Tax Exemption: São Paulo gives incentive to the oil and gas industry



Governor Márcio França signed this Friday, June 29, a decree that aims to give greater competitiveness to the São Paulo industry of oil and natural gas. From now on, the goods and merchandise of the sector produced in São Paulo and sold to other states will also be exempt from ICMS.

The benefit will be for the items incorporated into the goods that guarantee the operationality of the products used in the exploration and production of oil and gas. The tools used in maintenance also receive the same incentive.

“We have corrected this distortion in the sector’s taxation to strengthen the São Paulo oil and gas industry, responsible for more than 40% of the national production of parts and pieces,” said Energy and Mining Secretary João Carlos Meirelles.

The import and acquisition operations in the domestic market of permanent goods or merchandise invested in oil and gas exploration and production activities had already a tax burden equivalent to 3% with the publication of state decree 63.208. The measure is in line with Repetro-Sped, published in December 2017 by the federal government.

The products sold by foreign companies have not undergone any change with the decree.

“This is an important measure to improve the tax treatment related to the oil and natural gas exploration and production industry,” says Finance Secretary Luiz Claudio Rodrigues de Carvalho. “In addition, this action encourages an important segment of the economy of São Paulo and brings direct benefits to the entire chain,” he continued.

From now on, equipment, machinery, accessories, appliances, parts, materials and other goods used as inputs in the construction and assembly of floating systems and production or drilling platforms, as well as their units to be processed, industrialized or assembled in industrial units, are exempt from ICMS. Hulls and modules, when used as inputs in the construction, repair and assembly of floating systems and production or drilling rigs, will also not pay the tax.

“São Paulo has many vocations and a new vocation is now the oil and gas sector that already has the second largest exploration potential in Brazil,” said the Executive Secretary of Exploration and Production of IBP – Brazilian Institute of Petroleum , Gas and Biofuels.

When there is no definition of the block or field of production to which the goods will be destined, and federal legislation allows for storage in a non-bonded warehouse, the ICMS release is suspended at the moment when the goods leave the warehouse. Its economic use.

“This is a great opportunity to foster São Paulo’s oil value chain,” said Fiesp’s acting president, José Roberto Roriz.

The tax will be paid only once, even if the good leaves the national territory and returns later without any alteration or improvement, or in subsequent internal or interstate operations.

The tax incentive may be used for companies holding contracts under the concession regime, onerous assignment, sharing agreement, service providers and importers.

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