Brazil: Court denies oil companies’ request against export tax

The 16th Lower Federal Court in Rio de Janeiro denied a joint request from large oil and energy companies such as Shell, Equinor, and TotalEnergies against the Oil Export Tax, recreated by Lula’s government in Provisional Measure (MP) 1163/2023, of February 28.

With this MP, the government started charging PIS/Pasep and Cofins taxes on some fuels again.

The oil companies intended not to be subjected to the tax, whose rate is 9.2% and became effective on the date the MP was published.

The government intended to re-create the tax to compensate for the partial maintenance of the fuel exemption.

For Federal Judge Wilney Magno de Azevedo Silva, the MP “is compatible with the constitutional precepts”.

“There is no indication that collecting the questioned contribution will make it unfeasible for the companies to carry out their business activities.”

Shell Brazil is one of the main partners of Petrobras in the pre-salt and the second largest oil producer in the country, behind the state-owned company.

Also signing the lawsuit against the MP were oil companies Repsol Sinopec and Petrogal from Galp.

Actions of the Liberal Party and the Novo Party filed this week in the Supreme Court (STF) question the MP.

Novo Party claims that the tax was recreated by a provisional measure when a complementary law could have done this.

In addition, it claims that the tax principles that prevent the collection of taxes in the same year or at least 90 days in advance were not respected since the MP came into force on the publication date.

The two actions were distributed to Justice Gilmar Mendes, who has not yet judged the request for an injunction.

With information from Revista Oeste