On 08/11/2021, the Brazilian Government issued the Provisional Measure No. 1.063/2021 (“MP 1.063”) that sets forth relevant changes in the fuel sector in Brazil.
The MP 1.063 allows the direct sale between producers and importers of hydrated ethanol direct to fuel stations (fuel retailers), terminating the compulsory sale from producers and importers to fuel distributors.
The termination of the compulsory regulatory fidelity to distributors flag was also established. A fuel station that opted for a certain commercial flag of a certain liquid fuel distributor will be allowed to sell fuel from other suppliers, as long as the consumer is fully informed. The MP 1.603 expressly sets forth that this new regulation shall not restrict any contractual arrangement, including in the existing agreements on the date of its publication. The ANP shall have 90 days to regulate the subject.
Law No. 9.718/98 was also amended by MP 1.603 to provide for new rules regarding the contribution to PIS and COFINS taxes, in order to adapt the tax legislation to the possibility of producers and importers to sell directly to fuel stations without intermediation of fuel distributors. In case of a direct sale, the taxation shall be concentrated in producers or importers. In case of sale to distributors, the taxation shall remain segregated. Additionally, the MP 1.603 also brought other changes, for example, on the matter of anhydrous ethanol to be added in gasoline, providing that the distributor subject to the non-cumulative regime shall be entitled to discount credits related to PIS and COFINS taxes in the internal market acquisition. Besides PIS and COFINS taxes, the direct sale shall also require adjustments related to ICMS taxes under the States’ jurisdiction.
The changes implemented by the Provisional Measure are generating discussions in the fuel sector.
Our Oil & Gas and Tax teams are available to provide any clarification on this matter.