BRAZIL: GENERAL METADATA
Data documentation
General notes
Brazil is a federation comprising 27 sub-national jurisdictions [1] that possess a certain degree of freedom in setting prices for energy generation, transmission, and distribution. For this reason, there may be variations between federal and regional authorities in the adoption and implementation of energy-related policies. A few regional spending programmes provide reductions in the ICMS tax for transactions involving diesel fuel used in public transport. A cursory review of these regional policies suggests that the overall value of sub-national support for fossil fuels is much less significant than that of federal support.
Brazil’s fiscal year coincides with the calendar year.
Methodological note
A large part of support to fossil fuels in non-OECD economies takes the form of price controls or regulations benefitting final consumers. In many cases, this occurs through the government mandating state-owned oil and gas companies to charge lower retail prices, which lowers the revenues these companies collect through their sales of fuel. This sometimes results in the government subsequently intervening to compensate state-owned oil and gas companies for the losses they incurred in the downstream sector due to the regulated prices, with this compensation taking many forms. Some governments choose, for example, to compensate national oil and gas companies through targeted tax concessions (e.g., VAT exemptions) or equity injections.
This inventory focusses on the direct budgetary transfers and tax expenditures that encourage the production or consumption of fossil fuels, including those benefitting national oil and gas companies. For this reason, some of the measures classified here under "Producer Support Estimate" may have been introduced by governments with a view to compensating domestic, vertically integrated oil and gas companies for the lower prices they are required to charge at the retail level, resulting in these measures being connected to some extent to consumer support.
Producer Support Estimate
Upstream operators of oil and natural-gas concession blocks in Brazil are subject to additional specific government levies - notably royalties, a signature bonus, a special participation tax, and an area-retention tax. Royalties take the form of a monthly tax applied on sales revenue at a rate of 10%, which can be reduced in exceptional cases to 5%. Special participation is a quarterly tax applied on sales revenue at a rate that varies from 10% to 40%, which is adjusted for certain high-volume or high-profit-margin fields. The signature bonus is an amount included by oil and gas producers in their concession bids, and which is payable to the ANP upon signature of the concession agreement. Lastly, the area-retention tax is an annual tax set by the ANP during the bidding round, the rate of which depends on the size and the geological characteristics of the field. Under this latter tax, upstream operators of concession blocks located onshore must pay the owners of the land where they operate an amount determined by the ANP, usually in the range of 0.5% to 1% of the value of production. Under concession agreements, upstream operators are also required to carry out domestic R&D investments equal to at least 1% of their gross revenues.
Readers are advised that some fiscal measures related to oil and natural-gas production may not constitute tax expenditures under an alternative baseline where resource taxes (or production taxes) vary with market conditions and production costs. This inventory uses the annual amounts of tax expenditures as reported by the Federal Revenue Secretariat of Brazil.
Footnotes
[1] The Federative Republic of Brazil currently consists of 26 states and one federal district.
OECD Companion to the Inventory of Support Measures for Fossil Fuels 2021
Nov-22
Data for 2021 are preliminary and may contain OECD-generated estimates.
Annual
Indicator
PSE: Producer Support Estimate
GSSE: General Services Support Estimate
CSE: Consumer Support Estimate
Stage
EXTRACT: Extraction or mining stage
TRANS: Transportation of fossil fuels (e.g., through pipelines)
REFIN: Refining or processing stage
GENER: Use of fossil fuels in ectricity generation
INDUS: Use of fossil fuels in the industrial sector
END: Other end uses of fossil fuels
Statutory or Formal Incidence
consumption: Direct consumption
returns: Output Returns
income: Enterprise Income
inputs: Cost of Intermediate Inputs
labour: Labour
land: Land and natural resources
capital: Capital
knowledge: Knowledge
Users of tax expenditure estimates should bear in mind that the Inventory records tax expenditures as estimates of revenue that is foregone due to a particular feature of the tax system that reduces or postpones tax relative to a jurisdiction’s benchmark tax system, to the benefit of fossil fuels. Hence, (i) tax expenditure estimates could increase either because of greater concessions, relative to the benchmark tax treatment, or because of a raise in the benchmark itself; (ii) international comparison of tax expenditures could be misleading, due to country-specific benchmark tax treatments.
Measures appearing in the Inventory are classified as support without reference to the purpose for which they were first put in place or their economic or environmental effects. No judgment is therefore made as to whether or not such measures are inefficient or ought to be reformed.
