Pursuant to Decree no. 49294, of June 26, 2012, the State of Rio Grande do Sul has amended item CLXXII, of section 9, of the ICMS Statute (RICMS), Decree no. 37699, of August 26, 1997. As a result, the RICMS now provides that ICMS exemption applies to shipments to entities based overseas of assets and goods manufactured in Brazil that are subsequently imported pursuant to clauses one and two of CONFAZ ICMS Agreement no. 130, of November 27, 2007, under the Customs Regime of Temporary Admission, for use in oil and natural gas exploration and production, within or outside the State where the manufacturer is located, and the transaction preceding any such shipments.

In addition, Note no. 6 was added to item CLXXII, providing that the exemption also applies in case of an interstate transaction preceding the shipments to the entity based overseas.

(1) State Value-added Tax on the Circulation of Goods, Interstate and Intercity Transportation and Communications Services.

For more information, please contact Ivan Tauil, Eduardo Telles or Carolina Bottino.

Observations in this update about Brazilian law are by Tauil & Chequer Advogados. They are not intended to provide legal advice to any entity; any entity considering the possibility of a transaction must seek advice tailored to its particular circumstances.