Equinor, TotalEnergies, Petrogal, Shell, Repsol Sinopec win injunction as government prepares appeal
A federal court in Rio de Janeiro has granted a preliminary injunction to five oil companies, suspending the collection of a 12% tax on crude oil exports, which the government introduced in March through a provisional presidential decree. The tax was designed as a way for the federal government to offset measures adopted to contain the impact of rising oil prices in the domestic market following the outbreak of war in the Middle East. The decision, issued by federal judge Humberto de Vasconcelos Sampaio of the 1st Federal Court of Rio de Janeiro on Tuesday (7), benefits multinational groups Equinor, TotalEnergies, Petrogal, Shell, and Repsol Sinopec. According to sources, the government plans to appeal.
In their filing, the companies argued that Provisional Presidential Decree No. 1,340/2026, which set the 12% rate, distorted the fiscal nature of the export tax, claiming it is being used as a “purely revenue-raising instrument.” The decision states that the plaintiffs alleged violations of the principles of legal certainty, equality, free competition, and ability to pay, as well as the need to comply with the principle of prior notice, given the tax’s clearly fiscal purpose.
The judge noted that the federal government argued there was no creation of a new tax, but merely a change in the rate. According to the ruling, the government maintained that the previous zero rate reflected an economic policy aimed at encouraging exports and that taxpayers have no acquired right to maintain a preferential rate. “However, this argument does not hold in light of the specific regulatory context of Decree No. 1,340/2026,” the judge wrote.
The ruling further states that the explanatory memorandum of the provisional measure indicates that the 12% rate has a primarily revenue-raising purpose, intended to finance government spending, without any connection to exchange rate policy, trade balance equilibrium, or external market regulation. “When an extrafiscal tax is used for revenue-raising purposes, it loses the constitutional justification for exempting it from limitations on the taxing power, and the guarantees outlined in Article 150 of the Constitution must be observed. The Federal Supreme Court has already ruled this way in relation to the Tax on Financial Transactions (IOF) and CIDE [a special tax used by the federal government to regulate specific sectors] when used as revenue instruments,” the judge wrote.
A government source said the injunction reproduces Article 10 of the provisional decree but includes three new paragraphs. One of these inserted paragraphs states that “revenue from the tax referred to in this article shall be allocated to meet the federal government’s emergency fiscal needs, as provided by regulation.” This language does not appear in the provisional presidential decree published in the Official Federal Gazette on March 12. Based on this passage, Judge Sampaio granted the injunction, stating that the export tax has a revenue-raising nature, which would not be allowed since it is classified as an extrafiscal tax.
“The wording of Article 10 of Provisional Presidential Decree No. 1,340/2026, by expressly providing that revenue from the Export Tax will be allocated to meet the federal government’s emergency fiscal needs, clearly reveals the revenue-raising purpose of the measure. By linking the tax to the financing of public expenditures, the rule eliminates any claim that it serves as an instrument of exchange rate policy or foreign trade regulation,” the judge wrote in the injunction.
Article 10 of the provisional measure contains no such paragraph or reference to “meeting the federal government’s emergency fiscal needs.” It merely states that “a 12% export tax rate is established on crude petroleum oils or bituminous minerals classified under code 2709 of the Mercosur Common Nomenclature (NCM), applied to the total value of exports.”
Government officials said it is clear that the judge, in granting the injunction, did not rely on the original text of the provisional presidential decree. “The decision was based on a provision that does not exist in the regulation,” the source said. The government also argues that the temporary tax, created to mitigate the effects of the war, has an extrafiscal—not revenue-raising—nature, serving as an economic policy and market regulation tool. These arguments will be presented in the appeal.
Equinor’s Brazil president, Veronica Coelho, said the provisional presidential decree has legal weaknesses and cannot serve a purely revenue-raising purpose. “This is the latest development for us. These uncertainties increasingly reinforce the perception of risk,” she said on Wednesday (8) after attending the Brazilian Energy Leaders Forum in Rio. She added that the company invests more than $1 billion annually in Brazil, totaling about $25 billion between 2009 and 2030, underscoring the need for regulatory and fiscal stability.
Roberto Ardenghy, president of the Brazilian Petroleum Institute (IBP), said the decree is fragile and that the organization is considering legal action against the export tax. Petrobras, which is part of the IBP, did not support the initiative and voted against filing a lawsuit, according to sources. At the same event, Mines and Energy Minister Alexandre Silveira said oil companies are “making a lot of money” from oil “speculation” in the current environment. “Why not contribute temporarily so we can lower diesel and gasoline prices?” he said.
*By Fábio Couto and Jéssica Sant’Ana — Rio de Janeiro and Brasília
Source: Valor International
https://valorinternational.globo.com/