Changing the instrument does not correct the legal flaws of the Export Tax on crude oil
The Brazilian Institute of Oil, Gas and Biofuels (IBP) expresses deep concern over recent reports suggesting that the Federal Government may seek to maintain the Export Tax on crude oil even if Provisional Measure (MP) No. 1,340/2026, which established the tax, loses its legal effect.
Maintaining the Export Tax, even with a gradual reduction in rates depending on Brent crude prices, would further increase the economic impacts on oil production projects and companies' investment plans. It would also perpetuate the constitutional concerns surrounding the tax, given its explicitly revenue-raising purpose, thereby increasing legal uncertainty in Brazil.
It is important to note that Brazil's fiscal framework already includes mechanisms that capture increases in international oil prices, making the Export Tax redundant, unnecessary, and unjustified.
The expiration of a Provisional Measure is a natural consequence of the legislative process established by the Federal Constitution and underscores the importance of congressional oversight over provisional measures issued by the Executive Branch. Any attempt to preserve, through administrative acts, a tax policy originally created by a Provisional Measure that no longer remains in force would undermine the constitutional role of Congress by circumventing its legislative authority.
The oil and gas industry requires highly capital-intensive investments, undertaken with long-term planning horizons and based on stable legal and regulatory frameworks. Moreover, oil is one of Brazil's leading export products and represents a significant share of the country's foreign exchange earnings, trade surplus, and government revenues through royalties and other government participations, already making a substantial contribution to fiscal balance.
The IBP reiterates its willingness to work with the Federal Government and the National Congress to develop solutions that reconcile fiscal responsibility, regulatory stability, legal certainty, and international competitiveness.
