By Patrícia Campos Mello, The State of S. Paulo - 18/01/2005
Collaborated: Nilson Brandão Junior

The Guarulhos Organized Crime Fighting Group is investigating six fuel distributors and one carrier for tax evasion and unfair competition. The distributors under investigation are TM, linked to the Axial Network, JPJ, XYZ Transportadora, Sollus, Alcom and Inca. The companies are accused of withholding about R $ 500 million from ICMS in interstate operations, buying gasoline from a distributor that withholds tax or using “oranges” in the transfer of fuel.
José Mário Barbuto, the group's prosecutor, told the state that there are suspicions that companies are taking advantage of a resolution by the state of Rio to evade taxes. Throughout Brazil, fuel distributors buy gasoline from the refinery with ICMS already embedded. Therefore, the distributor does not need to collect these taxes. In Rio de Janeiro, however, a resolution allowed some distributors to have a special regime, which allows them to buy fuel from the refinery without taxes and collect the ICMS later.

When selling to stations in Rio, these companies must pay the tax to the Rio de Janeiro government. When they sell to service stations or other distributors in São Paulo, however, they owe the tax to the São Paulo government. "The suspicion is that some companies are buying fuel without tax in Rio and selling to São Paulo, without collecting ICMS anywhere," said Barbuto. According to him, if the suspicion is confirmed, the companies would also be practicing unfair competition, because they have access to cheaper gasoline.

According to Eribelto Rangel, deputy director of the Executive Board of Tax Administration of the Secretariat of Finance, Inca and Alcom have already been assessed for tax evasion. On Monday, in an interview with the Valor Econômico newspaper, São Paulo's Finance Secretary, Eduardo Guardia, said that around R $ 600 million in ICMS would have stopped being collected due to fraud. The penalty provided for the crime of evasion is 2 to 5 years in prison.

The president of TM distributor, Ernesto dos Santos Andrade, stated that the company has already provided all the information requested and is at the disposal of the authorities. Andrade also said that TM was assessed by the Treasury Department in January 2003, for withholding ICMS, but the tax assessment notice was canceled. The company was again assessed in August 2004, and the report is being analyzed.

Alcom Comércio de Óleos, based in the Baixada Fluminense, in Rio, said it would not comment on the matter. Inca Combustíveis, in Paulínia (SP), did not answer phone calls.

The Secretary of Finance of the State of Rio, Henrique Bellúcio, said that eventual ICMS debts of fuel companies with the State of São Paulo are problems that are up to the São Paulo government. Despite this, Bellúcio left the door open for an understanding, should the neighboring state feel harmed by Rio's special regime.