As of May 2016 Rio de Janeiro has begun to levy a new state environmental control and inspection tax on the control, monitoring and supervision of research, mining, exploration and production of oil and gas (for further details please see "Rio de Janeiro creates tax on production of oil and gas").

Introduced by Law 7,182/15, the tax was created to bear the costs associated with the regular exercise of the environmental policy power conferred by the Rio de Janeiro State Environmental Agency, enabling the control and inspection of oil activity in Rio de Janeiro.

All legal entities authorised to conduct research, mining, exploration and production of oil and gas are subject to the tax.

The tax will be levied on a monthly basis at a rate of R2.71 per barrel of oil or an equivalent unit of extracted gas and must be paid by the 10th of each month. The taxable rate will be adjusted annually on January 1 based on Rio de Janeiro's fiscal reference unit or, should it be discontinued, by the inflation index adopted for state tax correction.

Although Law 7,182 was published in December 2015, the regulations for administering the law were issued only in April 2016, through Decree 45,638/2016.

The Brazilian Association of Oil and Gas Exploration and Production has filed a direct action before the Federal Supreme Court for a declaration of unconstitutionality (ADI 5,480/RJ), questioning the lawfulness of the monthly tax. However, thus far, the Federal Supreme Court has not issued a statement regarding the legality or lawfulness of this charge.

For further information on this topic please contact Godofredo Mendes Vianna at Kincaid | Mendes Vianna Advogados by telephone (+55 21 2276 6200) or email ([email protected]). The Kincaid | Mendes Vianna Advogados website can be accessed at