States announce increase in ICMS on fuels – 10/26/2023 – Market

Confaz (National Council for Financial Policy) published this Thursday (26) new ICMS rates for fuels, effective from February 2024. These are the first increases since the tax began to be charged at a single national rate .

The ICMS on gasoline will rise by R$0.15, to R$1.37 per liter. In diesel, the increase will be R$0.12, to R$1.06 per liter. The cooking gas tax rate was set at R$1.41 per kilo, an increase of R$0.16 compared to the current rate — on a 13-kilo cylinder, the difference is R$2.08.

The changes were published on the Confaz website, with no explanation yet as to the reason for the increases. The law that unified the ICMS on fuels provided for a period of one year for the first rate change. Afterwards, reviews can be carried out every six months.

The new charging model for diesel and LPG came into effect in May. In the case of gasoline, the new ICMS began to be charged in June. But the law that compensates states for ICMS losses, published this week, overturned the initial minimum deadline.

In the market’s assessment, the states scheduled the increase for February to respect principles of quarantine and annuality in tax changes.

In addition to a unified rate, the new ICMS is now calculated in reais per liter, and no longer as a percentage of the pump price. The changes pleased the fuel market, which sees less scope for tax fraud.

But they were questioned by the states, which even appealed to the STF (Supreme Federal Court), alleging losses in revenue. In fact, data from Confaz show that, until August, ICMS revenue from fuels fell by almost 16%, to R$73.6 billion.

In 2022, however, the states benefited from the rise in fuel prices, which broke records at the pumps in the first half of the year. Revenue from these products reached R$122.4 billion, an increase of 7% compared to 2021, the previous record.

The definition of a single rate for gasoline was mediated by the STF. Initially, the states announced the charge of R$1.45 per liter. Then, they reduced the value to R$1.22 per liter.