On June 18, 2015, State Law No. 15.833/2015 passed by the Government of the State of São Paulo was published in the Official Gazette. The State Law regulates the collection of financial compensation and government takes resulting from the exploration and production of oil and gas.

The State Law applies to all companies that undertake oil and natural gas exploration and production activities.  Such companies will have to provide information to the State of São Paulo Revenue Office regarding the financial compensation and government takes due to the State, pursuant to the criteria determined by Federal regulations, and allow tax auditors to enter their facilities, among other procedures required in connection with the exercise of supervision.

Fines resulting from failure to comply with the State Law can range from 20% to 100% of the monthly amount of financial compensation and government take, depending on several factors, such as the seriousness of the infraction.

Finally, we emphasize that in addition to the penalties above, now tax authorities can determine the calculation basis in the events specified in the regulations.

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Founded in 2001, Tauil & Chequer Advogados is a full service law firm with approximately 90 lawyers and offices in Rio de Janeiro, São Paulo and Vitória. T&C represents local and international businesses on their domestic and cross-border activities and offers clients the full range of legal services including: corporate and M&A; debt and equity capital markets; banking and finance; employment and benefits; environmental; intellectual property; litigation and dispute resolution; restructuring, bankruptcy and insolvency; tax; and real estate. The firm has a particularly strong and longstanding presence in the energy, oil and gas and infrastructure industries as well as with pension and investment funds. In December 2009, T&C entered into an agreement to operate in association with Mayer Brown LLP and become "Tauil & Chequer Advogados in association with Mayer Brown LLP."

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This article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.