Amendments to the Brazilian petroleum tax legislation.

5 CONCLUSION

Brazil has a complex tax system that, at first glance, seems to be extremely counterproductive and a factor of major spending by the oil industry due to its three levels of taxes, which cover all kinds of triggering event. However, the legislation establishes a clear division of competences that avoids the phenomenon of double taxation.

Likewise, the government participation in oil production – which is covered by charging royalties, special participation, signature bonuses and rate of use of the surface – and its share between the three levels of government suggest a complex payment system and a large government take over the net revenue.

However, the total government take is reasonable and one single box receives these resources, namely the National Treasury, which then redistributes the values to other federative entities. Such a variety of tax species just reflects the outlines of a federate state rather than a unitary state.

The challenge that has arisen with the oil in the pre-salt layer gives to the government the possibility of improving the legislation and the potential increase in 5% of the royalties’ level. However, political conflicts encountered by the Ibsen amendment will also bring a side effect because of the demand for the restoration of budget losses, which may increase the value of some taxes paid by industry to states and municipalities.

BIBLIOGRAPHY

Primary Sources

National Legislation

Complementary Law No. 87, 1996 (entered into force 13th Sep. 1996)

Decree No. 2.705, 1998 (entered into force 3rd Aug. 1998)

Decree-Law No. 37, 1966 (entered into force 18th Nov. 1966)

Decree-Law No. 1578, 1977 (entered into force 11th Oct. 1977)

Draft Bill No. 5938/2009, Chamber of Deputies of Brazil (published in the Official Gazette of the Union on September 01, 2009)

Federal Constitution, 1988 (entered into force 8th Oct. 1988)

Law No 2.004, 1953 (entered into force 3rd Oct. 1953)

Law No. 5.172, 1966 (entered into force 8th Oct. 1988)

Law No. 9.478, 1997 (entered into force 6th Aug. 1996)

Municipal Law 6.989, 1966 - City of São Paulo (entered into force 29th Dec. 1966)

State Law No. 1.427/RJ, 1989 (entered into force 13th Feb. 1989)

State Law No. 6.374/SP, 1989 (entered into force 1st Mar. 1989)

State Law No. 6.606/SP, 1989 (entered into force 20th Dec. 1989)

State Law No. 10.705/SP, 2000 (entered into force 28th Dec. 2000)

Secondary Sources

Articles

Afonso, J. (2001) Brazil: Fiscal Federalism, Tax Modernization and Consumption and Production Taxes. Rio de Janeiro, Brazil, BNDES.

Guerra, S. and Honorato, F., (2004) A Lei do Petróleo e a Renda Petrolífera no Brasil. Campinas, Brazil, UNICAMP.

Quintans, L. Os royalties do petróleo na legislação brasileira e a Emenda Ibsen. [Online] Available from http://jus.com.br/artigos/14698 [Accessed 14th May 2010]

Regra, A., Participações Governamentais e de Terceiros na Lei do Petróleo. In Brazil 10th Round - Oil & Gas Bidding Rounds, SPG/ANP. Brasília, Brazil, ANP.

Other Sources

Newspaper and Magazine Articles

Andrade, R. Royalties do pré-sal dividem produtores e governadores do NE. [Online] Available from: http://www.estadao.com.br/noticias/economia,royalties-do-pre-sal-dividem-produtores-e-governadores-do-ne,471360,0.htm [Accessed 14th May 2010]

Brazil’s pre-salt basin oil extraction becomes commercial operation. MercoPress, 1st May 2009. [Online] Available from: http://en.mercopress.com/2009/05/01/brazils-pre-salt-basin-oil-extraction-becomes-commercial-operation [Accessed 14th May 2010)

Forero, J. (2009) Brazil girds for massive offshore oil extraction. Washington Post Foreign Service, 7th December 2009.

Malta, D. Levy: royalties e redistribuição. [Online] Available from: http://youpode.com.br/blog/alguemmedisse/tag/royaltes-do-petroleo/ [Accessed 14th May 2010]

Pacheco, N. Fatia maior do government take. [Online] Available from: http://www.energiahoje.com/online/petroleo/e&p/2008/08/07/28329/fatia-maior-do-government-take.html [Accessed 14th May 2010].

Radowitz, B. (2008) Oil finds prompt Brazil to change rules. Dow Jones Newswires, 18th April 2008.

Internet Sites

BNDES. Reforma Tributária. [Online] Available from: http://www.bndes.gov.br/SiteBNDES/export/sites/default/bndes_pt/Galerias/Arquivos/conhecimento/informesf/inf_11.pdf [Accessed 14th May 2010)

Brazil customs and duties. In Encyclopedia of the Nations. [Online] Available from: http://www.nationsencyclopedia.com/Americas/Brazil-CUSTOMS-AND-DUTIES.html

REUTERS. Culp, S. [Online] Available from: http://graphics.thomsonreuters.com/0210/BR_SUBSLT0210.gif [Accessed 14th May 2010)

IBGE. Social Data of Municipalities. [Online] Available from: http://www.ibge.gov.br/home/estatistica/populacao/indicadores_sociais_municipais/tabela1a.shtm [Accessed 14th May 2010]

