The State of Rio de Janeiro regulates tax incentives for thermoelectric power plants

On September 21, 2021, the Rio de Janeiro State Governor issued  Decrees 47,767 and 47,768, ruling on the special tax treatment granted to legal entities or legal entities consortia developed or intend to develop power plant projects in the State.

These incentives are summarized below:

Decree 47,767 – Law 9.214/21 – Power Plant Projects

Decree 47,767 rules on the special tax treatment introduced by Law 9,214/21, consisting of ICMS deferral at the following operations:

(i) import of machinery, equipment, parts, pieces and accessories intended for the installation of thermoelectric power plant projects, provided that such goods are imported and cleared at ports or airports located in the territory of the State of Rio de Janeiro;

(ii) domestic acquisitions of machinery, equipment, parts, pieces, and accessories intended for the installation of the thermoelectric plant projects; and

(iii) interstate acquisition of machinery, equipment, parts, pieces, and accessories intended for the installation of a thermoelectric power plant project, regarding the tax rate differential.

Legal entities contracted or subcontracted for the construction of the referred power plants are also eligible to apply for the regime.

Under the special treatment, the Buyer would be liable for the deferred ICMS, which shall be calculated over the sale’s price and paid by the time that the goods leave the power plant.  With respect to the ICMS deferred on acquisitions by contractors and subcontractors, the liability is shifted to the party engaging them.

Legal entities or legal entities’ consortia applying for the special treatment must:

• evidence that they were awarded at 2021 power auctionenergy auction held in 2021; or
• obtain a preliminary environmental license for the power plant project already installed or to be installed in the State.

While submiting their application to the special treatment, Applicants must also express if they would like to enjoy of ICMS exemption on imports of natural gas for power generation.

Decree 47,768 – Law 9.289/21 – Natural Gas Supply

Decree 47,768/21 rules on the special tax treatment introduced by Law 9289/21, consisting of ICMS deferral on:

• domestic transactions with natural gas destined to be used as input on power generation;
• transportation services

General Conditions

Legal entities and legal entities’ consortia willing to enjoy the incentives ruled by Decrees 47,767 and 47,768 must present a specific request to the State Treasury Office, adhering to the commitment of investing as required by Law 9,214/21 and 9,289/21, consisting the application of, at least, 2% of the annual variable cost of natural gas acquisition on power generation projects involving renewable sources of low environmental impact electedand/or approved by the State Secretariat of Economic Development, Energy, and International Relations (SEDEERI).

We remain at your disposal for any questions on the subject.