Portuguese 
English 
Spanish 
5 min of reading 
One of the main impacts of tax reform in Brazil would be to simplify the tax system, in addition to extinguishing taxes like PIS, Cofins, IPI, ICMS, and ISS for a Tax on Operations with Goods and Services (IBS).
Since it started being considered by the Federal Government in the late 1980s, other impacts of tax reform would be to modernize tax collection to enhance the competitiveness of companies from various sectors, including those in the oil and gas sector.
However, the main obstacle is the slow pace of political sectors, with Bills (PL), Constitutional Amendment Projects (PEC), among other legislative instruments, dragging on, stumbling on unconstitutionality or on the lack of willingness from politicians.
This is the common analysis and opinion of specialists who study and advocate for reform, as they see important results for the Brazilian economy.
-
A major turn in the Justice system suspends tax increases and directly impacts oil and gas companies in Brazil by affecting costs, contracts, and financial planning, leaving uncertain what could happen to the sector if these costs had increased.
-
Brava Energia begins drilling in Papa-Terra and Atlanta and could change the game by reducing costs in oil while increasing production and strengthening competitiveness in the offshore market.
-
Petrobras surprises the world again by announcing a new discovery in the pre-salt with excellent quality oil.
-
Offshore industrial demand in Macaé skyrockets with the recovery of oil and gas and could grow by up to 396% by 2026 in the Campos Basin.
Last Wednesday (24), the Tax Debate Group (GDT) and the Brazilian Institute of Oil and Gas (IPT) held a webinar to discuss tax reform and its impacts on the sector. The meeting was remote and broadcast live on the GDT’s YouTube channel, receiving significant interaction from internet users.
The event was opened by Janssen Murayama (GDT), Matias Lopes, and Bruno Fonti (IBP), followed by a presentation by lawyer Eduardo Maneira and panelists Edmilson Neves (Petrobras), Francis Tenório Duarte Pinto (Ipiranga), Fabio Gaspar (Shell), and Ana Paula Longo (Vibra).
History of Tax Reform in Brazil
Lawyer Eduardo Maneira provided a historical overview of what each Federal Government has done regarding tax reform in Brazil, from the Collor era to Michel Temer.
The reasons that underpinned requests for tax reform were basically the same as today: the complexity of the law, high litigiousness, and legal insecurity.
- Collor Government and Tax Reform – There was no concrete proposal, nor anything approved in this regard.
- Itamar Franco Government – In 1993, Constitutional Amendment No. 03 was approved, creating the IPMF, abolishing the income tax surcharge, and the retail sales tax on fuels.
- Fernando Henrique Cardoso Governments – In 1995, PEC No. 175 was shelved, and EC No. 33/01 was approved (extending the triggering event of ICMS for exports).
- Lula Governments – In 2003, PEC No. 41 was transformed into EC No. 42, and PEC No. 233 from 2008 was not analyzed.
- Dilma Rousseff Governments – There was no proposal.
- Michel Temer Government – There was no proposal.
What Proposals and Opinions Exist in 2021 Regarding Tax Reform That Would Also Impact the Oil and Gas Sector
Among bills and constitutional amendments, there are a few ideas in progress related to tax reform that would definitely bring the same impacts of modernization of the system to the oil and gas sector. They are as follows:
- PEC No. 45 presented in 2019 but is ready for the agenda in the Chamber’s Plenary.
- Bill No. 2,337/21 awaiting Senate approval. It has already been approved in the Chamber.
- Constitutional Amendment Project No. 110 is in the hands of rapporteur Senator Roberto Rocha (PSDB)
- Bill No. 10 is in the Justice and Citizenship Commission
You May Also Like
- Brazil Ranks Fourth in the World for Tax Burden on Mobile Telephony and First for Broadband Internet
- Gasoline, Ethanol, and Diesel Prices Keep Rising, and Deputies Refuse to Change ICMS Amid Soaring Fuel Prices, Leaving Petrobras to “Pay the Price”
The Complexity and Political Delays in Bringing Tax Reform to Life
During the GDT and IBT webinar, the specialists made a point of expressing their opinions on the pace of proposals involving tax reform in Brazil.
For Ana Paula Longo from Vibra, this is not a new topic, but it is also not a trivial and simple matter.
“Addressing a comprehensive tax reform in a country with a complex system with many regulations, numerous rates, exemptions, and tax benefits, different rates for the same product, tax wars among taxpayers; is also a debate that takes time and deserves to be matured by society”.
Ana Paula Longo
The specialist further highlighted that Brazil is the country that requires the most hours for tax compliance from companies, according to the World Bank. It’s 1,501 hours, while the average of other 190 countries researched is 234 hours.
For Francis Tenório Duarte Pinto from the Ipiranga network, politicians work with short-term proposals. That is, most of the projects concerning tax reform are not thought out for future generations.
“I believe in small reforms. They won’t solve a structural problem, but they can improve many things, such as: we have 27 states legislating ICMS (…) and if you had more comprehensive national legislation that defined general points, you would greatly improve the situation. Each state regularly differs in how they declare”.
Francis Tenório Duarte Pinto
Edmilson Neves, representative of Petrobras, questioned the term “tax reform”, as he advocates for a completely new legal system.
“I don’t know if this ‘house’ can accommodate another reform or if we need to build a new one. There is a lot of discourse that ends up endesiring the tax, but the tax is absolutely necessary. Without it, there is no public safety, no school, no health… sometimes we lose this link about what the tax is for. And we discuss the tax as if it were the state we want for Brazil.
Edmilson Neves
Concluding the debate, the representative from Shell, Fábio Gaspar, shared data about taxes involving oil.
“The industry contributed to public coffers between taxes and special participations between 2008 and 2018, R$ 1.5 trillion. Between 2010 and 2020, $250 billion were invested in Brazil. Naturally, largely by Petrobras, but also by foreign investors who are obviously concerned about safety and the type of discussion we are having here”.
Fábio Gaspar
Seja o primeiro a reagir!