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Legal Update

Brazil: Declaration of Unconstitutionality Lawsuit No. 5489/RJ: State Tax Fee related to the Control, Monitoring and Environmental Supervision of Energy Activities (“TFGE”)

31 March 2016
Tauil & Chequer Legal Update

On March 21, 2016, the National Confederation of Industries ("CNI") proposed a Declaration of Unconstitutionality Lawsuit in order to dismiss the levying of the state tax fee related to the control, monitoring and environmental supervision of generation, transmission and/or distribution of electricity from hydraulic, thermal and thermonuclear sources ("TFGE"), which was instituted by State Law No. 7,184/2015 in Rio de Janeiro.

TFGE was established in order to compensate for the regular exercise of “environmental police power” (“poder de polícia”), granted to the Rio de Janeiro State Environmental Agency (“INEA”). The TFGE is charged monthly based on fixed rates per megawatt-hour generated by legal entities authorized to carry out the activities of generation, transmission or distribution of electricity in the state of Rio de Janeiro.

Because of its effect over the production and economic chain of operations, CNI argues that the TFGE is unconstitutional because of  a lack of proportionality between the amount to be collected and the cost of the environmental supervision itself; the utilization of the tax assessment basis of another tax; and the lack of jurisdiction of the INEA and the State of Rio de Janeiro to control and supervise the aforementioned energy activities since this jurisdiction is exclusively assigned to the Federal Government.

The ADI is currently under the analysis of Minister Luís Roberto Barroso and is awaiting decision regarding the request for an injunction to suspend the levying of the TFGE, considering that its implementation will commence in April 2016.

Finally, it is important to mention that the TGFE is very similar to the state tax fee related to the control, monitoring and environmental supervision of research activities, mining, and the exploration and production of oil and gas "TFPG". The TFPG was established by State Law No. 7,182/2015 and is now being argued in ADI No. 5480/RJ. Regarding the TFPG, the 11th Court of Public Treasury of Rio de Janeiro has granted an injunction to remove the levying of the environmental tax on the activities of its plaintiffs.


  • Carolina M. Bottino
    T +55 21 2127 4217
  • Niandra Soares
    T + 55 21 2127 4266

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