Representative of the large oil companies operating in Brazil, the Brazilian Institute of Oil and Gas (IBP) defends the adoption of a single-phase taxation system for the Tax on the Circulation of Goods and Services (ICMS) for all fuels, as the federal government signaled . The argument is that the measure would simplify the tax structure and, consequently, improve the business environment.

"The current system is complex, costly, stimulates fiscal war, tax evasion and, consequently, the irregular market", said the entity in a statement.

IBP's vision is that the submission of fuels to the single-phase ICMS regime, especially if combined with specific rates, would result in definitive taxation at a pre-defined stage of the goods circulation cycle. This single taxpayer would be responsible for collecting the tax from the entire chain.

The solution advocated by the IBP is to adopt a fixed value of ICMS per liter, with uniform rates between the federal entities, to be approved by the National Council for Farm Policy (Confaz).

Today, each state has its own calculation base and ICMS tax rate for each fuel (hydrated ethanol, gasoline and diesel). According to the IBP, this makes room for tax fraud, competitive distortions and creates enormous complexity for calculating and collecting interstate transactions.

Taxes represent on average 45% of the fuel price, while the combined margins of the distribution and resale links are around 15%.

"With a high tax burden and a complex system, like the current one, the leverage that the tax evader has is enormous, making the premium compensate for the risk assumed in the fraud", says the institute.