Brazil: Supplementary Law # 192 – Introduction of single-stage ICMS tax regime and of PIS and COFINS zero rate transactions with fuels


In brief

On March 11, 2022, Supplementary Law # 192 introduced the single-stage ICMS tax regime on transactions with fuels.

This new law aims at reducing the final customer’s tax burden on transactions with the following fuels: gasoline; anhydrous ethanol fuel; diesel; biodiesel; liquefied petroleum gas; and natural gas. Moreover, Supplementary Law # 192 temporally reduces to zero the PIS and COFINS rates on transactions with the above-mentioned fuels until December 31, 2022, without affecting the accrual of credits.

In depth

Article 4 of Supplementary Law # 192 states that producers, their equivalent, and importers are liable for the ICMS imposed on fuels, which is levied just once, by the time that fuel leaves the taxpayer´s establishment, or, in case of importation, at customs clearance, as set forth by article 5th.

As provided by article 3, II, the ICMS’  must be paid to the State where the consumption occurs, as aligned with principle of destination, already acknowledged by Supreme Court for decades, since the judgment of Extraordinary Appeal # 198.088-SP, occurred on May 17, 2000.

As for non-petroleum-derived fuels, article 3, II provides that the ICMS imposed on goods destined to ICMS taxpayers must be split between the states of origin and destination. On the other hand, if the fuel was destined to final consumers, the ICMS must be paid to the state of origin.

Under article 3, V, the ICMS rates will be specific (ad rem), per unit of measurement (such as weight, volume or other physical units), applicable throughout the Brazilian territory. The tax rate will be determined by States through the National Council of Treasury Policy (CONFAZ) and can be adjusted in the same calendar year, observing the 90-days time-lapse established by article 150, head provision, III, ‘c’ of the Federal Constitution.

Besides the 90 days time-lapse, the variation of the tax rates should respect a 12 (twelve) months interval between the rate fix and its first adjustment, and  6 (six) months for the following adjustments, as provided by article 6, paragraph 4th of Supplementary Law # 192. Lastly, article 9 of Supplementary Law 192 states that (i)  the PIS and COFINS imposed on fuels under the single-phased regime will be reduced to zero until December 31, 2022, without jeopardizing the accrual of credits and (ii) the zero rate PIS/COFINS on the import of the following fuels: diesel oil and its currents, biodiesel and liquefied petroleum gas, petroleum and natural gas derivatives, and aviation kerosene.


The enactment of Supplementary Law 192, changing the ICMS framework and temporally reducing PIS/COFINS rate on fuels, took place in the context of the coronavirus pandemic, as well as the warfare conflict between Russia and Ukraine, which affected the price of the commodities, especially fuels and other energy resources.

 However, the establishment of a single-phase framework, through  ICMS’ ad rem rates, based on the fuels price’s estimates, considering the current period of high global volatility, may not bring the benefits wished for the lawmaker, as there is no assurance that the States will, through CONFAZ, substantially reduce the ICMS rates on fuel.

About this matter, the States, hinted in the past, through Notice CONSEFAZ # 12 addressed to the Federal Senate’s President, their will to fix the ICMS rate on internal operations over diesel and biodiesel at 18% (eighteen percent). It is also worth mentioning that the new single-phase framework did not include lubricants, goods that may also be subject to the regime provided for in article 155, paragraph 2, XII, ‘h’ of the Federal Constitution.

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