This excerpt taken from the PBR 20-F filed May 22, 2009.
We have been served with four tax assessments by the Brazilian Revenue Service relating to a withholding tax (IRRF) that they claim should have been paid by us. Two assessments relate to payments we made to purchase oil we imported, and the other two relate to charter payments we made with respect to movable platform vessels. On May 8, 2008, we filed suit concerning one of the two tax assessments related to charter payments, and the court granted preliminary injunctive relief (tutela antecipada) suspending the withholding tax until a final judgment is reached. On December 31, 2008, the total amount of these four tax assessments corresponded to approximately R$5,092 million (approximately U.S.$2,179 million). We have
contested all four of these assessments, and they are pending appeal at the administrative level. If necessary, we will bring suit at the federal judicial level.
We sold imported naphtha for the production of petrochemical raw materials, as opposed to the production of gasoline or diesel. In 2006, the Brazilian Revenue Service filed a tax assessment (auto de infração) against us for the payment of CIDE, an excise tax applied to the sale and import of crude oil, oil products and natural gas products, on the grounds that we did not prove that the naphtha was not used to produce gasoline or diesel. As we have provided evidence that the naphtha was used solely in petrochemical activities, we believe these imports are not taxable. The assessment is being reviewed, and we will continue to appeal at the federal administrative level and later at the federal judicial level, if necessary. As of December 31, 2008, Petrobras maximum exposure in this matter, including monetary restatement, was R$1,421 million (U.S.$608 million).
Petrobras was obligated to sell its products to fuel distributors free of CIDE (an excise tax) due to judicial decisions obtained by the distributors against the federal government of Brazil. The judicial decisions have been revoked, and in 2007, the Brazilian federal government commenced an administrative proceeding against us to recover unpaid CIDE. We filed an appeal at the administrative level in light of the first unfavorable administrative decision. As of December 31, 2008, Petrobras maximum exposure in this matter, including monetary restatement, was R$1,107 million (U.S.$474 million).
This excerpt taken from the PBR 20-F filed Jun 30, 2005.
We received several tax assessments from the INSS alleging irregular presentation of documentation by construction companies and other service providers under contract with us with regard to their INSS contributions. The INSS seeks to hold us jointly and severally liable for contributions not made by these providers. We are analyzing each of the INSSs assessments in order to attempt to recover payments that we made to the INSS with respect to these tax assessments. In addition, we intend to take action against service providers in order to recover any amounts paid and not recovered from the INSS. Because it is unlikely that we will successfully obtain a reversal of the INSSs decision through the agencys administrative procedures, at December 31, 2004, we had a balance of U.S.$107 million in our provision to cover future payments to the INSS.
Federal tax authorities (Delegacia da Receita Federal) have served us with a tax assessment of approximately R$566 million related to a withholding tax (IRRF) that they believe should have been paid in connection with remittances we made abroad between 1999 and 2002. The remittances were related to the purchase of imported oil by Petrobras. According to the federal tax authorities, such remittances corresponded to interest payments, which they believe would give rise to the tax levy they claim. However, the importation documents do not make reference to the alleged interest payments. Petrobras is currently challenging the tax assessment.
The Rio de Janeiro branch of the Brazilian Revenue Service (Secretaria da Receita Federal) has asserted that, under Brazilian law, drilling and production platforms may not be classified as sea-going vessels and therefore should not be chartered but leased. Based on this interpretation of Brazilian law, overseas remittances for charter payments would be reclassified as lease payments, and would be subject to withholding tax at the rate of 25%. The Brazilian Revenue Service has filed two tax assessments against us in connection with the withholding tax (IRRF) on foreign remittances of payments related to the charter of vessels of movable platform types. On February 17, 2003, the Brazilian Revenue Service served us with a tax assessment notice for R$93 million (approximately U.S.$32 million) covering disputed taxes for 1998. On June 27, 2003, the Brazilian Revenue Service served us with a tax assessment notice for R$3,064 million (approximately U.S.$1,066 million) covering disputed taxes for the period from 1999 to 2002. We appealed the two unfavorable rulings from the Brazilian Revenue Service with respect to these tax assessments to a higher administrative court. On February 24, 2005, the Sixth Chamber of the First Taxpayers Council of the Ministry of Finance denied two voluntary appeals filed by us, upholding the tax assessments imposed by the Federal Revenue Office in Rio de Janeiro when it held that drilling and production platforms may not be classified as sea-going vessels and therefore should be leased, not chartered. We will continue to appeal the tax assessment at the federal administrative level and later at the federal judicial level, if necessary.