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Notas

1. IBGE. Social Data of Municipalities. [Online] Available from: http://www.ibge.gov.br/home/estatistica/populacao/indicadores_sociais_municipais/tabela1a.shtm [Accessed 14th May 2010]
2. Art. 150, Federal Constitution, 1988 (entered into force 8th Oct. 1988)
3. Law No. 5.172, 1966 (entered into force 8th Oct. 1988)
4. Decree-Law No. 37, 1966 (entered into force 18th Nov. 1966)
5. Brazil customs and duties. In Encyclopedia of the Nations. [Online] Available from: http://www.nationsencyclopedia.com/Americas/Brazil-CUSTOMS-AND-DUTIES.html
6. Decree-Law No. 1578, 1977 (entered into force 11th Oct. 1977)
7. Art. 3, Decree-Law No. 1578, op. cit.
8. Secretariat of The Federal Revenue of Brazil. Corporate Income Tax. [Online] Available from: http://www.receita.fazenda.gov.br/aliquotas/ContribPj.htm [Accessed 14th May 2010]
9. Secretariat of The Federal Revenue of Brazil. Individual Income Tax. [Online] Available from: http://www.receita.fazenda.gov.br/aliquotas/TabProgressiva20022011.htm [Accessed 14th May 2010]
10. Secretariat of The Federal Revenue of Brazil. Tax on Credit Operations, Exchange and Insurance. [Online] Available from: http://www.receita.fazenda.gov.br/aliquotas/ImpCreSegCamb.htm [Accessed 14th May 2010]
11. Secretariat of The Federal Revenue of Brazil. Rural Land Tax. [Online] Available from: http://www.receita.fazenda.gov.br/pessoajuridica/itr/2005/pergresp/pr165a182.htm [Accessed 14th May 2010]
12. BNDES. Reforma Tributária. [Online] Available from: http://www.bndes.gov.br/SiteBNDES/export/sites/default/bndes_pt/Galerias/Arquivos/conhecimento/informesf/inf_11.pdf [Accessed 14th May 2010)
13. State Law No. 1427/RJ, 1989 (entered into force 13th Feb. 1989) and State Law No. 10705/SP, 2000 (entered into force 28th Dec. 2000)
14. Art. 34, State Law No. 6.374/SP, 1989 (entered into force 1st Mar. 1989)
15. Art. 3, II, Complementary Law 87, 1996 (entered into force 13th Sep. 1996)
16. Art. 7, State Law No. 6.606/SP, 1989 (entered into force 20th Dec. 1989)
17. City of São Paulo. Municipal Law 6.989, 1966 (entered into force 29th Dec. 1966)
18. Id.
19. Id.
20. Art. 20, Federal Constitution, op. cit.
21. Law No. 9478, 1997 (entered into force 6th Aug. 1996)
22. Petrobras. Operational Highlights. [Online] Available from: http://www2.petrobras.com.br/ri/ing/DestaquesOperacionais/DestaquesOperacionais.asp [Accessed 14th May 2010]
23. Id.
24. Quintans, L. Os royalties do petróleo na legislação brasileira e a Emenda Ibsen. [Online] Available from http://jus.com.br/artigos/14698 [Accessed 14th May 2010]
25. Art. 47, Law No. 9.478, op. cit.
26. Art. 7 and 8, Decree No. 2.705, 1998 (entered into force 3rd Aug. 1998)
27. Art. 27, Law No 2.004, 1953 (entered into force 3rd Oct. 1953)
28. Art. 49, Law No. 9478, op. cit.
29. Guerra, S. and Honorato, F., (2004) A Lei do Petróleo e a Renda Petrolífera no Brasil. p. 11. Universidade Estadual de Campinas, October 2004.
30. Art. 50, paragraph 2, Law No. 9478, op. cit.
31. Decree 2.705, op. cit.
32. Art. 50, paragraph 1, Law No. 9.478, op. cit.
33. Regra, A., Participações Governamentais e de Terceiros na Lei do Petróleo. In Brazil 10th Round - Oil & Gas Bidding Rounds, SPG/ANP.
34. Art. 52, Law No. 9.478, op. cit.
35. Art. 46, Id.
36. Brazil’s pre-salt basin oil extraction becomes commercial operation. MercoPress, 1st May 2009. [Online] Available from: http://en.mercopress.com/2009/05/01/brazils-pre-salt-basin-oil-extraction-becomes-commercial-operation [Accessed 14th May 2010)
37. Culp, S. [Online] Available from: http://graphics.thomsonreuters.com/0210/BR_SUBSLT0210.gif [Accessed 14th May 2010)
38. Forero, J. (2009) Brazil girds for massive offshore oil extraction. Washington Post Foreign Service, 7th December 2009.
39. Art. 20
40. Afonso, J. (2001) Brazil: Fiscal Federalism, Tax Modernization and Consumption and Production Taxes. Rio de Janeiro, Brazil, BNDES.
41. Art. 3, paragraph III, Federal Constitution, op. cit.
42. Chamber of Deputies of Brazil (2009) Draft Bill No. 5.938-A
43. Andrade, R. Royalties do pré-sal dividem produtores e governadores do NE. [Online] Available from: http://www.estadao.com.br/noticias/economia,royalties-do-pre-sal-dividem-produtores-e-governadores-do-ne,471360,0.htm [Accessed 14th May 2010]
44. Malta, D. Levy: royalties e redistribuição. [Online] Available from: http://youpode.com.br/blog/alguemmedisse/tag/royaltes-do-petroleo/ [Accessed 14th May 2010]
45. Pacheco, N. Fatia maior do government take. [Online] Available from: http://www.energiahoje.com/online/petroleo/e&p/2008/08/07/28329/fatia-maior-do-government-take.html [Accessed 14th May 2010].
46. Radowitz, B. (2008) Oil finds prompt Brazil to change rules. Dow Jones Newswires, 18th April 2008.