The article 70, item LV, of the Espírito Santo’s Value-added Tax Regulations, as amended by the State Decree No. 3.658-R from August 26, 2014, authorizes a reduction on the tax basis of the Value-addex tax to three per cent (3%) until March 31, 2015, due in the customs clearance of equipment used in the production stage of oil and natural gas imported under REPETRO rules.

It occurs that so far the State of Espírito Santo has not yet extended the period of effectiveness of the aforementioned tax benefit. Therefore, tax authorities of the State of Espírito Santo have been demanding the tax rate of 17% on such operations, this burden will remain until the new term for the reduction of the tax basis is enacted by the State (if extended).

We emphasize, however, that the same is not applied for the exploration stage, since the Espírito Santo’s Value-added tax Regulation on article 5, item CXXXIX, authorizes an exemption of the State Valued-added tax due in the customs clearance of goods and assets imported under REPETRO rules until December 31, 2020.