New tax regulations for oil and gas consortia in Rio de Janeiro

On July 26, the Government of Rio de Janeiro issued State Decree No. 49.219/2024. Effective from December 1, this regulation establishes new rules for oil and natural gas exploration and production consortia, introducing special tax treatment for these activities.

One of the main changes is the requirement for consortium companies to register with the Rio de Janeiro State Registry for Taxable Entities (CAD-ICMS) through the lead bidder. This company will serve as a trustee for the other consortium members and must manage them by registering a subsidiary establishment individually for each exploration block, production field, unitized reservoir, or shared structure.

The decree also regulates the transfer of State Goods and Services Tax (ICMS) credits among the member companies in proportion to their participation in inputs, supplies, services, and goods for the consortium’s property, plant, and equipment (PP&E). Each company must issue electronic invoices to document all such transfers and the corresponding operations related to oil and gas flow, as per the applicable tax rules.

A key point to note is that, under the new regulation, the consortium members will be jointly and severally liable for the tax obligations related to the consortium's activities as a whole.

Sector expertise

To reduce their tax burden and ensure compliance with the competent authorities, companies should rely on partners who are knowledgeable about both national and local legislation and well-versed in the specific needs of their business segment.

With extensive experience serving companies in the oil and gas industry, Domingues e Pinho Contadores provides the expert support your business needs. Reach out to us at: dpc@dpc.com.br.