Paraná’s governor signs into law changes to the ICMS tax to support biogas and biomethane

In Brazil, Canal Energia reports that two decrees signed by governor Carlos Massa Ratinho Junior on Monday should further stimulate the energy transition agenda in Paraná. Both change ICMS application and collection rules, with a focus on taxi drivers and the biogas and biomethane industry. State Decree 4,446/2023 establishes the rules in relation to three agreements of the National Council for Financial Policy to which the State had approved adherence.

One of them authorizes the State to grant exemption from ICMS tax on operations with machines, equipment, devices and components for the generation of electrical energy from biogas. Another allows the granting of a presumed credit of 12% on the value of internal purchases of biogas and biomethane, while the third authorizes the reduction of the ICMS calculation base on internal outputs with biogas and biomethane, which results in the application of a percentage of 12% on the value of the operation.

The reduction of six percentage points in the rate charged – previously the tax was 18% – aims to stimulate new renewable energy businesses, especially in rural areas. The measure linked to the agreements with Confaz adds to other tax incentives that the State Government already offered to the renewable energy segment through the Banco do Agricultor Paranaense.

For family farmers with an active Declaration of Aptitude for Pronaf or registration in the Family Farming Registry, the State covers 100% of the interest rate on financing for the implementation of systems with solar energy or biogas generation. For other farmers, the State subsidizes 5 percentage points of interest per year.

Investments in civil works, acquisition of materials and equipment and in the preparation of projects for the installation of biodigesters will have the benefits offered by the State as long as the projects are limited to R$ 500 thousand per CPF or CNPJ for solar energy and R$ 2 million for biomass, or, if collective, the ceiling is R$20 million Since 2020, when the program was established, 6,950 renewable energy projects have taken shape.

Also with the aim of stimulating socio-environmental development, State Decree 4,445/2023 changed provisions in force until April 30, 2024 to make the rule on the exemption on ICMS for the purchase of new cars by taxi drivers for vehicles powered by fuels from renewable sources – such as ethanol and biodiesel – hybrid or electric. This also ensures alignment of state regulations with the most recent regulations on the federal exemption from Industrialized Products Tax. The measure aims to promote the adoption and encourage the use of more sustainable vehicles, in line with environmental concerns and technological trends in the automotive sector.