On 7 June 2017, the Plenary Sitting of the Rio de Janeiro Taxpayers’ Council cancelled a tax assessment that had been issued against Raízen Combustíveis SA (a Shell subsidiary) on the grounds that treatment fluids were to be deemed as inputs in the processing of the oil and gas industry, and as such, they should generate ICMS credits that are liable to be offset upon the tax calculation. MSI's Brazilian law member explains further.
The ICMS (a value added tax) is a non-cumulative state tax. The calculation of state tax involves the use of ICMS credits generated in the acquisition of inputs in the taxpayers’ productive process. Not all acquisitions generate ICMS credits, but only those that may be identified as inputs.
Vieira Coelho Advogados led the above-referred administrative tax proceeding since 2013. This case called for a long and challenging technical debate on the utilisation and function of each one of the 10 treatment fluids in the processing of oil and gas by Vieira Coelho Advogados' client. This final decision analysed the matter and therefore established a new and significant precedent in favor of all taxpayers in the oil and gas sector in Brazil.
