Petrobras Agrees to Pay $3.5 Billion in Back Taxes to Support Brazilian Budget

Brazilian oil giant Petrobras has agreed to settle $3.5 billion (R$19.8 billion) in outstanding taxes with the federal government.

This financial move comes as President Luiz Inácio Lula da Silva is pursuing additional revenue streams to balance the nation’s budget.

On Monday, the board of directors of the state-controlled drilling company endorsed the decision.

This marks a significant action under the leadership of the new CEO, Magda Chambriard. The details of the payment were publicly disclosed.

In addition, this contribution will bolster efforts by Finance Minister Fernando Haddad to eliminate Brazil’s primary fiscal deficit this year, which does not include interest payments.

Addressing outstanding fiscal debts is a pivotal part of his revenue-increasing strategy.

Recently, Haddad has faced increased scrutiny as market concerns grew over his ability to meet fiscal targets.

However, the government is now encountering heightened calls for public spending cuts to keep the deficit in check.

The pressure on Petrobras to clear its pending tax obligations intensified last year. The settlement relieves the company of legal burdens and is expected to reduce potential penalties and interest.

The approved amount pertains to taxes related to the leasing of offshore oil ships or platforms.

Petrobras will utilize approximately 8.000 billion reais from pre-existing judicial deposits and tax credits.

In addition, the company will pay 3.750 billion reais on June 30, with the rest split into six installments.

There’s potential for Petrobras to further aid the government’s fiscal plans, as its board may consider additional payments of the remaining extraordinary dividend for 2023 throughout the year.

In short, as the controlling shareholder, the government would receive the majority of these payments.

LatAm Markets: Live Signals → — real-time movers, turnover leaders and FX across Latin America.