With the loss of validity of Temporary Measure No. 1,175/2003, biodiesel will be taxed again and, as a rule, will not suffer PIS/Cofins at a zero rate (0%).
The Constitution, in its Article 225, paragraph 1, since 2022 (1), explicitly provides for a preferred regime for biofuels, directing its taxes towards the non-financial purpose of sustainable development, and the pursuit of renewable energy security that respects the environment.
Stone
Biofuel, under the provisions of Law No. 978/97 (Article 6), consists of “A substance derived from renewable biomass, such as biodiesel, ethanol and other materials stipulated in ANP regulations, which can be used directly or through modifications in internal combustion engines or for other types of energy generation, and can partially or completely replace the original fossil fuels. entirely.while biodiesel would be “Derived from renewable biomass for use in compression-ignition internal combustion engines or, depending on regulations, to generate another type of energy, which can partially or completely replace fossil fuels.
PIS/Cofins for importers and producers of biodiesel are taxed under Law No. 11116/2005 for legal entities duly registered with the National Petroleum Agency, under the provisions of Article 3 of Law No. 11116/2005, creating a single (single-phase) payment on gross revenues. acquired, applying PIS and Cofins contribution rates, respectively, of 6.15% and 28.32%. Subsequent transactions (resale) will be taxed at zero rate.
On the other hand, Article 4 allows the producer and importer of biodiesel to choose a special regime regulating the taxation of PIS and Cofins at a rate of “to me” Based on a fixed value per cubic meter (2).
Article 5, pursuant to the above, in light of the intention not only to encourage the production of biodiesel as an alternative to renewable energy, but also to direct production towards the use of certain raw materials, as well as to encourage their acquisition by agricultural households and the production of this fuel in areas in need, expressly gave authority to the Authority Executive to determine transactions aimed at reducing PIS and Cofins rates:
“Art. 5. The executive authority has the right to determine a factor to reduce the rates stipulated in Article. IV of this law and it may be changed at any time more or less.
§1 Rates may have different reduction factors depending on:
I – Raw materials used in biodiesel production, by type;
Second – the selling product;
III – The area where the raw material is produced.
Fourth – The group of factors mentioned in clauses one to three of this article.
§2 The use of differentiated reduction coefficients referred to in Paragraph 1 of this Article must comply with regulatory standards and terms and conditions issued by the executive authority.
§3° The selling producer, for the purposes of determining the rate reduction factor, will be the family farmer or his agricultural cooperative, as defined within the scope of the National Program for the Promotion of Family Farming – BRUNAF.
§4 In the case of the use of raw materials involving different rates for revenues arising from the sale of biodiesel, in accordance with the provisions of paragraph 1 of this Article, the rates shall be applied proportionally to the cost of acquisition of the raw materials used in the period.
§5 For the purposes of paragraph 4 of this Article, in the case of private production of raw materials, this must be evaluated at the average price of obtaining raw materials from third parties in the calculation period.
§6 The provisions of Clause 1 of this Article do not apply to revenues generated from the sale of imported biodiesel.
§7° The establishment and change of the transactions referred to in this article by the executive authority cannot lead to higher effective rates:
I – the actual rates of contribution to PIS/Pasep and Cofins, added to the actual rate of contribution for intervention in the economic field referred to in Law No. Mineral; no
II – At the rates stipulated in the Capital Law. Fourth of this law.
In view of the mandate created by law to the Executive to determine the terms and conditions regarding PIS and Cofins rate reduction transactions imposed on the production and marketing of biodiesel, we have Decree No. 10,527, dated October 22, 2020, which “It establishes the social biofuel stamp and stipulates the reduction factors for the contribution rates for the Social Integration Programme, the Public Employees Asset Building Program and the Social Contribution for Social Security Financing, imposed on the production and marketing of biodiesel, and on the terms and conditions for the use of differentiated rates.”
Returning to the focal point of this article, Chapter 6 of the Order specifies the “parameter”R$ 0.00 (real zero) per cubic meter of biodiesel made from raw materials produced in the northern and northeastern regions and in the semi-arid zone and obtained from family farmers covered by the PRONAF programme. (Article 6). In accordance with the above-mentioned normative text regarding “Using the differential reduction factors referred to in the second and third clauses of Paragraph (1), the biodiesel producer must obtain raw materials from family farmers and their agricultural cooperatives, in accordance with the provisions of Paragraph (3) of Article (5) of Law No. 11116, 2005. , (3) The holder, in good standing, of the privilege to use the Social Biofuel Seal referred to in this Decree.
