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Brazil has failed to collect R$260 billion in taxes from oil and gas companies. The tax breaks, concentrated in large corporations such as Petrobras, reignite the debate on the need for an urgent energy transition and the lack of transparency in the use of these tax benefits.
If you think the Brazil is on the right path towards energy transition, you may be surprised to learn that one of the country's largest industries, responsible for a good part of the national wealth, is also the one that benefits most from tax exemptions.
And it's not just a few bucks. We're talking about $ 260 billion that were not collected in taxes between 2015 and 2023. But why such a high waiver? Which companies benefited? And, more importantly, what is Brazil gaining (or losing) from this?
According to a survey by the Institute of Socioeconomic Studies (Inesc), 267 oil and gas companies in Brazil have been granted billion-dollar tax breaks over the past eight years. Petrobras was the main beneficiary, accumulating $ 117,2 billion.
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This amount is part of a special regime called repeat, which was renewed until 2040, allowing the oil industry to operate without the burden of various taxes. This includes taxes such as PIS, Cofins, IPI and others.
The year of 2020 was especially generous, with sacrifices that exceeded $ 56 billion, marking a historic record.
The curious thing is that, even in a world that is moving towards reducing the use of fossil fuels, Brazil has chosen to expand tax benefits for this industry, keeping incentives high since 2017.
For Inesc, this decision needs to be rethought, since the promise of using oil resources to finance the energy transition has not been fulfilled.
Tax breaks: is Brazil winning or losing?
According to Inesc, tax exemptions were responsible for large losses in revenue, mainly in relation to federal taxes and regional incentives, such as those granted by the development superintendencies of the Northeast (sudene) and the Amazon (Sudan).
Petrobras, the largest company in the sector in Brazil, leads the ranking of companies that benefited most from these waivers, totaling R$117,2 billion, followed by Modec Petroleum Services of Brazil, which benefited from R$15,3 billion, and the Ventura Petroleum, with R$8,5 billion.
The problem is that, according to Alessandra Cardoso, political advisor at Inesc, in an interview with newspaper Folha de S. Paulo, this dependence on oil could represent a barrier to the energy transition.
“Brazil’s relationship with the oil industry is marked by a profound asymmetry of information and the false promise that resources from oil will finance the energy transition”, highlights Alessandra.
For her, it is urgent that the country develop a strategic plan that takes into account the reduction in the use of fossil fuels without harming the economy and, at the same time, stimulates low-carbon production chains.
Lack of transparency and criticism of Repetro
Although tax waivers are justified as a way to attract investment and ensure international competitiveness for Brazilian oil companies, the transparency of these waivers is still a point of contention.
Inesc criticized the lack of clarity regarding the amounts that the Federal Revenue Service fails to collect specifically through Repetro.
Although the data is obtained through the Access to Information Act (LAI), the tax authorities claim a “technical impossibility” to calculate in detail the waivers granted under the regime.
This information gap raises questions about the real efficiency of these exemptions, especially at a time when Brazil is facing internal and international pressure to accelerate its energy transition and reduce its dependence on fossil fuels.
Transnational corporations, such as Modec Petroleum Services of Brazil and Ventura Petroleum, continue to access a series of benefits, both in Brazil and in their international operations, which reinforces the advantageous nature of Repetro for large corporations.
The impact of government waivers on the energy transition
Although tax exemptions could, in theory, increase the competitiveness of Brazilian oil companies in the global market, the question remains: to what extent does this compromise Brazil's ability to promote a more sustainable economy?
For experts, the country needs to find a balance between maintaining the competitiveness of the oil and gas sector and investing in renewable sources.
This includes the implementation of public policies that encourage the development of clean technologies and the creation of new jobs in the renewable energy sector, to prevent Brazil from falling behind in the race for decarbonization.
Alessandra Cardoso points out the need for strategic planning focused on the energy transition. For her, it is crucial to seek a model that preserves jobs and, at the same time, reduces carbon emissions.
The challenge is not only to attract investment, but to ensure that these resources are channeled to areas that effectively contribute to changing the energy matrix.
Companies that benefited most from tax breaks
Among the companies that benefited most from Repetro, in addition to Petrobras, are names such as modec, Ventura Petroleum e Bram Offshore Shipping, which received R$6,4 billion in exemptions.
In total, 10 large companies dominate the top of the list of exemptions, accumulating billions in sums. This concentration of benefits in a few companies reinforces the debate about the effectiveness of tax policies aimed at the oil sector.
With all this money lost and the lack of significant progress in the energy transition, is Brazil really on the right track by giving so many tax breaks to the oil industry? Or is the country missing the chance to lead a green revolution before it's too late? What do you think? Comment below!