BRAZIL: GENERAL METADATA
Data documentation
General notes
Brazil is a federation comprising 27 sub-national jurisdictions [1] that possess a certain degree of freedom in setting prices for energy generation, transmission, and distribution. For this reason, there may be variations between federal and regional authorities in the adoption and implementation of energy-related policies. A few regional spending programmes provide reductions in the ICMS tax for transactions involving diesel fuel used in public transport. A cursory review of these regional policies suggests that the overall value of sub-national support for fossil fuels is much less significant than that of federal support.
Brazil’s fiscal year coincides with the calendar year.
Methodological note
A large part of support to fossil fuels in non-OECD economies takes the form of price controls or regulations benefitting final consumers. In many cases, this occurs through the government mandating state-owned oil and gas companies to charge lower retail prices, which lowers the revenues these companies collect through their sales of fuel. This sometimes results in the government subsequently intervening to compensate state-owned oil and gas companies for the losses they incurred in the downstream sector due to the regulated prices, with this compensation taking many forms. Some governments choose, for example, to compensate national oil and gas companies through targeted tax concessions (e.g., VAT exemptions) or equity injections.
This inventory focusses on the direct budgetary transfers and tax expenditures that encourage the production or consumption of fossil fuels, including those benefitting national oil and gas companies. For this reason, some of the measures classified here under "Producer Support Estimate" may have been introduced by governments with a view to compensating domestic, vertically integrated oil and gas companies for the lower prices they are required to charge at the retail level, resulting in these measures being connected to some extent to consumer support.
Producer Support Estimate
Upstream operators of oil and natural-gas concession blocks in Brazil are subject to additional specific government levies - notably royalties, a signature bonus, a special participation tax, and an area-retention tax. Royalties take the form of a monthly tax applied on sales revenue at a rate of 10%, which can be reduced in exceptional cases to 5%. Special participation is a quarterly tax applied on sales revenue at a rate that varies from 10% to 40%, which is adjusted for certain high-volume or high-profit-margin fields. The signature bonus is an amount included by oil and gas producers in their concession bids, and which is payable to the ANP upon signature of the concession agreement. Lastly, the area-retention tax is an annual tax set by the ANP during the bidding round, the rate of which depends on the size and the geological characteristics of the field. Under this latter tax, upstream operators of concession blocks located onshore must pay the owners of the land where they operate an amount determined by the ANP, usually in the range of 0.5% to 1% of the value of production. Under concession agreements, upstream operators are also required to carry out domestic R&D investments equal to at least 1% of their gross revenues.
Readers are advised that some fiscal measures related to oil and natural-gas production may not constitute tax expenditures under an alternative baseline where resource taxes (or production taxes) vary with market conditions and production costs. This inventory uses the annual amounts of tax expenditures as reported by the Federal Revenue Secretariat of Brazil.
Footnotes
[1] The Federative Republic of Brazil currently consists of 26 states and one federal district.
OECD Companion to the Inventory of Support Measures for Fossil Fuels 2021
Annual
Nov-22
Data for 2021 are preliminary and may contain OECD-generated estimates.
Indicator
PSE: Producer Support Estimate
GSSE: General Services Support Estimate
CSE: Consumer Support Estimate
Stage
EXTRACT: Extraction or mining stage
TRANS: Transportation of fossil fuels (e.g., through pipelines)
REFIN: Refining or processing stage
GENER: Use of fossil fuels in ectricity generation
INDUS: Use of fossil fuels in the industrial sector
END: Other end uses of fossil fuels
Statutory or Formal Incidence
consumption: Direct consumption
returns: Output Returns
income: Enterprise Income
inputs: Cost of Intermediate Inputs
labour: Labour
land: Land and natural resources
capital: Capital
knowledge: Knowledge
Users of tax expenditure estimates should bear in mind that the Inventory records tax expenditures as estimates of revenue that is foregone due to a particular feature of the tax system that reduces or postpones tax relative to a jurisdiction’s benchmark tax system, to the benefit of fossil fuels. Hence, (i) tax expenditure estimates could increase either because of greater concessions, relative to the benchmark tax treatment, or because of a raise in the benchmark itself; (ii) international comparison of tax expenditures could be misleading, due to country-specific benchmark tax treatments.
Measures appearing in the Inventory are classified as support without reference to the purpose for which they were first put in place or their economic or environmental effects. No judgment is therefore made as to whether or not such measures are inefficient or ought to be reformed.