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New Dual VAT Rules Transform Energy Taxation and Require Urgent Adjustments to Contracts, Regimes, and Strategic Investments
The oil and natural gas sector, one of the pillars of the Brazilian economy, is undergoing an unprecedented change. Since the enactment of Constitutional Amendment No. 132/2023, on December 20, 2023, and the sanctioning of Complementary Law No. 214/2025, on January 16, 2025, the national tax system has been redesigned. The goal is to simplify taxes, but there are growing concerns about competitiveness and legal certainty.
The new model, based on the dual VAT, replaces several federal, state, and municipal taxes. It includes the CBS (Contribution on Goods and Services) and the IBS (Tax on Goods and Services), which take the place of PIS, Cofins, ICMS, and ISS. According to the Ministry of Finance, the combined rate could reach 26.5% by 2031, potentially placing Brazil among the countries with the highest tax burden on consumption. Although simplification brings clarity, companies warn of increased costs in logistics chains and importing equipment.
Special Regime and the Role of Repetro in the New Tax Phase
To mitigate impacts, Article 93 of the Complementary Law No. 214/2025 created a special tax regime for the sector. This regime allows for the suspension of IBS and CBS on import operations and internal purchases of goods intended for production. Once legal requirements are met, this suspension transforms into a zero rate, ensuring tax neutrality.
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Still, there are doubts about the integration with Repetro, which has been enabling the import of equipment with tax exemptions for over twenty years. According to the National Agency of Petroleum (ANP), harmonization between Repetro and dual VAT will be essential. This alignment will ensure legal certainty and the continuity of investments, as well as avoid overlapping rules.
Contracts and Financial Predictability at Stake
The uncertainty surrounding long-term contracts concerns operators and suppliers. The Complementary Law Project No. 68/2024, still under discussion, provides for economic-financial rebalancing in administrative contracts in case of tax changes. However, private contracts do not receive the same protection, requiring specific clauses to mitigate tax risks.
The phase of transition between 2026 and 2033 also generates concern. During this period, old taxes will be gradually replaced, and companies will need to adjust systems, projections, and contracts. Experts warn that, without clear rules, billion-dollar investments in the pre-salt and Equatorial Margin could be delayed.
Tax Simplification and Opening for Green Incentives
Despite the uncertainties, the new model presents potential efficiency gains. The unification of taxes promises to eliminate the cascading effect, reduce litigation, and facilitate compliance with tax obligations. Additionally, companies that invest in digitization and automation may lower costs and improve productivity.
Another relevant advance is the creation of the Environmental Selective Tax, which will target polluting products and encourage sustainable projects. This opens the door for tax benefits aimed at carbon capture, energy efficiency, and low-carbon energy. According to the Secretariat of Economic Policy, these measures reinforce Brazil’s alignment with global sustainability goals.
The Challenge of Balancing Revenue and Competitiveness
Although the government promises simplification, the great challenge will be to balance revenue and competitiveness. A disproportionate increase in the effective tax burden may reduce profit margins and drive away investors. Therefore, experts advocate for continuous technical dialogue between the government, ANP, and private companies. This cooperation is essential to ensure tax neutrality, predictability, and regulatory certainty.
In light of this new scenario, Brazil must decide whether it can modernize its tax system without compromising its energy strength. After all, how can the country remain competitive and attractive without stifling the engine that drives its economy?
By: Marcelo Simões, partner and co-founder of Comtax Referências.
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