The Department of Logistics and Transport and the Department of Tourism of the State of São Paulo published in the Official Gazette last Friday (19/07) a t resolution that regulates the benefit of the reduction of ICMS (Tax on Circulation of Goods) for airline companies.
Proposed by Governor João Doria and already approved by the Legislative Assembly of São Paulo, the measure provides for the reduction of ICMS from 25% to 12% on aviation fuel.
The tax relief will be offset by the counterparts generated by the expansion of services offered by the companies. Therefore, a fund of R$ 40 million will be set up to fund marketing activities with the aim of encouraging visitors to extend their stay in São Paulo.
The regulation also foresees that the companies operate flights to new cities in São Paulo and increase to at least 490 the number of weekly departures in the State of São Paulo, with destination to 38 municipalities in 21 States.
The action is part of the São Paulo Pra Todos Program, which aims to expand the air network in the State from several airports in São Paulo. The companies have 180 days, starting July 1st, to implement the measures and also create six new destinations within the State, increasing the offer to destinations across the country.
ICMS reduction
The cut in the tax rate on aviation kerosene sold in São Paulo is an old demand from airlines. According to industry studies, the price of fuel represents around 40% of the total operating cost of companies.
The announcement, made in February this year, stirred the market, and even before the bill was approved in the Legislative Assembly, Latam, Gol and Azul announced the expansion of their flights.
With the new rate, the expected revenue for 2019 on the commercialization of aerial kerosene will fall from R$ 627 million to R$ 422 million, but the total compensation – direct, indirect, induced and catalyzed – represents a forecast of at least R$ 316 millions.
The estimate is that 59 jobs will be generated in the next 18 months from the exemption, with a forecast of R$ 1,4 billion in salaries annually.
Via - Government of São Paulo
