Federal Government defends immediate taxation of crude oil exports

The federal government is facing a legal battle over the decision to temporarily increase taxation on crude oil exports.

The provisional measure in question, which instituted a 9,2% tax rate on crude oil export, was edited at the end of February and is the subject of three actions in the Supreme Court filed by PL, Novo and by the oil exploration companies.

To defend its decision, the federal government presented an argument that was taken to the Federal Supreme Court (STF) by the Advocacy General of the Union (AGU). Arguing that it is the role of the Executive to adopt policies “in the area of ​​foreign trade policy”, the AGU defended that the increase in the export tax, as it was done, “is not subject to the incidence of the principles of annual and nonagesimal precedence, of way that makes it possible to produce immediate effects”.

A review of Petrobras' fuel exemption policy was also contemplated in the provisional measure, but it is the taxation of crude oil exports that has generated the most controversy and discussion in the political and legal field.

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The arguments of the companies

The oil exploration have argued that taxation of crude oil exports was made without due consultation with the National Energy Policy Council (CNPE), which, according to the Constitution, is responsible for formulating the national energy policy. This prior consultation is, according to the companies, a requirement for the publication of normative acts that affect the oil and gas sector.

In addition, the companies claim that the provisional measure it was prepared without observing the principles of legal certainty, protection of trust and tax equality.

The government, on the other hand, argues that prior consultation with the CNPE was not necessary because the decision to tax the export of crude oil it is a measure related to the foreign trade policy and, therefore, of the exclusive competence of the Executive.

The impacts of taxation

A crude oil export taxation can have significant impacts on the oil and gas industry, especially since Brazil is a major oil producer and exporter. In addition, the measure may affect Brazil's trade relations with other countries, especially those that import Brazilian oil.

The role of the Supreme Court

It is up to the Supreme Court decide on the legality of crude oil export taxation. The oil exploration companies that filed lawsuits against the federal government hope that the STF will declare the provisional measure unconstitutional.
Meanwhile, taxation remains in effect, and oil and gas companies continue to export crude oil, but with the added burden of export tax. The legal battle surrounding the provisional measure promises to extend over the next few months, and is one of the many challenges that the federal government faces in relation to the Brazilian economy.