Brazilian Court Restores 12 Percent Tax on Crude Oil Exports

The Regional Federal Court of the 1st Region (TRF-1) has overturned a lower court injunction that had suspended a 12 percent tax on crude oil exports. The decision, issued by Judge Roberto Carvalho Veloso, granted a request by the Attorney General of the Union (AGU) to restore the tax collection. The court ruled that maintaining the suspension would pose a risk to the economic order and state planning regarding foreign trade and exchange policy, particularly given current international geopolitical instability.

The tax was originally established in March through Provisional Measure 1.340 to ensure domestic supply and fund fuel subsidies amid price volatility caused by conflict in the Middle East. After the measure expired in July without a vote from the National Congress, the government maintained the charge via a resolution from the Executive Management Committee (Gecex) of the Chamber of Foreign Trade (Camex). According to the Federal Revenue Service, the tax has already raised 7.9 billion reais.

The suspension of the tax had been granted on August 27 by the 17th Federal Court of Brasília following a lawsuit by the Brazilian Association of Oil and Gas Exploration and Production Companies (ABEP). The lower court judge had argued that using a resolution to renew a tax after a Provisional Measure expired could be seen as an attempt to bypass the legislative process. Oil companies have further argued that the tax reduces Brazil's competitiveness and serves as a revenue tool rather than a regulatory one.