ICMS on diesel will have a single rate of up to R$ 1.006 per liter, but each state will be able to give a discount

The single rate of ICMS (Imposto sobre Circulação de Mercadorias e Serviços) on diesel will have a maximum limit of R$ 1.006 in the country, but each state may grant a kind of tax benefit that will, in practice, result in a lower charge to their consumers.

The design was designed to preserve state revenue at the same level as in November 2021, when the reference fuel prices for tax collection were frozen.

The format also seeks to prevent consumers in some regions from ending up with a higher tax to compensate for the loss of revenue from other locations that, before the change, had higher rates on diesel.

The new rates take effect on July 1. Until then, the ICMS charge on fuels, including diesel, will continue to be made on the reference prices practiced in November of last year, keeping the frozen price.

The decision on the collection of ICMS was taken this Thursday (24) by Confaz (National Council for Finance Policy), formed by the 26 states, the Federal District and representatives of the Ministry of Economy, and announced by the state secretaries of Finance.

The highest rate, equivalent to the ceiling stipulated in Confaz, will be charged in the state of Acre. All others will grant a kind of subsidy. In Sergipe, for example, the benefit will be equivalent to R$0.0951, which will result in a tax of R$0.9109 per liter of S10 diesel – the most used in diesel vehicles and trucks.

The single rate throughout the national territory was a requirement of complementary law 192, approved by Congress and sanctioned by President Jair Bolsonaro (PL) on March 11. The proposal was a way the government found to try to force governors to change the fuel tax at a time of rising prices and rising inflation.

According to the text of the law, states needed to regulate a single ICMS rate on fuels, which would become a fixed value per liter (ad rem), replacing the current system of percentage on the value at pumps (ad valorem)​ .

While the changes are not fully implemented by the governors, the tax on diesel and biodiesel should be levied based on the moving average of the average prices practiced in the 60 months prior to its establishment – ​​which would reduce the collection of state governments.

The finance secretaries decided to rush to regulate the new rate on diesel to stem the losses. The maximum rate format was the way found to comply with the law without imposing a burden on governors, be it financial (due to the loss of revenue) or political (to increase the tax burden in their states).

In recent days, technicians have pored over the spreadsheets to decipher what would be the most appropriate rate. Until the end of the night of this Wednesday (22), different aliquots circulated among the secretaries.

There was a discussion as to whether the ceiling for the new ICMS should take as a reference charges on the frozen reference price in November 2021 or whether it should consider current fuel prices.

If the decision were based on the current price, the rate could be even higher, going from R$ 1.12. The final decision ended up being to maintain the reference by frozen prices.

​This week, the governor of Piauí, Wellington Dias (PT), stated that the states will challenge the transition rule in court.

ICMS values ​​on fuels have been unchanged since November last year, by decision of the governors themselves. As confirmed today by the secretaries, the PMPF freeze has been extended until June 30 in the case of gasoline, ethanol and cooking gas.

Before the freeze and the changes being implemented, the system for charging ICMS on fuels was based on the so-called Weighted Average Price to Final Consumers (PMPF) – a value calculated every fortnight based on surveys carried out by each state on the values observed in a sample of stations.

After verifying the PMPF, the state applied the current ICMS rate to the value, which in practice results in a tax value per liter – which is extended to the entire state. That is, an increase in the PMPF usually raises the ICMS charge for all stations.