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In brief

The Brazilian Institute of the Environment and Renewable Natural Resources (IBAMA) established a new way of calculating the Environmental Control and Inspection Fee (TCFA) and, as of the first quarter of 2024, the economic size to be declared by subsidiaries will be the economic size of the parent company and the subsidiary jointly, considering the annual gross income of the legal entity as a whole for the basis for calculating this fee. The legal deadline for payment of the first installment of the TCFA was 5 April.

For a better understanding of the changes applied by IBAMA and the impacts on taxpayers, we provide below details on the concept of the TCFA and how IBAMA previously applied the tax. 
 


Contents

  1. Further details
    1. General information on TCFA and calculation of the amount up to 2023
    2. Change of understanding resulting from Opinion No. 01/2023/DITRIB/PFE-IBAMA-SEDE/PGF/AGU and IBAMA Ordinance No. 260/2023
    3. Impact on taxpayers

Further details

General information on TCFA and calculation of the amount up to 2023

The TCFA is a fee charged for the regular exercise of the environmental authorities’ police powers to control and supervise potentially polluting activities and the use of natural resources. In general, any individual or legal entity that carries out a potentially polluting activity and/or uses the natural resources listed in Annex VIII of Federal Law No. 6.938/1981, or in Annex I of Normative Instruction No. 06/2013, must pay the TCFA on a quarterly basis.

The amount of the TCFA is defined by the degree of polluting potential and the economic size of the enterprise, and can vary from BRL 128.90 to BRL 5,796.73. The information is provided by the taxpayer themselves from their registration in IBAMA’s Federal Technical Register of Potentially Polluting Activities and Users of Environmental Resources (“CTF/APP“).

Previously, for legal entities with head offices and branches, size was determined based on the gross annual income of each individual establishment. In this way, branches with minimal turnover paid the minimum amount for the TCFA, even if their head office and/or other branches were large.

The TCFA is calculated on the last working day of each quarter and payment must be made by the fifth working day of the following month. Thus, for the first quarter of 2024, payment should have been done by April 5th.

Change of understanding resulting from Opinion No. 01/2023/DITRIB/PFE-IBAMA-SEDE/PGF/AGU and IBAMA Ordinance No. 260/2023

From 2024 onwards, the economic size to be declared by subsidiaries will be that of the head office and the subsidiary jointly, considering the annual gross income of the legal entity as a whole for the basis of calculating the fee. The change in understanding about the calculation of the TCFA occurred in the context of an administrative process that discussed the assessment of a company in the road transport sector, in which IBAMA identified a divergence in the size of the company declared in the CTF/APP and that registered with the Federal Revenue Service.

In Opinion No. 01/2023/DITRIB/PFE-IBAMA-SEDE/PGF/AGU, issued in the case file, the Specialized Federal Prosecutor’s Office at IBAMA stated that, although they have administrative and operational autonomy for inspection purposes, the branches do not have legal autonomy, since there is a relationship of dependence between the CNPJ of the branches and that of the head office. It therefore concluded that, for the purposes of calculating the TCFA, the definition of economic size should consider the gross income of the legal entity as a whole (head office and branches together), and that this understanding should be applied from the first quarter of 2024.
 
As a result of this new understanding, on 20 December 2023, IBAMA published IBAMA Ordinance No. 260/2023, which provided for the rectification of the size declared by the TCFA taxpayer. 

Impact on taxpayers

The impact of this change could be significant, since subsidiaries that were previously considered small may, based on an assessment of their joint gross income with the other establishments in the same group, be characterized as medium or large, which will result in an increase in the amount of TCFA owed to the establishment. According to the Ordinance, legal entities whose economic size has changed must rectify the size declared for the 2024 financial year before IBAMA, by submitting the respective supporting documents.

IBAMA proceeded to change its understanding of the calculation of the TCFA without any change having been made to the law that instituted the TCFA, which is already resulting in questions being raised before the Judiciary by some companies.

This is because the IBAMA Ordinance, in the way it was issued, ended up distorting the way fees are collected, since the law is clear in providing that the value of the TCFA, even if per establishment, will be based on the degree of use of natural resources (small, medium or high), and on the size of the company.

In this sense, it is possible to argue that the Ordinance offends the principle of legality, as it provides for a calculation method that differs from the law, as well as distorting the concept of the retributiveness of the value of the fee, since this must always respect a correlation between the requirement and the inspection activity being carried out.

