S&P Global to revise freight tax in Brazilian refined product IPPs May 2

S&P Global Commodity Insights will update its Platts Brazilian refined product Import Parity Prices with effect from May 2, 2022, to reflect the application of the Adicional de Frete para Renovao da Marinha Mercante (Additional Freight for Merchant Marine Renewal) tax for ports in the North and Northeast regions of Brazil, as well as for the reduction of the tax rate for ports in the South and Southeast of the country.

The Brazilian government had previously levied a 25% tax on the total freight for fuel imports for, which was applied only to ports in the South and Southeast. The exemption for ports in the North and Northeast expired on Jan. 8, 2022, according to government documents and market feedback. Following this expiry, a 25% tax was briefly levied on all ports before the Brazilian government revised the value to 8% in late March.

As a result, effective May 2, 2022, S&P Global will apply an AFRMM tax rate of 8% to the freight component in the calculation of all its Brazilian gasoline, jet fuel and diesel IPPs, with the exception of the Manaus IPPs.

While the 8% tax will be levied on the international portion of freight to Manaus, the IPPs at this port will also reflect a 40% river navigation tax outlined by AFRMM legislation. The 40% river navigation tax will be applied to the river freight from seaport of Macapa to Manaus, prior to the application of piloting fees.

For the LPG IPPs in both Suape and Santos, the 8% AFRMM tax will be applied to half of the total freight from the USGC to Santos, to reflect a multi-port discharge for the product.

An IPP reflects the value of a product imported at a specific location on the day of publication. It accounts for the product price, as well as the cost to transport it from the production location to the delivery hub. It also includes fees associated with moving the product into a terminal, like inspection and storage.

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