The Federal Revenue of Brazil issued Petrobras a notice of tax deficiency referring to withholding of income tax on remittances for payment of charter of vessels related to the period between January 1999 and December 2002. The Revenue understands that platforms are not vessels and therefore the company could not use the benefit of zero rate withholdings (IRRF) on the charter.

The company appealed in the administrative sphere, but in the last instance, the Superior Chamber of Tax Appeals of the Board of Tax Appeals (CARF) denied the appeal filed by Petrobras.

Dissatisfied with the administrative decision in March this year, the Brazilian oil giant resorted to the courts to make its understanding count (Proceedings No 2012.02.01.19274-6).

In a preliminary injunctive procedure at the Federal Court of the 2nd Region, the company managed to suspend the enforceability of the debt until judgment of the lawsuit filed. However, upon the judgment of the merits in the first instance, at the 29th Federal Court of Rio de Janeiro, the company was not successful, and the understanding that a platform is not a vessel prevailed.

With the judgment of the merits by the lower court, the Federal Court of the 2nd Region understood that the injunction previously granted must be revoked, the reasons: the risk of the delay in the decision causing irreversible damage for the party and the appearance of the appellant’s certain right.

The estimated amount of the debt is approximately R$ 4.8 billion.