On March 1, 2023, Provisional Measure No. 1,163/2023 (“MP 1,163/23”) was published, which again changed the taxation of fuels. In practice, although the aforementioned MP mentions the reduction of taxation, the result shown is the reestablishment of partial taxation on certain fuels, in addition to the establishment of a rate of 9.2% on the export of crude oil and bituminous minerals until June 30, 2023.
The impacts on the sector will be immediate, since the principle of prior notice does not apply to export tax in export transactions. Furthermore, it is worth reflecting on the constitutionality of such a charge, given the notably revenue-generating function that was attributed to the aforementioned tax by the current Government, whose function and materiality is predominantly extra-fiscal.
In addition, the MP changed the rates of the following contributions: PIS/Pasep, COFINS, PIS/Pasep – Import and CIDE – Fuels. See below for details of the changes regarding the taxation of these contributions: i.) Maintenance of zero PIS/COFINS and PIS/COFINS – Import rate for aviation kerosene and natural gas for vehicles until 06/30/2023; ii.) Maintenance of zero CIDE rate – Fuels until 06/30/2023; iii.) Reestablishment (re-taxation) of gasoline and alcohol, with the resumption of taxation “ad rem” of PIS/COFINS; and, finally, iv.) suspended, until 12/31/2023, the payment of PIS/COFINS and PIS/COFINS-Import on the acquisition or import of oil by refineries for fuel production. In this case, the MP provides that the suspension will be converted to a zero rate, after the oil is used for fuel production.
Among these rule changes, the re-taxation of gasoline and ethanol stood out in the market, as the result will directly reflect their prices. The PIS charge on gasoline will be R$$ 83.8380 per cubic meter (approximately R$$ 0.083/liter) and the COFINS charge will be R$$ 386.160 per cubic meter (or R$$ 0.386/liter). Thus, the total charge per liter of gasoline will be approximately R$$ 0.47.
In the case of alcohol, taxation is different for each member of the production chain. Producers and importers pay R$ 3.60 per cubic meter (R$ 0.0036/liter) of PIS and R$ 16.40 per cubic meter of COFINS (R$ 0.0164/liter), with an approximate burden of R$ 0.02 per liter of alcohol.
For cooperatives, the charge will be R$ 1.64 per cubic meter for PIS (0.00164/liter) and R$ 7.53 per cubic meter for COFINS (R$ 0.00753/liter), with a charge of R$ 0.01 per liter. Sales made by distributors are exempt from contributions.
Furthermore, with regard to the context of the taxation of gasoline and alcohol, we understand that the principle of 90-day prior notice should be applied, so that the incidence “ad rem” (charging for a fixed amount per cubic meter) could only occur from May 31, 2023, according to the understanding already expressed by the Supreme Federal Court, in topic no. 278 (RE no. 568503).
We emphasize that the two fuels (gasoline and alcohol) were exempt from the aforementioned contributions until February 28, 2023, by force of Provisional Measure No. 1,157/2023, previously issued on January 1, 2023. However, despite the return of taxation, the new rates are still lower than those established in Law No. 10,865/2004, which was in force before Provisional Measure No. 1,157/2023.
Finally, it is worth highlighting that Article 62 of the Federal Constitution presupposes the existence of urgency of the measure, which can be questioned, and that the maximum term of validity of Provisional Measures is 120 days. Therefore, if it is not approved by the National Congress by the end of this term, all the provisions contained therein lose their effects.
