Dados necessários para melhorar nosso serviço e personalizar a sua experiência.
The right to ICMS credit on drilling fluids
The website PETRÓLEO HOJE, from the magazine Brasil Energia, published an article written by Drs. Eduardo Maneira, Marcos Correia Piqueira Maia and Thales Roliz, which deals with the right of oil and gas companies to obtain ICMS credit on chemical products that are part of well drilling fluids.
The ICMS credit right on drilling fluids
By Eduardo Maneira, Professor at the Federal University of Rio de Janeiro, PhD in Tax Law from UFMG and partner at Maneira Advogados; Marcos Correia Piqueira Maia, PhD student in Tax Law at the Complutense University of Madrid and partner at Maneira Advogados; and Thales Maciel Roliz, master's student in Tax Law at IBDT and partner at Maneira Advogados
On April 18, the Superior Court of Justice ruled on an extremely relevant issue for the oil and gas sector.
This is Special Appeal No. 2,054,083/RJ, which was filed by the State of Rio de Janeiro against a Court of Justice ruling that recognized the possibility of an oil producing company recording ICMS credits on chemical products that are part of well drilling fluids. Such fluids, it should be noted, are notoriously indispensable for carrying out oil and gas exploration activities (defined in article 6 of Law No. 9,478/97), being used in the identification of economically viable deposits.
This is a stage that integrates the oil production cycle, in accordance with the aforementioned Law nº 9,478/97, representing an absolutely essential input for this purpose. Regarding the two points mentioned above – (i) integration into the production cycle and (ii) constituting an essential input –, there were no further discussions in the process, as both parties converged in this direction.
Thus, the central point debated by the Second Panel of the STJ was the following: the characterization of an input, for the purposes of recording credits under the ICMS, can only occur when a certain good, used in the industrialization process, has “physical contact” with the final product?
This is one of the major issues regarding ICMS, in relation to which doctrine and jurisprudence have always fluctuated. The discussion has been going on since the publication of the 1988 Constitution, as it involves the delimitation of the concept of “input” for the purposes of implementing the principle of non-cumulativeness enshrined in art. 155, §2º, I, of the Magna Carta itself.
There are two classic schools of thought regarding the extension of the ICMS credit right, which can be summarized as follows:
a)There is a more restrictive interpretation that, as with the IPI, allows ICMS credits only on goods that(i) are incorporated into the final product (raw materials); (ii) come into physical contact with the final product and are consumed in the production process (intermediate products), and (iii) constitute so-called packaging materials. This is the well-known “physical credit” criterion;
b)On the other hand, there is a diametrically opposite line of thought, which considers the possibility of recording credits on all goods essential to the taxpayer's activity, including those that will not “leave” their establishment because they have not been added, either directly or indirectly, to the final product. The logic is that the acquisition of these goods will always impact the sales price to be subsequently taxed by ICMS, ultimately representing the cost of production or resale of the products for the taxpayer. This rationale was called the “financial credit” criterion.
The STF, since the edition of the 1988 Constitution, has positioned itself in the sense that the group of materials that could be classified as “input” is that composed of raw materials, intermediate products and packaging materials, in line with the “physical credit” criterion mentioned above (RE nº 447.470 AgR, Rel. Min. Joaquim Barbosa, Second Panel, in 09/14/10, for example).
Furthermore, according to the Supreme Court, there would only be a right to credit over a certain asset in case of express authorization from the infra-constitutional legislator [1]. And it was precisely from this perspective that the panorama evolved, with the Superior Court of Justice taking the lead in the discussion.
In plan, it is worth making the following observation: as soon as the 1988 Charter was promulgated, Agreement No. 66/88 was published, which regulated the general ICMS rules at the national level – including with regard to the implementation of the principle of non-cumulativeness –, with, in its art. 31, stating that “will not imply credit (…)the entry of goods or products that, used in the industrial process, are not consumed in it or do not integrate the final product as an indispensable element in its composition”.
Note that the wording of art. 31 of Agreement No. 66/88 adopted a restrictive perspective for the use of ICMS credits for taxpayers, which was already present in the jurisprudence of the Superior Courts.
However, in 1996, Agreement No. 66/88 was replaced by the current Complementary Law No. 87. This diploma, unlike the previous one, began to guarantee, in its art. 20, §1º, the recording of ICMS credits on all assets that are not unrelated to the establishment's activity and that do not result in an exempt or non-taxed operation or provision of services.
This important change in legislation then allowed the STJ to begin revisiting the historical position of the Courts on the issue. And the change began to take shape, firstly, from judgments that discussed the possibility of taking ICMS credits due to the acquisition of goods by transport and communication service providers.
On 03/26/10, the Second Panel of the STJ, when judging REsp nº 1.175.166/MG, stated that art. 20 of LC nº 87/96 would have expanded “the possibility of crediting, as it only referred to the linking of inputs to the establishment's activity, but not to the need for them to be part of the final product”. Based on this rationale, it was understood that the transport service provider could take credit for all goods that were used and consumed in vehicles owned by the company. This positioning finally meant overcoming the classic lines of the “physical credit” criterion.
Next, the First Section of the STJ, in the files of REsp nº 842.270/RS and REsp nº 1.201.635/MG, analyzed the discussion regarding the credit right of telephone operators over the electrical energy used to provide communication services, having concluded that the aforementioned product constitutes an essential input for the companies' core activity, which is why its acquisition should generate the right to credit.
