10/22/2008 10h25
SP reduces taxes with an eye on the pre-salt
Valor Econômico 10/22/2008
The State of São Paulo entered the dispute to attract investments for oil and gas exportation and production, which includes oil of the pre-salt layer. A decree foresees the application of a tax benefit that, in the practice, results in a reduced collection of the Tax of Merchandises and Services Circulation (ICMS). The importation of goods in temporary admission for installations of gas and oil production will have 7.5% tax burden, with the use of credits, or 3% without credits. For goods destined to the exploration, importation will be taxed at 1.5%, without credit appropriation. The reductions implemented by São Paulo have been authorized since last year's November by the Agreement number 130, of the National Council of Public Finance Policy (Confaz), but they were regulated this week and will be in effect starting in the beginning of 2009. The benefits will be valid until December of 2020. The incentives will be applied to goods included in the agreement. Decree number 53.574/2008 also establishes the reduction of the ICMS for operations with goods and merchandises that will be later destined to foreign manufacturers and, in a following stage, imported as temporary admission for the exportation or production of oil and natural gas. The rule the State of São Paulo also says that, in case of oil and gas exportation, the ICMS rate of 1.5% established by the decree can be converted in exemption, in case it is verified that another State grants a more favorable tax benefit. In a note, the coordinator of tax management of the Secretariat of Finance of São Paulo, Otávio Fineis, remembers that the São Paulo legislation already granted some incentives for the oil industry and, before joining the agreement, it was necessary to evaluate the impact of the changes both for the companies of the sector and for the tax renunciation of the State. Fineis also says that the possible substitution of the reduced tax burden of ICMS for exemption should be regulated in the beginning of November. Any benefit, however, should be implemented in a sectorial way and not in a way to benefit one contributor or another, he says.
