Mendonça sets a single ICMS rate on fuels

Minister André Mendonça, of the Federal Supreme Court (STF), determined this Friday (June 17, 2022), in an injunction (provisional), that the ICMS rates on fuels must be uniform throughout the country from July.

There is still no forecast for judgment on the merits in the plenary of the Court. Here is the full text of the decision (250 KB).

Mendonça suspended Confaz (National Finance Policy Council) Agreement nº 16/2022, which allowed each State to charge a different amount of ICMS on diesel. Until a new rule is edited by the council, the basis for calculating the tax for fuels will be fixed by the average of prices practiced in the last 60 months.

The minister also set guidelines for ICMS rates on fuel to be:

  • selective, to the greatest extent possible, depending on the essentiality of the product and extra-fiscal purposes, according to the product;
  • “ad rem” or specific, per unit of measure adopted (value in reais per liter).

In setting the rates, States must:

  • consider a minimum interval of 12 months between the 1st fixation and the 1st readjustment, and of 6 months for subsequent readjustments –
  • observe the principle of nonagesimal anteriority (a 90-day wait) when it implies a tax increase;
  • stop increasing the proportional weight of ICMS in the formation of the final price to the consumer, in view of the estimates of evolution of the price of fuels;
  • observe the principle of tax transparency, in order to provide, through normative and administrative measures, the clarification of consumers about taxes levied on goods and services.

The minister’s decision was taken in the action in which the AGU (Advocacy General of the Union) questions the different rates of ICMS on diesel. An attempt at conciliation between the federal government and the states, called by the minister, ended without an agreement.

“In view of the frustration in this STF of a conciliatory initiative, given that there was no presentation of a joint proposal for an agreement, it is now necessary to examine the precautionary requests placed in the amendment to the exordial”said Mendonça, in reference to the federal government’s requests in the action.

In the same decision, Mendonça gave Petrobras 5 days to explain the criteria used to readjust fuel prices.

It also collected information about the company’s pricing policy. This Friday (June 17), the state-owned company announced a new increase in gasoline and diesel.

“With regard to Petrobras, I require that at this time, detailed information be provided, within 5 days, regarding the criteria adopted for the pricing policy established in the last 60 months”said the minister.

Also with regard to the state-owned company, Mendonça determined to Cade (Administrative Council for Economic Defense) and the ANP (National Petroleum Agency) a period of 5 days for them to inform, respectively, about open procedures in relation to Petrobras and about the inspection, monitoring and transparency of fuel pricing policy in the country.


Minister André Mendonça is the rapporteur of an action in the Supreme in which the federal government asks for the suspension of the definition by the states of ICMS on diesel. The intention is to keep the tax unified, as approved by Congress.

On May 24, Mendonça had authorized the manifestation of the States and the Federal District in the action in the Court that discusses the issue. It gave 48 hours for those responsible for the state economies to provide information, such as the rates and average prices of the last 60 months charged on fuel and the value of ICMS collection of each Federation Unit with the products.

State governments sent official letters with the given information.

On May 13, the minister had suspended, in an injunction (provisional) form, parts of Confaz (National Finance Policy Council) Agreement nº 16/2022, which allowed each State to charge a different amount of ICMS on fuel. The action was brought by the federal government, through the AGU (Advocacia Geral da União). In the decision, he said it was clear that “violation of constitutional provisions” and the “manifest affront to the principle of uniformity.” on the device that allows for state-specific billing.

The Comsefaz (National Committee of State and Federal District Treasury Secretaries) had already decided to challenge Mendonça’s injunction. On May 20, the AGU expanded its initial request, and requested that the Court make a decision on the alleged “omission” of States in relation to ICMS on diesel. The body stated that the entities of the Federation adopted “recalcitrant posture” at a Confaz meeting on May 19, in which they did not agree to reach a solution for the tax.

On the occasion, the body also asked for the suspension of the effectiveness of the entirety of Confaz’s Agreement nº 16/2022.

ICMS on diesel

In March, the state finance secretaries unanimously defined that the ICMS on diesel S-10 would be R$ 1.0060 per liter as of July 1st. The value refers to the highest rate in force in the country, practiced in Acre. The application of the tax, however, would come with a “discount”, which, in practice, would maintain the current tax burden of each State. The measure was taken with the justification that, thus, there would be no impact on the collection.

As a result, each State continued with a different amount, not having achieved the objective of Complementary Law 192/2022, approved on March 10, which unified the rate and also established a new form of collection, the so-called “ad rem”that is, fixed and per unit of measure.

The government filed the direct action of unconstitutionality on May 13. In it, he questions the possibility of each State charging a different amount of ICMS on diesel.

Read the full agreement on the national diesel ICMS rate (266 KB).

On May 19, Confaz, linked to the Ministry of Economy, called an emergency meeting with the States to try to reach a solution. The Council proposed the adoption of the transition model of application of a moving average, in the tax calculation basis, from the average price of fuel in the last 60 months. This would reduce final prices at the pump. States did not accept the proposal, which would reduce revenue.

Fuel prices have been one of the main drivers of inflation in the country.

About Abhishek Pratap

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