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Economic impact of the oil and gas sector in Brazil
The Oil and Gas (O&G) sector, one of the pillars of the Brazilian economy, faces challenges with the introduction of new taxes. The Brazilian Institute of Petroleum and Gas (IBP), representative of the sector, emphasizes the relevance of the oil industry in generating employment, income and significant fiscal contribution through taxes, royalties and special participations. In 2023, the oil and gas industry in Brazil contributed R＄92,2 billion in payments, including R＄53,6 billion in royalties and R＄38,6 billion in special participation, according to ANP data. These resources are fundamental for meeting fiscal targets and developing public policies by the Union, States and Municipalities.
The sector was responsible for 10% of the country's industrial GDP in 2020, according to the CNI, and exports of oil and oil products generated a surplus of US$80 billion in the last four years. The segment plans to invest US$183 billion in exploration and production between 2022 and 2031, supporting an average of 445 thousand jobs per year.
Challenges with new tax burdens
Despite the high tax burden in the sector, around 70%, which already provides significant revenue, Governments have promoted increases in this burden. The Tax for Control, Monitoring and Inspection of Oil and Gas Exploration and Production Activities (TFPG), approved by the government of the State of Rio de Janeiro in December 2023, and the Selective Tax, introduced in the Tax Reform, represent important risks for the sector and society.
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The new charges could negatively impact the investment decisions of companies and potential investors, affecting the attractiveness of the oil and gas sector in Brazil. This could harm the country's competitiveness in relation to other regions of the world that compete for investment in oil and gas projects.
Furthermore, new taxes on oil and gas exploration, production and commercialization activities could affect legal security and the confidence of agents and investors in the Brazilian market, with medium and long-term negative impacts on the industry.
IBP’s vision and the future of the sector
IBP and its associates believe that the sustainable and continuous development of the Brazilian oil and gas industry depends on a business environment that values the stability of rules, dialogue between public and private agents, and actions that continually attract investment to the sector. The entity reinforces the need for balance in tax decisions to ensure the sector's growth and competitiveness on the global stage.
Source: Rodrigo Dutra – dutra@fsb.
