Maintenance of tax exemption worries ethanol market, survey shows

Agents in the sugar-energy sector are aware of the uncertainties about whether or not to continue the policy of exemption from federal taxes on fuels for 2023, said this Monday (28) an analysis by Cepea/Esalq.

A survey by Cepea indicates that a large number of sellers and buyers believe in the return of these taxes, considering what is planned in terms of spending by the new government — and, therefore, the need for revenue.

Since June, PIS/Cofins has been zeroed on hydrated and anhydrous ethanol, in addition to gasoline, which made biofuel lose competitiveness in relation to fossil fuel.

At the same time, ICMS was limited to 17% or 18% on gasoline, accentuating the disadvantage of ethanol since then, since the state tax rate on biofuel was already lower than the average on gasoline.

“In terms of business, the scenario built over the last few months culminated in specific movements, especially in hydrous ethanol on the spot market. This occurred in all producing states, due to the loss of competitiveness of biofuel at pumps compared to gasoline”, said Cepea, in the analysis.

“In the case of anhydrous ethanol, however, the stronger sales of Type C gasoline at gas stations favored demand at the plants,” he added.

The 2023 Annual Budget Bill (PLOA), already sent to the National Congress, provides for a total fiscal waiver of R$ 52.9 billion by the Union to keep Cide and PIS/Cofins at zero throughout the year on fuels .

But, in the case of PIS/Cofins, the tax exemption needs to be approved by Congress.

Despite the uncertainty, prices remained practically stable at mills between November 21st and 25th, according to the Cepea/Esalq Indicator.

Hydrated ethanol in the State of São Paulo was R$ 2.8094 per liter, with a slight decrease of 0.07% compared to the previous period.

For anhydrous, the indicator closed at US$ 3.2423, representing a decrease of 0.88%.