also issued, which extends Repetro's term from 2020 to 2040. Repetro is a special customs regime of export and import that grants suspension of federal taxes for equipment used in research and mining of oil and natural gas deposits.

Deductions

The MP changes several tax legislation points. It establishes that from 2018 onwards, companies will be able to deduct amounts invested in the exploration and production of oil and gas in determining the real profit and the calculation base of the Social Contribution on Net Income (CSLL). In practice, it reduces the amounts that the company will pay CSLL and Corporate Income Tax (IRPJ).

According to the text, the expenses with the purchase of machinery and equipment are also deductible from IRPJ and CSLL.

Import

The MP also suspends the payment of the Import Tax (II), the Tax on Industrialized Products (IPI) and the contribution to PIS/Cofins on imported goods that are permanently in the country related to this industry.

The Brazilian Federal Revenue will define the relation of the goods that will have the taxes suspended. After five years, the suspension may be converted into exemption (for Import Tax and IPI) or at a zero rate (for PIS/Cofins).

The special regime will be applied from 2018. The suspensions would only cover the generating facts occurred until 31 July 2022, but the rapporteur changed the deadline to 31 December 2040 – considering that the Decree that extends the Repetro also expires in 2040. The special regime is a significant change in the taxation of the goods production chain for the oil and gas industry. Until recently, imported goods would not remain permanently in national territory without paying tributes.

The measures adopted by the Federal Government which also include changes in the rules on the Petrobras' participation in Pre-salt exploration and modernization of local content standards, have already shown results. In public sale held last month, the dispute over maritime and land blocks generated a profit of R $3.8 billion to the public coffers. “Record collection”, said the Minister of the General Secretariat of the Presidency of the Republic, Moreira Franco, responsible for the Investment Partnerships Program (PPI).

Source: PPI

Leia outras notícias