This excerpt taken from the PBR 6-K filed Nov 21, 2007.
18.3. Capital reserve fiscal incentives
Includes an investments subsidy incentive in the Northeast, within the region covered by the Northeast Development Agency (ADENE), granting a 75% reduction in income tax payable, calculated on the profits of the exploration of the incentive activities, in the amount of R$ 1.031.441 thousand as at September 30, 2007, and which may only be utilized to offset losses or for a capital increase, as provided for in Article 545 of the Income Tax Regulations.
On May 10, 2007, the Brazilian Federal Revenue Office recognized Petrobras right to deduct this incentive from income tax payable, covering the tax years of 2006 until 2015.