State of Rio de Janeiro introduces special tax regime for maritime industry

​On December 29, 2021, a law establishing a new tax regime for the maritime industry in the state of Rio de Janeiro was published, though it still awaits regulation by the executive branch.

The new law results from an official state policy to encourage the growth of the maritime economy (created under the terms of Law No. 9,466/2021). It stipulates that the state executive branch must offer to grant maritime industry players tax incentives within the scope of the National Council for Fiscal Policy (CONFAZ).

Tax deferral

Tax deferral refers to postponing tax collection until the product arrives at the jurisdiction where it will be used for economic activity. The new tax regime for the sector provides for deferring State Value Added Tax (ICMS) when:

• Importing machinery, equipment, parts, pieces and accessories for fixed assets, if similar goods are not  produced in the state of Rio de Janeiro, and provided that the goods are imported and cleared at ports or airports located in the state of Rio de Janeiro;
• Purchasing machinery, equipment, parts, pieces and accessories for fixed assets within the state of Rio de Janeiro;
• Purchasing machinery, equipment, parts, pieces and accessories for fixed assets produced in other Brazilian states, if similar goods are not produced  in the state of Rio de Janeiro (in this case, only the difference between the ICMS rates in the two states may be deferred);
• Importing raw materials, intermediate products and other resources for industrial processes (except packaging material), if similar materials are  not produced in the state of Rio de Janeiro, and provided that the goods are imported and cleared at ports or airports located in the state of Rio de Janeiro;
• Purchasing raw materials, other resources and packaging material intended for industrial processes within the state of Rio de Janeiro, except for energy, water and secondary materials.

When deferring ICMS on fixed assets (i.e., the hypotheses in points one, two and three above), the tax is the purchaser’s responsibility. It must be collected when the asset is sold (or departs the point of origin), with the sale value used as a basis for tax calculation. The normal tax rate charged at the point of destination of the goods must be applied.

In the hypotheses referred to in points four and five, the deferred tax must be paid when the products are received at the point of destination.

Tax treatment for internal and interstate transactions

Establishments that qualify for this special tax regime must pay a tax corresponding to 3% of the value of internal and interstate transfer and sale transactions (after returns have been deducted) – including a 2% portion directed to Rio de Janeiro’s Fund for Combatting and Eradicating Poverty (FECP). The use of any tax credit is prohibited.

If an establishment that receives goods has a credit balance – either resulting from an internal transfer operation to another establishment within the same company or to interdependent companies – the receiving establishment must reverse this credit balance.

Sales to final consumers

The deferrals established by Law No. 9,466/2021 do not apply to internal sales transactions carried out to final consumers (as they are non-tax contributors), except when these transactions are intended for a legal entity governed by public law or an agency within the direct public administration without legal personality.

However, the tax base will be reduced in domestic sales transactions to final consumers who are not covered by this exception, with the tax burden equivalent to 12% of the transaction value. The use of credits from previous transactions is prohibited.

Nonetheless, the law states that the reduction in the calculation basis will be limited to 10% of the total value of sales and transfers made by the establishment each year.

The specific tax aspects applicable to sales involving final consumers that are presented above do not apply to transactions carried out by shipyards.

Opting in

By opting for this tax regime, which is to be regulated by an act of the Rio de Janeiro executive branch, companies waive their right to any tax incentive they have previously received.

Taxpayers who opt for the new regime must also submit the socio-economic and environmental results derived from tax benefits, income and job creation to the State Secretary of Finance (SEFAZ).

For more information on the new law and tax incentives for the maritime sector, please contact Mattos Filho’s Tax practice area.

*The summary of this article is available in Spanish and German at this link.