VAT Success: MSI’s Brazil law member SPCC achieves appeal success for oil and gas client
Following an appeal by Raízen Combustíveis S/A (a Shell subsidiary), the First Panel of the Rio de Janeiro Taxpayers’ Council overruled its initial decision which classified treatment fluids, commonly used by oil and gas companies, as “assets of use and consumption” which do not allow taxpayers to record and utilize VAT (ICMS) tax credits in Brazil.
At the Appeal hearing, the Reporting Administrative Judge was persuaded by the opinion of the technical experts and took the view that treatment and cleaning fluids were in fact “inputs” and not items of “use and consumption”. Therefore, as “inputs” the acquisition of treatment and cleaning fluids gives rise to VAT credits which can be offset against VAT debts upon the payment of this tax .
This case was conducted by MSI’s Rio law member firm SPCC Advogados. It now remains to be seen how the State Revenue Officer will act and on what grounds.
