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  • Pedro Barros

Introducing the Rio de Janeiro's ISS Neutral Program

Rio de Janeiro has been a pioneer in sustainability initiatives aimed at protecting the environment and stimulating responsible economic development. Recently, the city's municipality took a significant step in this direction with the publication of Decree No. 53,288, dated October 3, 2023, regulating the ISS Neutral Program, created by Municipal Law No. 7,907, dated June 12, 2023. In this blog post, we will explore the ISS Neutral Program, how it works, and its potential impact on the carbon market and the business world.


The primary goal of the ISS Neutral Program is to encourage the purchase of Eligible Carbon Credits by taxpayers of the Service Tax on Any Nature (ISS) in Rio de Janeiro. These credits can be deducted from the tax owed by taxpayers while contributing to the sustainable economic development of the city of Rio de Janeiro and reducing carbon emissions.


The tax deduction can be total or partial, depending on the rules established in the Decree and applicable legislation. This deduction will be effected through the Electronic Service Invoice - Nota Carioca, according to the guidelines of the Municipal Treasury and Planning Secretariat.


To participate in the ISS Neutral Program, emission inventories and inventory audits must be prepared in accordance with ISO 14064 and ISO 14065 standards. Additionally, Eligible Carbon Credits must meet specific criteria, such as:


- Emission reduction or removal activities must occur within national territory.

- The carbon credit issuing company must follow recognized international standards, such as the Gold Standard, Verified Carbon Standard (VCS), or Climate, Community, and Biodiversity Standards (CCBS).

- Only activities related to carbon credit projects registered after January 1, 2016, will be accepted.


The process of joining the ISS Neutral Program will be carried out through a public call notice, containing the rules, deadlines, and procedures to be followed by taxpayers. The list of Taxpayer Adherents eligible for the tax deduction will be published by December 31 of the notice year.


The final list of the amount of carbon credits and values that can be deducted by each taxpayer will be announced within 30 days after the publication of the list of Taxpayer Adherents candidates. The Taxpayer Adherents will have 120 days after the publication of the final list to submit documentation proving the retirement of the Eligible Carbon Credits.


The ISS deduction can only be used between January 1 of the year following the notice and December 31 of the same year, provided the rules established in the notice are respected.


The Taxpayer Adherents are subject to an overall limit, which will be set by the call notice and may not exceed BRL 60,000,000.00 (sixty million reais). The values to be individually deducted by taxpayers are calculated according to specific criteria, such as the proportion relative to the overall limit, the relationship with the emission inventory, and others.


The SMFP and SMDEIS are responsible for regulating the provisions of the Decree through Resolution. The rules related to the ISS Neutral Program will be in force for the period specified in the Organic Law of the Municipality of Rio de Janeiro.


For the program's first year, a transition rule will be admitted that alters the applicability of some criteria, allowing the submission of Eligible Carbon Credits until December 1, 2024, with fiscal restitution starting in 2025.


The ISS Neutral Program by the Municipality of Rio de Janeiro represents an important step towards sustainability and the reduction of carbon emissions in the city. By encouraging the purchase of Eligible Carbon Credits, the program benefits both the environment and taxpayers by reducing the tax owed. With the implementation of these measures, Rio de Janeiro stands out as an example of commitment to sustainable development and the mitigation of climate change.

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