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March 7, 2023

Brazil modifies taxation of fuels and crude oil

On 1 March 2023, Brazil published Provisional Measure (PM) 1,163 modifying the taxation of transactions with respect to fuels and crude oil.

This Alert summarizes the new provisions.


Taxation security

PM 1,163 maintains the PIS and COFINS (Social Contributions on Sales) reduction of 0%, including on imports, on transactions with aviation fuel (kerosene) and natural gas (for vehicle); the Economic Intervention Contribution (CIDE) rate was also reduced to 0% on transactions carried out with gasoline, except for aviation usage. Both benefits were granted until 30 June 2023. The suspension of the PIS and COFINS contributions, on imports, will be maintained until 31 December 2023.

There also will be a partial increase of PIS and COFINS due on transactions with gasoline and alcohol. These transactions previously were taxed at a 0% PIS and COFINS rate until 28 February 2023. Now the current rates will be of R$83,8380 and R$386,160 per cubic meter.


PIS and COFINS credits on the acquisition of aviation fuel (kerosene) and natural gas (for vehicle) will not be allowed.

Crude oil


Exports of petroleum oils and oils obtained from bituminous minerals, crude, classified at position 27.09 of the Mercosur Common Nomenclature (NCM), will be subject to an export tax at a 9.2% rate until 30 June 2023. Since the export tax is an extra fiscal tax, it can be charged immediately.

Although the imposition of an export tax over crude oil exports has generated some controversy and also surprised the market, it is important to note the matter is not new and is already being discussed by the Brazilian National Congress through bill 1,472/2021, proposed by Senator Rogério Carvalho from the Brazilian Workers’ Party (Partido dos Trabalhadores). Such bill was approved by the Senate and sent to the Chamber of Deputies for analysis.

The Federal Government has announced that the new export tax on crude oil exports will recover public finances, since it will compensate the maintenance of the reduced taxation on transactions with fuels. The export tax is expected to generate approximately R$6.6 billion in the four months it will be in force.


For additional information with respect to this Alert, please contact the following:

EY Assessoria Empresarial Ltda, São Paulo

Ernst & Young LLP (United States), Latin American Business Center, New York

Ernst & Young Tax Co., Latin American Business Center, Japan & Asia Pacific


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