The State of São Paulo has passed Decree No. 58,388/2012. The Decree was published in the State Official Gazette on September 15, 2012, and revokes State Decree No. 53,574/2008 effective as of October 1, 2012. Consequently, it also modifies the tax regulation relating to the Incentive Program for the Oil and Natural Gas Production and Exploration Industry in the State of São Paulo.
The new Decree creates new rules for taxation on ICMS in transactions relating to REPETRO, as provided in ICMS CONFAZ Convention No. 130/07. The Decree seeks to harmonize the laws of São Paulo with the tax benefits provided by other states to secure that the Taxpayers of the State of São Paulo are equally competitive.
The Decree reproduces in general the same rules contemplated by Decree 53.574/2008, and introduces a few novelties, as follows:
- the Decree converts into tax exemption the current tax benefit of reduced ICMS calculation basis (tax rate of 3% with credits, and 7.5% without credits) due in the customs clearance of assets and goods imported to be applied in equipment for use solely (i) in the exploration of oil and natural gas or (ii) equipment used in both the exploration and production phases but staying less than 24 months in Brazil;
- the Decree grants tax exemption to assets or goods used in production platforms if such assets or goods are in transit to an industrial unit for repair or maintenance purposes; and
- the Decree extends the cases of deferral of ICMS due on remittances immediately prior to the fictitious export in order to include internal outflows (SP) of raw materials and intermediate products for use in factories that effect deferred remittances (i.e., remittances taking place prior to the immediately preceding remittances), pursuant to regulations to be introduced by the Tax Authorities of the State of São Paulo.