Danilo Oliveira – 27/01/2025 – 19:49
The recent sanctioning of the regulation of the Tax Reform (LC 214/2025) may bring different impacts on the prices of products and/or services of companies in the oil and gas sector. A large portion of the players are service providers contracted by operators for activities such as seismic surveys, drilling, well completion, maritime support, among other segments of the industry. Tax experts believe that, with the replacement of PIS, Cofins, and ISS by IBS and CBS, it is likely there will be an increase in taxation levels for these companies due to differences in rates, even when considering the expansion of credit possibilities.
Offshore activities that require the chartering of vessels on a bareboat or time-charter basis, which today are not subject to ISS or ICMS, will now have their charter contracts taxed by IBS and CBS, shifting taxation to a point earlier in the contract chain. In light of these changes, experts believe these companies may need to renegotiate to balance the pricing of their contracts.
Patricia Azevedo, a lawyer at Kincaid Mendes Vianna, observes that the oil and gas sector requires significant investment (Capex), with the use of equipment and vessels leased from foreign companies and imported temporarily. “In this context, the reform ensured the extension of Repetro-Sped until 2040, the current deadline of the regime, which is very important for sector investment,” she pointed out.
During the sanctioning process, President Luiz Inácio Lula da Silva vetoed an article that would have exempted exports in the oil, gas, and mining sectors from Selective Taxation (IS). A study by IBP at the end of 2024 highlighted that the incidence of IS could have an annual impact of R$ 5.5 billion on society, considering the consumption of diesel and petrol in the country.
Patricia considers that the adaptation period is far from comfortable for companies adjusting to these changes. “The rules are not fully on the table yet. To estimate the impact on their operations, companies are trying to work with different scenarios based on estimated rates shared by the government through communication channels,” she analysed in an interview with Portos e Navios.
The lawyer mentions that Complementary Law 214/2025 is the main legal framework for the reform, but many other regulations are yet to be issued, including the definition of tax rates. One of the concerns is that, at least one year after the establishment of CBS and two years after IBS, it is still not possible to make a reliable estimate of the real impacts of the reform.
“The reform will lead to renegotiation between the parties to rebalance contract prices. It is not a simple renegotiation, as the tax reform affects the information on rates, as well as credit analysis,” Patricia emphasised. Additionally, from 2026 to 2032, companies will need to comply with obligations for three different tax systems, which will increase their compliance costs.
In the IBP study, the industry showed optimism regarding the Tax Reform, despite the initial complexity it will create. According to Patricia, the substitution of IPI, ICMS, ISS, PIS, and Cofins with CBS and IBS changes the taxation of certain contracts in the chain, but it could be balanced with fair renegotiation. “If we consider that the reform project began by addressing Repetro-Sped and Repetro-Industrialisation, ensuring these regimes is a positive aspect. As the industry operates with foreign assets, it requires a reduction in Capex, similar to what occurs in other jurisdictions,” she assessed.
The lawyer warned that the institution of IS may have an unintended effect, given that oil and gas are not luxury products, as the public will decide whether to consume them. She understands that taxing it with IS will make fuels more expensive for the population and/or increase costs in exports.
From a decarbonisation perspective, IS could function as a kind of ‘carbon tax’ to curb activities harmful to the environment, especially because Brazilian decarbonisation policies are geared towards transferring decarbonisation costs to companies through the creation of a carbon market. The lawyer believes Congress, after returning from parliamentary recess, should reconsider the sections vetoed by President Lula, which provide room for the IS not to directly affect exports.
The Tax Reform will bring changes that will directly affect the structure of financial and fiscal processes at Ocyan. To ensure a smooth transition, the company’s first action was to prepare an awareness and training campaign for all employees, aimed at clarifying and disseminating an understanding of the new taxes and fiscal rules introduced by the reform. Ocyan created an internal multidisciplinary commission involving various company areas such as tax, finance, legal, procurement, among others, to ensure preparation for operating under both tax systems during the transition.
Ocyan’s Vice President of Finance and Investments, Helena Ramos, told the report that the tax team is engaged in mapping internal processes that will be impacted by the new rules, requiring careful planning. “It will be necessary to adjust operational systems, review contracts and accessory obligations, and reassess our tax planning to mitigate negative impacts and explore potential benefits brought by the new rules,” she said.
Helena explained that, as some complementary laws, decrees, and regulations are still pending, there are numerous day-to-day business impacts that cannot yet be measured and/or adjusted. She added that changes to operational systems are particularly complex and demanding, especially given the need to operate under two tax systems and the uncertainty surrounding how the implementation of ‘split payment’ and its impact on the company’s cash flow will unfold.
The expectation is that, with the inclusion of new taxes and the need to change contract pricing with suppliers and clients, there will also be a significant challenge in ensuring that all suppliers are aligned with the reform and its effects on price impacts. “We will need to renegotiate with our clients, generating work for everyone at the company,” predicted Helena.
Ocyan believes that focusing on effectively managing these challenges will provide a competitive advantage in the market, strengthening its institutional position and facilitating strategic management in the long term. ‘More than ever, we will need to have an in-depth understanding of all our costs and suppliers, as well as a strong grasp of the impacts of the Reform on the company, in order to negotiate with suppliers and clients effectively. Additionally, we must demonstrate to our stakeholders the impact of the reform on the company’s results,’ concluded Helena.
Source: Portos e Navios / BR8