The new rationale adopted for service providers taxed by ICMS as of the 1988 Constitution was necessary, since maintaining the requirement for “physical contact” with the final product would completely prevent the recording of any credits by this group of taxpayers (who, obviously, do not “exit” any goods).
Therefore, although the STF remains faithful to its position regarding the constitutionality of the physical credit criterion [2], the STJ, based on the interpretation of art. 20 of Complementary Law No. 87/96, began to give due contours to the principle of non-cumulativeness and, with this, guarantee full credit rights to taxpayers.
It turns out that, even within the STJ, there was a divergence between the decisions handed down by the First and Second Panels on the matter. In fact, since 2009 [3], there was already a tendency for the First Panel to guarantee the right to credit for taxpayers, regardless of physical contact between the input and the final product (the main element became the indispensability of the good for the achievement of the taxpayer's core activity).
On the other hand, in the Second Panel of the STJ, the situation was different. Although there are very lucid precedents on the subject (such as REsp 1,331,033, which very well differentiated the situation of IPI and ICMS [4]), there was a greater tendency to adopt the physical credit criterion, as occurred, for example, in the following judgments: AgRg in REsp nº 738,905 (Rel. Min. Humberto Martins), of 02/07/08; REsp nº 1,808,979 (Rel. Min. Herman Benjamin), dated 06/11/19; and AgInt in REsp nº 1,860,994 (Rel. Min. Francisco Falcão), dated 11/14/22.
Hence comes the relevance of the recent judgment of REsp nº 2.054.083/RJ [5], held on 04/18/23, in which the Second Panel of the STJ seems to have regained its better understanding of the issue and, thus, decided to recognize the possibility of an oil producing company recording credits on well drilling fluids.
See how emblematic the situation is: even though the drilling fluids do not come into contact with the final product and do not participate in the oil and gas extraction process itself (as it is applied in the exploration phase), the credit was recognized by the Second Panel of the STJ. And this decision appears to be irrevocable, given that the exploration phase is part of the initial stage of the oil and gas production cycle (as provided for in Law No. 9,478/97), with fluids being an essential and indispensable input for the achievement of the aforementioned core activity of oil and gas operators.
This therefore makes it even more representative. If this understanding prevails (which seems absolutely appropriate to us), the characterization of input, for the purposes of recording ICMS credits, will depend on the proof of only two elements by the taxpayers (whether industrialists, traders or service providers), namely: (i)that the acquired good has been taxed; and (ii) that constitutes an essential item for the achievement of the company's core activity.
Despite the importance of the precedent in question, it is prudent to warn that the debate is far from over. Even knowing that the STJ has been taking great strides towards finding the best interpretation of the principle of non-cumulativeness, it is a fact that the topic arouses many interests, with the STF's jurisprudence still very much focused on the criterion of physical credit. Therefore, there are new chapters ahead.
NOTES:
[1] In this sense, we can cite AI nº 685.740 AgR-ED, judged by the Second Panel of the STF on 08/31/10 (Rel. Min. Joaquim Barbosa).
[2] In this sense, there is RE nº 689.001 AgR, judged by the Second Panel on 02/06/18, for example (Rel. Min. Dias Toffoli).
[3] On 03/06/07, for example, the 1st Panel of the STJ, in REsp nº 762.748 (Rel. Min. Luiz Fux), stated that the right to credit is limited to “products classified as input goods, which are raw materials or intermediate products that, used in the industrialization process, are added in some way to the final product and, consequently, when they are sold, they are, in a certain way, passed on to the consumer.”
Soon after, it began to be noticed, within the scope of the 1st Panel, the existence of judgments more favorable to taxpayers, in which it was recognized that the right to credit is, in fact, linked to the use of the good in the taxpayer's core activity, with physical contact with the final product being irrelevant. This was what happened in REsp nº 1,435,626, judged on 06/03/14, in which the right to credit was recognized in the acquisition of fuel for the provision of river transport services. Likewise, in AgInt in EDcl in AREsp nº 1,394,400, judged on 10/25/21, credit was authorized for the acquisition of fuel, by an energy transmission company, for the fleet used in the maintenance of its network.
[4] REsp nº 1.331.033/SC, Minister Mauro Campbell Marques, Second Panel, judged on 02/04/13.
[5] “TAX. ICMS. INTERMEDIATE PRODUCT. ACQUISITION OF CHEMICAL PRODUCT. INDUSTRIAL PURPOSE. PURPOSE ACTIVITY. UTILIZATION OF CREDITS. LC N. 87/1966.
I – The Court a quo, based on the evidence in the case, found that the chemical product used by the taxpayer is used directly in the production process, being an essential input for obtaining the final product made available by the company.
II – The Superior Court of Justice has a pacified understanding that, as of the entry into force of Complementary Law no. 87/1996, it is legal to use ICMS credits when purchasing intermediate products used in the business company's core activities, even if consumed or worn out gradually.” (Rel. Min. Franciso Falcão)
See other related news stories
Press
Averages should not ignore the Contumacious Debtor Law, experts say
May 11, 2026Media should not ignore the Contumacious Debtor Law, experts say Risks are greater for companies that fail to comply with balance sheet obligations and are unaware of the situation of related parties By Suzana Liskauskas, Para o Valor — Rio de Janeiro Instituted...
