On November 4, 2019, the legislative branch of the State of Rio de Janeiro ("ALERJ") filed Action of Unconstitutionality ("ADI") No. 6250 before the Brazilian Supreme Court ("STF"), requesting the declaration of unconstitutionality of article 155, paragraph 4th, item I of the Brazilian Federal Constitution ("CRFB/88") (instituted by Constitutional Amendment No. 33/2001 – "EC 33"). This article establishes the authority of the state of destination of lubricants and oil-derived fuels to collect the ICMS in such transactions.

ALERJ argues  that the taxation of lubricants and petroleum-based fuels in the state of destination violates the reciprocal tax immunity between the federal entities that is provided in article 150, VI, "a" of CRFB/88. This is because the inclusion brought by EC 33 excluded the possibility that the State of Rio de Janeiro could tax lubricants and petroleum-based fuels, acting, thus, on their assets and income.

In addition, the ADI also requires the interpretation in accordance with CRFB/88 of item "b," item X, paragraph 2 of article 155 in the sense that there is no prohibition on the taxation in the extraction of oil. Thus, the taxable event of the ICMS would be the movement of the product resulting from the activity of separating hydrocarbons from oil deposits, natural gas and other fluid hydrocarbons—the moment when ownership transfers between the federal government and the explorer of such resources.

For more information regarding this ADI, please contact our tax team:
Ivan TauilGuido VinciEduardo TellesCarolina BottinoCelso GrisiAna Luiza MartinsThais Rodrigues