Oil Industry Asks Brazil Crude Export Tax Be Left to Expire

Brazil · ENERGY

Brazil’s oil industry fears the tax will hurt competitiveness, but the finance ministry wants it kept until its current window ends.

The oil industry is asking that the Brazil crude export tax be left to expire. On Friday 21 August 2026, the Instituto Brasileiro de Petróleo, Gás e Biocombustíveis (IBP), the sector’s main trade body.

Sent a formal request to a minister asking that the tax’s validity not be extended.

What Is the Brazil Crude Export Tax?

In short, the Brazil crude export tax is a 12 percent levy on the total value of crude petroleum exports. In short, it was created by Medida Provisória nº 1.340/2026, signed by the federal government on 12 March 2026.

A Medida Provisória, or MP, is a presidential decree that has the force of law immediately. It must be approved by Congress within 60 days, extendable once by another 60 days, or it lapses.

The IBP, Brazil’s main oil and gas trade body, has formally asked a minister not to extend this tax. Meanwhile, the association represents over 200 member companies in the sector.

Why the Tax Was Introduced

The government said the tax was part of a package to mitigate the impact of higher oil prices. The explanatory memorandum stated the goal was to ‘capture and transfer to society part of the gain’ from higher oil prices.

In addition, the MP authorises the federal government to subsidise the sale of diesel used in transport. The finance ministry estimated the tax could raise about R$ 15.6 billion in reais over four months.

The government estimated potential revenue between R$ 13.9 billion and R$ 17.4 billion, depending on Brent prices. However, these are estimates, not actual amounts collected.

The Current Legal Framework

The original MP ran for 60 days and was automatically extended by another 60 days. That window ended in early July 2026, so the government issued Resolução Gecex nº 938/2026 to keep the tax in force.

The resolution, dated 9 July 2026, set the rate at 12 percent on crude petroleum oils under heading 2709. Therefore, it follows the Mercosur Common Nomenclature.

It entered into force on 10 July 2026 and is valid for 60 days from that date. The resolution’s Article 2 states the tax is valid for 60 days from its entry into force.

Therefore, it replaced the expired MP window, keeping the rate continuous since 10 July 2026.

When Does the Tax Expire?

Counting 60 days from Friday 10 July 2026, the sixtieth day falls on Monday 7 September 2026. This date is calculated from the text of Article 2 of the resolution, not printed in the document itself.

Therefore, the Brazil crude export tax is set to expire on that date unless the government decides to extend it. The Gecex resolution states the measure would be reassessed after 30 days.

The Gecex approved the measure on 9 July 2026, stating it would last up to 60 days and be reassessed after 30. As a result, the reassessment likely occurred around 9 August 2026.

The Industry’s Objection

The IBP argues the tax is ‘redundant and damaging to the country’s competitiveness’. It says the sector’s production-sharing model already captures price upcycles efficiently.

As evidence, the IBP noted that Brazilian crude shipments fell 28.3 percent in May 2026 compared to April 2026. The volume dropped from 62.8 million to 45 million barrels, with revenue down 23.3 percent.

The IBP’s evidence shows a sharp drop in May 2026 exports, highlighting the tax’s impact. Consequently, the association argues the measure is redundant given existing revenue mechanisms.

The Government’s Position

The Ministério da Fazenda, Brazil’s finance ministry, wants the tax kept. A technical note issued on 13 August 2026 recommends maintaining the 12 percent tax until the end of its validity.

The ministry’s secretary argues the tax should be kept until at least the end of the validity of Resolução Gecex 938. Therefore, the tax would remain in force until 7 September 2026, but not necessarily beyond.

The finance ministry’s technical note recommends keeping the tax until the end of its validity, not beyond. However, the secretary’s specific name has not been published in reports.

The Industry’s Earlier Request

This was not the IBP’s first such request. On 21 July 2026, the association objected and reiterated its request that the tax not be extended.

In addition, the IBP highlighted that Brazil distributed R$ 36.5 billion in oil royalties in the first half of 2026. Of that, R$ 9.6 billion, or 26.3 percent, was attributed to the surge in crude prices.

The IBP’s July request preceded the formal August pedido to the minister. Meanwhile, the association has consistently argued against extending the tax since its inception.

What Happens Next?

The decision on extending the Brazil crude export tax lies with Gecex-Camex, the executive management committee of Brazil’s Foreign Trade Chamber. This body sets and can reduce export tax rates.

As of 21 August 2026, the MP 1.340/2026 was still in tramitação, meaning it was still being processed by Congress. No definitive outcome has been confirmed, and the tax remains in force until its current window ends.

The Gecex-Camex, within the development ministry, will decide on any extension. Although the tax is set to expire on 7 September 2026, the government may act before then.

The Broader Context

The Brazil crude export tax is part of a broader debate about how the country captures windfall gains from oil. The IBP argues that the state already benefits through royalties and production-sharing agreements.

In short, the industry wants the tax to expire as scheduled. The finance ministry, by contrast, prefers to keep it until the end of its current validity.

The final decision will shape Brazil’s oil export competitiveness in the coming months. The IBP notes the production-sharing model already captures price upcycles efficiently.

Therefore, the tax may be seen as an unnecessary burden on the country’s competitiveness.

Frequently Asked Questions

What is the Brazil crude export tax rate?

The Brazil crude export tax is set at 12 percent on the total value of crude petroleum exports. This rate was established by Medida Provisória nº 1.340/2026 and is currently in force under Resolução Gecex nº 938/2026.

When does the Brazil crude export tax expire?

The tax is valid for 60 days from 10 July 2026, which calculates to 7 September 2026. This date is derived from the text of the resolution, not printed in the document itself.

Why does the oil industry oppose the tax?

The IBP says the tax is redundant because the production-sharing model already captures price upcycles. It also points to a 28.3 percent drop in crude shipments in May 2026 as evidence of the tax’s negative impact.

What is the government’s position on the tax?

The finance ministry recommends keeping the 12 percent tax until the end of its validity. This means the tax would remain in force until 7 September 2026.

This article was produced by The Rio Times’ automated newsroom system. How we use AI · Report an error