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Brazilian Government enacts Decree regarding Repetro-Industrialização

On October 25, 2018, the federal executive branch published Decree No. 9,537/2018, dealing with the Repetro-Industrialização regime and extending the final date for the migration from Repetro to Repetro-Sped to June 30, 2019.

The Repetro-Industrialização regime permits the importation and local purchases of raw materials, intermediate products and packaging materials with relief from federal taxes to manufacturers of final products that benefit from Repetro-Sped and manufacturers of intermediate products that sell to manufacturers of final products, which benefit from Repetro-Sped.

Decree No. 9,537/2018 was eagerly awaited by the O&G industry since the enactment of Law No. 13,586/2017, which introduced the Repetro-Industrialização regime and stipulated that such regime would be further regulated through an act by the federal executive branch.

In fact, numerous taxpayers questioned if Repetro-Industrialization was effective upon the publication of Law 13,586/2018 or if the benefit depended on further regulations. In this regard, the Brazilian IRS declared that the procedures for the application of the tax benefit will be stipulated in a Decree and ruled by means of a Normative Instruction of the RFB. (according to Repetro-Sped Guidelines).

Decree No. 9,537/2018 is the first step to regulate Repetro-Industrialization by the executive branch. Nonetheless, such Decree, in general terms, reproduces rules already set forth by Law No. 13,586/2017 and, therefore, does not bring effective regulations on such regime. However, Decree No. 9,537/2018 indicates that the Brazilian IRS must further regulate several matters concerning Repetro-Industrialização.

Please find below the main aspects addressed in Decree No. 9,537/2018:


a.    Requirements. As a key requirement to qualify for the Repetro-Industrialização regime, the raw materials, intermediate products and packaging materials purchased must be used entirely within the productive process of the final products benefiting from Repetro-Sped.

In case the imported or locally purchased items are not entirely used within the productive process set forth by the legislation or are used in a manner that is not in compliance with the legislation, the taxpayer may take the following measures in order to not trigger the payment of taxes: 

  • Export the products;
  • Transfer the products to another special regime, if appropriate;
  • Destroy the products, under the supervision of a customs agent, at the expense of the taxpayer; or
  • Allocate the products to the local market with the appropriate payment of taxes added by all other related costs. 

b.    Enrollment. In order to benefit from the regime, the taxpayer must be previously qualified with the Secretariat of the RFB, pursuant to regulations, which will be further issued. 

c.     Period to benefit from the Repetro-Industrialização regime. The taxpayer eligible for Repetro-Industrialização will not be required to pay federal taxes for one year, extendable for up to five years, observing further rules to be enacted by the Brazilian IRS. In exceptional and justified cases, the Brazilian IRS can further extend such 5-year limitation. 

d.    Period for the use of the final product. The purchaser of the final product must use it within three years in E&P related activities. However, the Brazilian IRS can extend the 3-year period to another twelve months in exceptional and justified cases. In case the 3 year-period is not followed, the purchaser of the final product must pay the taxes that were not collected with other appropriate costs, pursuant to regulations that will be further issued. 

e.    Conversion into zero rate or exemption. When the final product manufactured under the Repetro-Industrialização regime is used in compliance with the law, the suspension  of the payment of federal taxes for the purchase of raw materials, intermediate products and packaging materials will be converted into a zero rate for PIS/COFINS and PIS/COFINS-Importation and into a tax exemption for II and IPI. 

The final product will be purchased with suspension from payment of PIS/COFINS and IPI taxes. When the final product  is used for its E&P related purpose, the suspension will be converted into a zero rate for PIS/COFINS and into an exemption for IPI. 

f.     Expiration date. In line with the term stipulated by Law No. 13,586/2017, Repetro-Industrialização is applicable to triggering events that occur up to December 31, 2040. 

With respect to the migration from Repetro to Repetro-Sped, Decree No. 9,128/2017 established that interested taxpayers had the option to apply for the migration by December 31, 2018. Decree No. 9,537/2018 extends such date to June 30, 2019.