Among the relevant disputes again, with the burden, is the application of the reduction to zero per cubic metre, with regard to PIS / Cofins in the case of production and manufacture of biodiesel when purchasing inputs from these sites, equipped with the Social Fuel Stamp, but without its use Direct and in its entirety in production. This is equivalent to saying: Can you enjoy zero rate tax on PIS/Cofins for the production and sale of biodiesel, even if no raw materials (or part thereof) are actually used in the manufacture of the product?
The Federal Revenue Authority, in a restrictive manner, takes the position that this is impossible, according to Cosit Consultation Solution 196/2021:
Solution to query No. 196 – referral date December 14, 2021
Topic: Contribution to financing social security – biodiesel production. “Social Fuel” stamp. Requirements for applying the differential reduction factor for the contribution ratio. Raw materials used in biofuel production. The mere fact that a biodiesel producing enterprise has, in the normal situation, been privileged to use the “Social Fuel” stamp does not, in itself, allow automatic enjoyment of the differential reduction factor for coffins. In order for a producer to be able to use the above-mentioned plant, he must produce biodiesel from raw materials acquired from family farming.
This doesn’t seem like the best explanation to us. As a starting point, we assume that the minimum requirements are met: obtaining a license from the Afghan National Police; Obtain a permit from the Federal Revenue Service; To be produced with a special calculation and collection system for each cubic meter of PIS and Cofins; It holds the “Social Biofuel Seal” issued by the Ministry of Agriculture, Livestock and Supply (MAPA).
The issue is complex and deserves deeper reflection, but we will point to some justifications that lead us to acknowledge the error of this requirement, which makes it illegal and even unconstitutional.
The first justification appears in Article 5 itself, of Law No. 11116/2005, when referring to the delegation of the executive authority to determine the reduction factor on the basis of the raw material used, the product and the region, as well as the combination of all these factors. Factors. The regulation of the executive power in Decree No. 10,527/2020, regarding the terms and conditions of use of the tax reduction factor on PIS and Cofins (Article 6, §§ 1 and 2), only requires the acquisition of raw materials and the acquisition of the Social Fuel Stamp.
Furthermore, the requirements and concessions, as well as the maintenance of the social biofuel seal, are not the responsibility of the Revenue, and the Ministry of Agriculture, Livestock and Supply is responsible for setting the standards within the law to obtain them. Therefore, since the issue of access to and use of inputs is an element linked to the Social Fuel Stamp grant, it is not within the competence of the Federal Revenue to analyze this aspect.
On the other hand, any application of Article 111 of the National Tax Code would not constitute an obstacle to the interpretation of the PIS and Cofins legislation in the sense of the feasibility of enjoying taxation at a reduced rate, for example, 0% (zero), in particular, from a final and evaluative perspective in view of the intention Promoting biodiesel production, but mainly acquisitions that lead to economic and social development of those areas of the country.
Therefore, apart from not actually being used in manufacturing, in such cases the objectives sought by the legislation are achieved (final interpretation).
Especially because, when analyzing the letter of Article 6, paragraphs 1 and 2, of Decree No. 10527/2020, there is no imposition of the condition of the effect of use for the enjoyment of this right, in a way that makes, in light of the legality and even the literal interpretation, the enjoyment of the intended right possible.
In such circumstances, and despite the position of the federal tax authorities, it seems to us that differential taxation is possible when the PIS/Cofins coefficient is low, in particular, at zero, for biofuels.
(1) “Eighth – Maintaining a preferential tax regime for biofuels intended for final consumption, in the form of a complementary law, in order to guarantee taxes lower than those imposed on fossil fuels, and capable of ensuring a competitive advantage in relation to it, especially with regard to the contributions referred to in Paragraph “B” of the first clause and the fourth clause of the first chapter of Article 195 and Art. 239 and the tax referred to in the second clause of the upper part of Article 155 of this Constitution (included in Constitutional Amendment No. 123 of 2022). The current wording “Eighth – Maintaining an appropriate tax system for biofuels and low-carbon hydrogen, in the form of a complementary law, in order to guarantee lower taxes than those imposed on fossil fuels, capable of ensuring a competitive advantage in relation to them, in particular with regard to the contributions referred to in Article 195, 1, “ B, 4 and 5, Art. 239 and the taxes referred to in Articles. 155, 2, and 156-a. (Text of Constitutional Amendment No. 132 of 2023)”
(2) The regulations for this special system, called RECOB, were initially established under Standard Instruction no. 876/2008, repealed by Standard Instruction No. 1,911/2019 and currently in standard instructions 2121/2022.
(3) “§ 3 Seller Producer Grade, for the purposes of determining the rate reduction factor, will be the family farmer or his agricultural cooperative, as defined within the scope of the National Program for the Promotion of Family Farming – PRONF.”
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