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The Brazilian Oil and Gas Institute (IBP), the main organization representing the O&G sector in the country, highlights the importance of the oil industry for the Brazilian economy, through the generation of jobs, income and the large fiscal contribution in general taxes, royalties, and special participation taxes.

In 2023 alone, the Brazilian oil and gas industry paid BRL 92.2 billion (BRL 53.6 billion in Royalties and BRL 38.6 billion in Special Participation Taxes), according to ANP data. These are important financial resources that help the federal, state, and municipal governments meet their fiscal targets and develop public policies.

The O&G sector was responsible for 10% of Brazil’s industrial GDP in 2020, according to the most recent data from CNI. In addition, exports of oil and oil-derived products have generated a surplus of US$ 80 billion over the last four years (2020-2023) in the country’s trade balance, making it the second most important export item.

Between 2022 and 2031, the sector will invest US$ 183 billion in exploration and production projects and should sustain an average of 445,000 jobs per year in the segment until 2031. In the same period, the exploration and production segment is expected to raise more than BRL 3 trillion (around USD 620 billion) in taxes and government participation. The tax burden in the sector is extremely high – around 70% – which leads to a large collection of general taxes, royalties, and special participation taxes. Even so, governments keep increasing the tax burden.

The Control, Monitoring and Inspection of Oil and Gas Exploration and Production Activities Fee (TFPG) passed in December 2023 in the Rio de Janeiro State Congress, and the Selective Tax, created in the Tax Reform, bring important risks for states and society.

The new taxes will impact investment decisions by companies and potential investors, affecting the attractiveness of the oil and gas sector in Brazil and damaging the country’s competitiveness compared to other regions in the world bidding for capital in oil and gas projects.

New taxes on oil and gas exploration, production, and marketing activities, in addition to having an impact on drawing investments, also affect legal certainty and the confidence of agents and investors in the Brazilian market, with negative impacts on the industry in the medium and long term.

IBP and its members believe that the sustainable and continuous development of the Brazilian oil and gas industry depends on a business environment that values the stability of rules, dialogue between public and private agents, and actions that continue to draw investment into the sector.