Petrobras has decided to include tax debts in the Special Installment Program – REFIS, introduced under Law 12996/2014 and regulated by the Joint Ordinance PGFN/RFB 1064/15 and the Regulatory Instruction RFB 1576/15, published on August 3, 2015.

Since the above-mentioned regulatory instruments were published, Petrobras has been reassessing its federal tax litigation to identify any proceedings to be included in the REFIS.

These debts include unpaid Withheld Income Tax (IRRF) on remittances to the subsidiary Petrobras International Finance Company (PIFCO) to pay for oil and oil product importation for the periods 1999 to 2002, 2004, 2005 and 2007 to 2012.

The inclusion of these debts, which have an updated value of R$6.0 billion, in the REFIS, will save the Company 50% by reducing the liability to R$3.0 billion, R$876 million of which will be settled with tax loss carryforwards.

The total disbursement will therefore be R$2.1 billion, R$1.26 billion of which will come from converting the judicial deposit to be settled definitively and the remainder to be paid in installments, by disbursing R$536 million in 2015 and R$ 333 million between 2016 and 2017.

The negative impact on the Company’s profits for the third quarter of 2015 will be R$2.0 billion, net of taxes.

The decision to adhere to the program was based on the potential financial benefits and a risk analysis of possible unfavorable decisions both from a legal and management perspective. On the reporting date of the 2Q2015 financial statements, this analysis had not been completed. It was finished on August 13, 2015.

In addition, to judicialize it would mean a financial outlay for guarantees, as well as a substantial increase in the amount of the debt over time from interest and additional financial charges and the risk of revoking the Federal Tax Clearance Certificate, which would result in significant losses for the Company.

Since the deadline for including notified tax debts is in September 2015, the Company continues to reanalyze litigation to identify other debts that can be settled through the Program.