On December 5, 2013, Brazilian authorities published the new REPETRO regulation (Instrução Normativa RFB no. 1.415/13). The team of ACT has prepared a brief summary with comments about the main changes in comparison with the previous Normative Instruction (RFB 844/08)
“It has been a long time since there has been such substantial changes in the oil & gas tax legislation in Brazil”, the tax experts at ACT-Rio Appraisals, Consulting and Taxes, Paulo M. Hazan da Fonseca (in the photo) and André Hazan da Fonseca, say.
The summary follows below:
REPETRO: Changes Introduced by Normative Instruction RFB no. 1.415/13
In view of the publication of said Instruction on December 5th, 2013, we present below a brief summary with comments about the main changes in comparison with the previous Normative Instruction (RFB 844/08) which regulated the matter and was revoked.
1. Goods to which REPETRO is applicable
Although the art. 3, item I, of ADI COANA no. 05/03 had already established the applicability of the regime for rigid pipes, the new regulation has expressly included lines, pipelines and umbilicals in the list of goods to which REPETRO is applicable.
If on one hand the Normative Instruction was favorable to taxpayers by including said items, on the other it has promoted a restriction (art. 3 , § 1 , I) by excluding of the regime all machinery, equipment, tools, appliances and parts, including spare parts (art. 3, II ) with unitary CIF value of less than USD 25,000.00 (twenty five thousand North-American dollars).
Being a restriction based on unitary value and not by the Import Declaration (DI), this provision may represent a significant increase in taxes, depending on the characteristics of the operation, and considering the long periods of exploration and production contracts, which many times exceed five years.
2. Production sharing agreement and consortium
Given the new bidding model for the pre-salt area, the new IN has included the production sharing agreements (art. 4, item I) to the REPETRO, and also the inclusion of consortiums (art. 9, § 4), provided that IN RFB 1.199/11 is observed.
3. Online qualification process
Following the trend of transferring administrative and judicial proceedings to online based procedures, the qualification process to REPETRO will be done via “dossiê digital de atendimento” (digital service folder). Also, it is now required that the applicant company has subscribed to the Electronic Tax Domicile (DTE), regulated by IN SRF no. 664/2006, which enables notification of taxpayers by email .
It is optional for taxpayers already qualified for REPETRO via the old procedure to migrate to the new procedure, by completing the documents listed in art. 6, which includes the DTE.
Moreover, it is no longer necessary to list which subsidiary establishments are to be qualified to REPETRO together with the headquarters. Now, all linked establishments shall be automatically qualified jointly with the headquarters.
4. Guarantee of suspended taxes
The new REPETRO regulation replicates the rule established by Normative Instruction no. 1.361/13 (Temporary Admission), considering able to provide guarantee a legal entity with equity equivalent to five times the suspended taxes or greater than BRL 5,000,000.00 (five million Brazilian reais).
We have been informed that the tax authorities are already requiring the new net equity values for imports under REPETRO. Therefore, it is essential that companies adjust the net equity of their guarantor companies to this new amount until December 31st, 2013, to present its balance sheet for guarantee purposes next year.
The guarantee is now waived for suspended taxes equivalent to less than BRL 100,000.00 (one hundred thousand Brazilian reais).
5. Contract Summary
The new act introduced a “Contract Summary Form” (Annex IV), replacing the presentation of contracts on which were based the qualification for the regime (notably Charter and Services Contracts). The form shall be registered in the Registro de Títulos e Documentos (RTD), pursuant to art. 22, sole paragraph, of IN 1.415/2013.
6. Extension of the Regime
The extension form of REPETRO is no longer the Application for Extension of Regime (RPR) and now the Application for Temporary Admission (RAT), contained in Annex III, shall be utilized. It is waived the resubmission of documents which remain unchanged, since they will be archived in the digital service folder.
In addition to the other possibilities of the termination of the regime (re-export, waiver of the asset in favor of the National Treasury, destruction, transfer of regime and nationalization), there is now the possibility of partial re-export of goods subject to REPETRO, allowing the partial termination of the regime (art. 25, § 1).
8. New Admission
The registry of Declaração de Admissão is now waived in the event of substitution of REPETRO beneficiary, nevertheless, all other requirements and formalities are still required, according to art. 27, § 2, of IN RFB 1.415/2013.
9. Shared use of assets
The new Normative Instruction has included the possibility of transfer of goods between platforms of the same REPETRO beneficiary. It is necessary to previously notify Receita, via the digital service folder (art. 29 et seq.).
10. Restoration, maintenance, assembly or processing
The art. 31 of IN 1.415, established the non-suspension of REPETRO while the vessel or its components are sent for restoration, maintenance, assembly or processing, in Brazil or abroad, utilizing Simplified Declaration of Import and Export for the exit and return to the country. This was already provided by the general temporary admission regime.
The art. 34, § 1, has suppressed the provision of previous authorization by the head of the local Receita unit for the storage of REPETRO goods. Paragraph 3rd of the same article has also established the possibility of storing goods outside of the bonded warehouse (armazém alfandegado) even before the beginning of the operation.
The safety requirements were maintained, but it seems from the text suppressed that the previous authorization of the storage by Receita will no longer be required. We recommend observing what the actual procedure of Receita will be, but it seems this Normative Instruction tends to simplify proceedings.
For more information, click here.