In this regard, there are already rulings against the TCFA increase. The Federal Courts of São Paulo and Minas Gerais have already granted injunctions in writs of mandamus to set aside the increase in the TCFA as provided for in item “b” of item II of article 13 of IBAMA Ordinance No. 260/2023, and for the plaintiffs to pay the TCFA in 2024 and subsequent years, taking into account the turnover of each subsidiary.

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Author

Renata Campetti Amaral joined the firm in 2002 and became a partner in 2013. She is the head of the firm’s Climate Change, Environmental Law and Sustainability group in Brazil, and the leader of Ablfs McKfnzif’s global climate change group in Latin America. Is also the coordinator of the sustainability initiatives conducted by the office’s B-Green Committee. Renata assists the major players in the Brazilian market in Nature-bases Solution (NbS) projects, transaction of carbon credits, implementation of decarbonization strategies and carbon-related advocacy and regulatory matters. Renata leads several of the largest environmental and regularization cases in the country. She has extensive experience in sustainability matters, as well as in managing crises and negotiating with stakeholders. Advises on negotiating with authorities; judicial and administrative litigation; reviewing environmental aspects of institutions and financial operations; drafting environmental provisions in contracts and other commercial operations. Renata has extensive experience in dealing with environmental management, legal auditing and other organizational practices; regulatory and institutional analysis and environmental control; negotiation and implementation of environmental remediation plans; environmental licensing; legal aspects of biodiversity protection; environmental crisis management; development of preventive policies and strategies for companies; negotiation and drafting of contracts for the purchase and sale of carbon credits and acting in transactions related to various aspects of the energy transition.
*Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.

Author

Giovani Bruno Tomasoni joined the Firm in 2008 and became partner of the Environment, Consumer and Sustainability practice group in 2020. He practices with focus on Environment, Public Law, Energy, Forestry, and helps clients in the internalization of concepts such as sustainability, ESG, circular economy, environmental compliance, among others.
*Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.

Author

Manuela Demarche joined the Firm in 2017, and has been working with Environmental Law since 2010. She is currently a Senior Associate of the firm’s Environment, Sustainability and Climate Change practice group.
She has several years of experience in complex matters connected to environmental, sustainability and climate change, and her practice focus on a wide range of matters, particularly in connection to environmental liability, licensing proceedings, carbon and M&A transactions and cross-border disputes. During 2022, she did an attorney training program in the U.S. and has worked as a Legal Extern for the American Clean Power Association.
She regularly advises international and domestic clients in relevant cases, including preparing opinions, overseeing due diligences, drafting administrative and judicial claims for disputes arising from controversial environmental matters. Under her umbrella, she regularly deals with regularization (air pollution, effluents, solid waste, contaminated areas), circular economy, take-back schemes, extended producer responsibility, carbon markets, REDD+, biodiversity and crisis management.
Awards and Recognitions
Manuela Demarche is recognized for her work as an outstanding professional – “Associate-to-watch” – in Environmental Law in Brazil, by the publication Chambers and Partners. She was also mentioned by Análise Advocacia Mulher.
*Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.

Author

Alexandre Salomão Jabra joined the firm in 2010. He integrates the environmental, consumer and sustainability practice group, with focus on consultancies, administrative procedures lawsuits and negotiations. In the environmental area, Alexandre has a wide breadth of experience in cases involving contamination, environmental and urbanistic licensing procedures, environmental liability, management of solid wastes and take-back requirements, effluents, electromagnet pollution, air emissions, forestry matters, protected areas and minorities, biodiversity, controlled chemicals products, socio and environmental liability of financial institutions, climate change, carbon markets and urbanistic regularization. In the consumer area, Alexandre has experience with consultations, administrative and judicial procedures related to Consumer Law issues with federal, state and municipal agencies, such as DPDC, PROCONs, Public Prosecutors and Municipalities involving recall, offers, data protection, misleading and abusive advertising, privacy, e-commerce, abusive clauses, commercial practices, terms and conditions and violations to the Brazilian Consumer Defense Code. Alexandre represents several clients in the oil&gas, automotive, chemicals, technology, food, communications, mining, finance and services sectors.
*Trench Rossi Watanabe and Baker McKenzie have executed a strategic cooperation agreement for consulting on foreign law.