Senate includes benefit for fertilizer company that uses natural gas in MP

The Senate approved this Wednesday (25) a provisional measure that extends until the end of 2027 tax benefits for the petrochemical industry. Lawmakers inserted additional incentives aimed at fertilizer plants that use natural gas.

The rapporteur of the proposal Eduardo Braga (MDB-AM) created a mechanism that allows these companies to use tax credits to build or expand factories. In the justification of the project, Braga specified that the measure would help units in Três Lagoas (MS), Linhares (ES) and Uberaba (MG).

The rapporteur’s argument is the difficulty faced by the agricultural sector in obtaining fertilizers in the midst of Russia’s war in Ukraine.

“Talking with President Rodrigo Pacheco, who is a fervent supporter of the implementation of this fertilizer industry in Uberaba, we decided that it was time, in MP 1095, to take a step forward. of environmental safety, of water safety, of safety of labor legislation”, said Braga.

“No, we want to advance further. We want to advance in the investment solution for an industry that generates 10% of Brazilian GDP and can generate more, of the industry’s GDP, which is responsible for 2.5% of total GDP, but which is fundamental basis for agribusiness. If we are self-sufficient in fertilizers, Brazil will free itself from a deficit trap of around U$ 8 billion per year, generating employment and income in Brazil”, he added.

The measure involved the articulation of the president of the Senate, Rodrigo Pacheco (PSD-MG) – from one of the states mentioned by the rapporteur.

Pacheco thanked Braga “on behalf of the people of the state of Minas Gerais” for the change to “enable the fertilizer industry in Uberaba, in the Triângulo Mineiro, as well as in Linhares, in Espírito Santo, and in Três Lagoas, land of our dear Senator Simone Tebet, in Mato Grosso do Sul,” he said.

“I really appreciate this concrete possibility of enabling a major industrial transformation in Minas Gerais through the feasibility of this industry in the city of Uberaba”, he added.

The new text provides that petrochemical plants and chemical industries will be able to discount, in the period from January 2024 to December 2027, additional credits to those already provided for in the text.

These credits will be calculated by applying the rate of 0.5% for the PIS/Pasep contribution and 1% for Cofins and Cofins-importation, “by means of a commitment to invest in the expansion of installed capacity”.

Some senators questioned the mention of the three plants specifically, such as Senator Oriovisto Guimarães (Podemos-PR). Braga replied that they are close to the raw material supply areas. Linhares is located, he argued, close to a natural gas processing unit. As for Uberaba, it is close to the gas pipeline in the Triângulo Mineiro region.

The proposal was approved in a symbolic way, but, as there were changes, it will need to go through a new round of voting in the Chamber of Deputies.

The provisional measure sent by the federal government initially established the extinction of the so-called Reiq (Special Regime for the Chemical Industry). This is a regime that reduces PIS/Pasep and Cofins rates that are levied on some chemical products, such as naphtha and ethane.

With the end of this special regime for the petrochemical sector, the government intended to use the revenue gains to offset another measure recently approved, the reduction of the Withholding Income Tax on aircraft leasing.

It is estimated that the increase in revenue with the end of Reiq would be R$ 573 million this year alone.

But the Chamber of Deputies amended the proposal and extended Reiq until 2027 with a gradual end. Until then, a transition rule was established for the resumption of rates, increasing gradually to, in the end, resuming the rates of 1.65% and 7.6%, of PIS/Pasep and Cofins, respectively — scheduled to take effect without Reiq.

The rates levied prior to the revocation of Reiq were 1.26% and 5.8%, respectively.

Companies that adopt the regime will need to implement some counterparts, such as complying with occupational safety and medicine standards, maintaining regularity in relation to tax and social security debts and presenting certificates proving that they follow the provisions of environmental legislation.

The text also determines that participating companies must comply with the environmental compensation measures determined administratively or judicially.

The text of the provisional measure by the Senate presents other changes in relation to what came from the Chamber. The proposal provided for the suspension of Reiq only this year, between the months of April and December. Braga, however, considered this suspension “exaggerated” and therefore reduced the period of absence from the special regime to six months – from April to September.