On October 25, 2018, Decree No. 9,537/2018 was published in the Official Gazette, establishing the special regime for the industrialization of goods destined for the exploration, development and production of oil, natural gas and other fluid hydrocarbons (the so-called “Repetro-Industrialization”).
The Repetro-Industrialization allows for the import or local purchase, with suspension of the payment of federal taxes, of raw materials, intermediate products and packaging materials to be used integrally in the production process of the final products destined for exploration, development activities and for the production of oil, natural gas and other fluid hydrocarbons.
This regime is applicable to raw materials, intermediate products and packaging materials intended for the production process of the final products and that will be imported on a permanent basis, pursuant to §8 of Article 458 of Decree No. 6,759/2009.
The following taxes are subject to the aforementioned Regime:
I – Import Duty;
II – Excise Tax - IPI;
III - PIS/Pasep on Imports;
IV – Social Contributions (PIS and Cofins) on Imports; and
V – Social Cofins on revenues.
The enjoyment of such benefits does not exempt compliance with the legal and regulatory requirements for the permanent stay of the merchandise in the country, in the case of raw materials, intermediate products and imported packaging materials.
In order to benefit from such benefits, the legal entity must request authorization to operate in the Repetro-Industrialization regime. The beneficiary of the regime will be responsible for the custody of the goods, in the capacity of depositary, from the customs clearance or the electronic invoice issuance onwards.
Waste and by-products from the production process that can be used for economic purposes can be allocated to the local market and, in this case, will be subject to the collection of taxes levied on the operation.
The local purchase of the final product will be carried out with suspension of payment of PIS / Pasep, Cofins and IPI. Once the destination of the final product is verified, the suspension becomes:
I - zero percent rate, regarding the contribution to PIS / Pasep and Cofins; and
II - exemption, regarding IPI.
A beneficiary of the regime that purchases the final product with suspension of taxes and does not allocate the final product within three years, calculated from the date of acquisition in the electronic invoice, is obligated to collect the unpaid taxes and any interest/penalties due, under the terms of the specific legislation, calculated from the date of the triggering event. This period may be extended for up to 12 months, in exceptional and duly justified cases.
The benefits of Repetro-Industrialization apply to the tax events that occur up to December 31, 2040, and a ruling from Brazilian federal revenue authority is still necessary for its use.
Finally, we emphasize that Decree 9,537/ 2018 also authorized the migration to Repetro-SPED, until June 30, 2019, of assets admitted in Brazil up to December 31, 2017.