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The General Coordination of Customs Administration (“Coana”) enacted, on June 26, 2018, Ordinance No. 40/18, regulating simplified procedures for the migration of assets from Repetro to Repetro-Sped. 

As detailed in our memorandum to clients of January 10, 2018, Normative Ruling No. 1,781/17 introduced a regime called Repetro-Sped and indicated that taxpayers could migrate assets to this new regime by means of a simplified procedure to be further defined by Coana. 

With the enactment of Ordinance No. 40/18, companies which are in compliance with all legal requirements and which are qualified for Repetro-Sped may initiate the migration of their assets originally brought into Brazil under Repetro to this new regime.

Below, we summarize the main regulations introduced by Ordinance No. 40/18.

• Effectiveness. Ordinance No. 40/18 came into effect on June 26, 2017 and its simplified procedures apply to the migration of assets that are carried out prior to December 31, 2018. For migration of assets after that day, the standard procedures applicable to the transfer of assets between customs regimes will be applicable.

• Application. The simplified procedure must occur through an application form called “RCR-Migração”, which must be filed with the tax authorities. Further to such filing, companies must comply with certain procedures, such as registering a new Import Declaration and filing an additional form canceling the prior Repetro regime.

• Assets covered by the simplified procedure. In the RCR-Migração form the main assets imported by companies in the O&G industry (e.g. vessels and oil rigs) and directly related ancillary assets may be included, as well as inventory items relating to the maintenance of the vessel or oil rig or for the use of the crew and passengers.

Ordinance No. 40/18 permits incidental assets and inventory items to be automatically migrated to Repetro-Sped after the customs clearance of the main asset. However, third party assets that are on board a vessel or oil rig are not covered by the migration of the main asset and must be migrated by their respective owners.

The simplified procedure may include assets that are currently subject to an ongoing request for Repetro extension or beneficiary substitution. In such cases, however, an authorization to migrate assets to Repetro-Sped does not indicate approval of such requests or prevent the tax authorities from carrying out an inspection as to the correct application of the prior regime.

During the analysis of the request for the migration to Repetro-Sped, taxpayers may use the assets for the purposes for which they were imported under Repetro.

• Assets of less than US$ 25.000,00. Assets having a value of less than US$ 25,000.00 may not be migrated to the temporary importation regime with complete relief from federal taxes (although they may be migrated to the temporary importation regime with federal tax relief proportional to the time the assets remain in Brazil or be migrated to the permanent importation regime). For such purposes, the value of the main assets and their respective ancillary assets, as well as freight and insurance costs, are taken into consideration. 

• Registration of the Import Declaration. For the migration of assets to the temporary importation regime with relief from federal taxes, the new Import Declaration must be registered by: (i) the O&G company (operator of the block); or by (ii) the service provider for the account and at the order of the operator.

• Reject of migration request. If the tax authorities reject the request for migration of assets to Repetro-Sped, taxpayers will be required to extinguish their Repetro regime within 30 days from the rejection, unless the remaining period of its Repetro regime is longer. In the case of rejection, the tax authorities may charge taxes proportional to the period the assets remain in Brazil if the period of the Repetro regime expires before the assets are re-exported.