Production and use of fuel ethanol in Brazil - BAFF

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A3.4.
What is the taxation line on the hydrous ethanol
and anhydrous ethanol that are used as fuels in
Brazil’s domestic market?
a) Hydrous Ethanol:
The taxation on hydrous fuel ethanol is focused on the producer and the fuel
distributor. There is no taxation on fuel stations; as a result, the distributor is
responsible for the pay of those taxes which would otherwise be due by the fuel
station.
In a nutshell, the taxation on hydrous ethanol is as follows:
• Federal Taxes:
1. On Manufacturers:
1.1 Social Security Contribution on Revenues and Social Security Contribution
to the PIS (Social Integration Program) (COFINS/PIS): Contributions paid
on revenues from ethanol sales at the rate of 3.65 percent;
1.2 Contribution for Intervention in the Economic Domain (CIDE): It was
reduced to zero, effective as of April 2004.
2. On Distributors:
2.1. Social Security Contribution on Revenues and Social Security Contribution
to the PIS (COFINS/PIS): Contributions paid on the distributor’s revenues
from ethanol sales at the rate of 8.2 percent.
• State Tax:
Tax on Products and Services (ICMS).
It is imposed on the Manufacturers and Distributors, and the ICMS rates on the
price at the fuel station ranges from 12 to 30 percent, depending on the state.
The rate in place in the State of São Paulo is 12 percent.
b) Anhydrous Ethanol:
• Federal Taxes:
1. On Manufacturers:
1.1 Social Security Contribution on Revenues and Social Security Contribution
to the PIS (COFINS/PIS): Contributions paid on revenues from ethanol
sales at the rate of 3.65 percent;
1.2 Contribution for Intervention in the Economic Domain (CIDE): It was
reduced to zero, effective as of April 2004.
2. On Distributors: Since anhydrous ethanol is added to gasoline at the
distributor’s, it is taxed as though it were gasoline as that moment.
A. Fuel ethanol: Activities in Brazil and the world context