After Ambev Falls Under Scrutiny, Oil Company Seadrill Also Tries to ‘Pull a Fast One’ on the Federal Revenue Service But Is Sentenced to Pay Millions in Taxes for Illegal Tax Maneuver in Contracts with Petrobras

‘Bad Faith’ Of Seadrill, The Giant Of Oil And Gas Exploration Drilling, Will Cost An Impressive Sum Of More Than R$ 300 Million In Taxes

In the corporate world, the giant drilling company for oil and gas exploration, Seadrill, is facing a significant setback. The Federal Regional Court of the 2nd Region (TRF-2) unanimously decided that the company must disburse an impressive sum of more than R$ 300 million in taxes. This verdict arises as a result of an alleged illegal tax maneuver identified by the Federal Revenue Service.

In detail, Seadrill was accused of evading R$ 231.2 million in Corporate Income Tax (IRPJ) and R$ 83.3 million in Social Contribution on Net Profit (CSLL), related to contracts signed with the oil giant Petrobras during the years 2009 and 2010. This decision highlights a years-long battle between the Federal Revenue Service and the oil multinational.

Seadrill Sought To Enjoy The Tax Benefits Granted To Foreign Companies In The Oil Sector

The controversy revolves around the creation of a “contractual modeling” by Seadrill, allowing it to record expenses as if they were from its Norwegian parent company. Under the guise of an apparently harmless contractual structure, Seadrill sought to enjoy the tax benefits granted to foreign companies in the oil sector, while artificially lowering its expenses from the Brazilian company’s tax base.

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This tactic now condemned by the TRF-2 is a clear demonstration of abuse of rights and goes against the principle of good faith objective. The Brazilian oil company assumed expenses related to freight contracts, originally the responsibility of the Norwegian Seadrill, in order to reduce the tax burden.

Defense Of The Oil Company And Its Past In Operation Lava Jato

Contacted by the newspaper UOL to comment on the decision, Seadrill’s defense stated that it plans to appeal. This indicates that the legal battle is far from over and that the company is willing to fight to overturn this million-dollar sentence.

It is worth noting that Seadrill’s contracts with the oil giant Petrobras had already been previously investigated by the notorious Operation Lava Jato. In 2019, suspicions of corruption and money laundering resulted in the opening of an inquiry. However, in February 2022, the Superior Court of Justice (STJ) closed the case. This episode highlights the complexity and legal ramifications of Seadrill’s operations in Brazil.

Contract Between Seadrill And Petrobras Was Multifaceted

The contract between Seadrill and Petrobras was multifaceted, involving both the provision of services and the freight of drilling and oil extraction platforms. The Federal Revenue Service argued that 80% of the funds were allocated to freight, while only 20% related to the provision of services. It was in this imbalance that the “contractual modeling” manifested.

The Brazilian Seadrill recorded the freight contract as if it were from Seadrill Offshore, the international operations company. At the time, revenues from foreign companies regarding the freight of oil exploration equipment were exempt from federal taxation. The move here was clear: to make the Brazilian company pay less in taxes.

The problem, according to the TRF-2, was that the objects of the contracts were artificially distorted to reduce the tax burden of the Brazilian company. Expenses related to the operation of the vessel, which should have been associated with the freight of the oil platforms, were recorded in the service provision contract. As a result, the company’s expenses in Brazil exceeded its revenues, allowing for deductions in the calculation base of the taxes owed.