Fossil Fuel Support - BRA
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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.


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OECD (2018), OECD Companion to the Inventory of Support Measures for Fossil Fuels 2018, Paris.

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Nov-17

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Annual

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Units
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Brazilian real

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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

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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.

Fossil Fuel Support - BRAAbstract

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.


Country notehttp://stats.oecd.org/wbos/fileview2.aspx?IDFile=e10cca86-673b-4704-929e-e4f65efd2651Country sourceshttp://stats.oecd.org/wbos/fileview2.aspx?IDFile=fe692bfa-0e77-4115-b76f-bc9c749277b8
Contact person/organisation

ffs.contact@oecd.orgffs.contact@oecd.orgName of collection/source

OECD (2018), OECD Companion to the Inventory of Support Measures for Fossil Fuels 2018, Paris.

Unit of measure used

Brazilian real

Power codeUnitsPeriodicity

Annual

Date last updated

Nov-17

Key statistical concept

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

Recommended uses and limitations

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.

Other comments

OECD Companion to the Inventory of Support Measures for Fossil Fuels 2018http://dx.doi.org/10.1787/9789264286061-en