Petrobras – Legal proceeding on deductibility of expenses related to Petros Plan renegotiation

Rio de Janeiro, June 30, 2017 – Petróleo Brasileiro S.A. – Petrobras, pursuant to the market disclosure  of June 1, 2017, informs that the sentence by the court of first instance published on May 19, 2017 was confirmed in its entirety on June 20, 2017, through  a decision in a motion for clarification. This sentence recognizes the deductibility of expenses related to the renegotiation of the Petros Plan pension fund in the assessment of Income Tax for Legal Entities (Imposto de Renda da Pessoa Jurídica, IRPJ) and Social Contribution on Net Profits (Contribuição Social sobre Lucro Líquido, CSLL). However, such deductibility is limited to 20% of the employee payroll and the remuneration of officers associated to the Plan.

After the examination of the grounds for the decisions, the company decided that the expectation of loss in this lawsuit should be changed to probable.

The company is evaluating the option to settle the debt within the framework of the Special Program for Tax Regularization (Programa Especial de Regularização Tributária – PERT), established by Provisional Measure no. 783, of May 31, 2017, whose deadline for enrollment is August 31, 2017. The analysis will be submitted for approval to the competent authorities.

The current estimate of negative impact on the consolidated gross profit for the second quarter of 2017 is to the order of R$ 6.5 billion.

The information in connection with this process is incorporated into the financial statements for the first quarter of 2017, in explanatory note No. 28 (Provisions for legal proceedings – item 28.3 – Contingent liabilities).

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