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Tax breaks worth $260 billion were granted to 267 oil companies between 2015 and 2023, impacting federal government revenue from tax incentives and immunities.
Tax breaks granted to 267 companies in the oil industry totaled R$260 billion between 2015 and 2023. An unprecedented study by the Institute of Socioeconomic Studies (INESC) highlighted the extensive benefits provided to the oil and gas sector during this period.
These tax waivers had a significant impact on federal government revenue, reflected in subsidies and other economic incentives. The study also pointed out that, in addition to the tax breaks, companies in the sector benefited from several tax exemptions that contributed to reducing the tax burden. This demonstrates broad government support for the industry, resulting in a more favorable environment for investment.
These values, which encompass Incentives, tax benefits and immunities, were directed to 267 companies in the sector, directly affecting the federal government revenue. Last year alone, the oil industry benefited with R$29 billion. In 2020, the values of tax breaks reached R$56 billion, marking the highest peak recorded.
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Need for Strategic Planning for Energy Transition
This scenario highlights the urgent need for strategic planning for the energy transition in Brazil. It is crucial to consider the urgent reduction in the use of fossil fuels, combined with the preservation of jobs and the stimulation of low-carbon production chains. Alessandra Cardoso, political advisor at Inesc, emphasizes this need.
The data was obtained through the Federal Revenue Service, which, in 2023, began to disclose detailed information by legal entity benefiting, as defined by Ordinance No. 319 of that year.
Inesc Survey and Details on the Repetro Special Regime
The survey conducted by Inesc used this information, accessed through the Access to Information Act (LAI), to identify the values associated with companies eligible for the Repetro Special Regime – a customs regime that exempts the oil industry from several taxes. The database for this analysis is available at this link:
The main taxes from which companies were exempted include PIS, Cofins, Import Tax (II), and Tax on Industrialized Products (IPI). In addition, there were incentives granted by the Superintendencies for the Development of the Northeast (Sudene) and the Amazon (Sudam).
Transnationals Among the Biggest Beneficiaries of Tax Exemption
The majority of the 267 companies benefiting from Repetro are transnational, receiving benefits granted to foreign companies. Among the biggest beneficiaries are MODEC Serviços de Petróleo do Brasil Ltda and Ventura Petróleo, highlighting the multiplicity of regimes and incentives, such as tax exemption, to which these companies have access.
According to Inesc, although Ordinance No. 319 of 2023 represents progress in providing information on subsidies granted to the oil industry, there is still a lack of transparency to the special Repetro regime. Tax waivers in the country are not disclosed in the Federal Revenue's Tax Expenditure Statements. The justification given by the RFB is the technical impossibility of computing these waivers.
Brazil's Relationship with the Oil Industry
'Brazil's relationship with the oil industry is marked by a profound asymmetry of information and by false promise that the resources from oil will finance the energy transition', explains Alessandra. 'Holding onto this expectation is wasting precious time in combating climate emergencies', he concludes.
Table 1: Tax Exemptions Associated with Companies Eligible for Repetro (in R$ million)
| Year | COFINS | PIS | II | IPI | SUDAM/SUDENE 75% IRPJ | SUDAM/SUDENE reinv | TOTAL |
|---|---|---|---|---|---|---|---|
| 2015 | 7.814,66 | 1.612,73 | 6.657,95 | 756,18 | 66,39 | 1,38 | 16.909,30 |
| 2016 | 7.112,79 | 1.448,02 | 7.483,34 | 728,11 | 60,67 | 1,42 | 16.834,34 |
| 2017 | 4.607,55 | 960,40 | 4.688,11 | 578,12 | 74,83 | 1,32 | 10.910,32 |
| 2018 | 9.534,48 | 1.944,39 | 10.420,47 | 646,64 | 859,93 | 45,92 | 23.451,82 |
| 2019 | 13.162,44 | 2.834,03 | 16.511,33 | 1.604,98 | 680,98 | 1,47 | 34.795,23 |
| 2020 | 21.032,27 | 4.535,33 | 28.374,79 | 2.096,66 | 94,05 | 3,61 | 56.136,70 |
| 2021 | 18.440,99 | 4.001,87 | 20.360,23 | 1.546,73 | 873,90 | 45,81 | 45.269,53 |
| 2022 | 12.147,08 | 2.631,47 | 8.215,16 | 611,95 | 2.922,72 | 166,06 | 26.694,43 |
| 2023 | 13.011,67 | 2.990,52 | 11.589,82 | 682,27 | ND (*) | ND (*) | 29.074,28 |
| TOTAL | 107.663,91 | 22.958,75 | 114.301,20 | 9.251,63 | 5.633,47 | 266,98 | 260.075,95 |
Source: information from RFB through LAI.
Preparation: Inesc.
(*) The RFB did not present tax waiver data within the scope of SUDAM and SUDENE in 2023.
Source: INESC Press
