Carmen Silva Lima de Arruda, a judge at the 2nd Region Federal Regional Court (TRF-2), said the National Treasury Attorney-General’s Office, which filed the appeal on behalf of the federal government, “failed to demonstrate the risk of concrete, serious and current harm arising from the maintenance of the challenged decision, and there is no evident prejudice in waiting for the final judgment of this interlocutory appeal, when the panel will examine the merits in detail.”

That means the injunction will remain in effect for the oil companies until the merits of the case are reviewed by a TRF-2 panel. The injunction was granted on Tuesday by federal judge Humberto de Vasconcelos Sampaio of the 1st Federal Court in Rio de Janeiro in favor of Equinor, TotalEnergies, Petrogal, Shell and Repsol Sinopec.

Arruda also said the government’s argument that the injunction interferes with the economic policy adopted to soften the effects of the Middle East conflict “does not prove the immediate and irreversible harm that would, by itself, justify suspending the effects of the challenged decision.”

Appeal remains blocked

The federal government temporarily reinstated the export tax at a 12% rate on crude oil in an effort to offset subsidies granted to diesel producers and importers in Brazil. The purpose of the subsidy is to prevent diesel prices from rising domestically, after the Middle East conflict sent Brent crude prices sharply higher.

The government’s appeal challenged the injunction on both procedural and substantive grounds. “The federal government has already appealed, filing an interlocutory appeal with TRF-2, since the reasoning is based on an article of the MP [provisional presidential decree] that does not exist, and that nonexistent article was decisive to the judge’s conclusion,” the National Treasury Attorney-General’s Office said in a statement before Arruda’s decision.

The injunction cited Article 10 of the provisional decree that temporarily created the export tax, but included three paragraphs that do not exist. One of those inserted paragraphs says that the “revenue arising from the collection of the tax referred to in this article will be allocated to meet the federal government’s emergency fiscal needs, as provided for in regulation.”

That passage does not appear in the provisional decree issued by the government and published in the Official Gazette on March 12. Based on that wording, the federal judge granted the injunction, saying the export tax had a revenue-raising purpose, which would not be allowed because it is an extrafiscal tax.

The article cited contains no paragraphs and no reference to “meeting the federal government’s emergency fiscal needs.” It says only that “a 12% tax rate is hereby established on exports of crude petroleum oils or oils from bituminous minerals, classified under Mercosur Common Nomenclature code 2709, levied on the total value of exports.”

Government contests ruling’s basis

In its filing to the court, the National Treasury Attorney-General’s Office argued that the text of the provisional decree “does not provide, either expressly or implicitly, that revenue arising from the export tax will be allocated to meet the federal government’s emergency fiscal needs.”

“A reading of Article 10 of MP 1,340/2026 (the actual one), as well as subsequent Article 11, which also deals with the export tax levied on exports of crude petroleum oils or oils from bituminous minerals, reveals no earmarking of the revenue obtained for any specific purpose,” it added.

In the government’s view, that alone should have been enough to overturn the injunction, but the appellate judge did not accept the argument.

Beyond what it sees as a procedural flaw, the government also argues that the temporary tax is in fact extrafiscal rather than revenue-driven, because it was adopted as part of a broader package to contain the effects of the Middle East conflict. It says the measure is therefore a matter of economic policy and market regulation.

“MP 1,340/2026 did not create a tax with a purely revenue-raising purpose. On the contrary, it is part of a package of complementary and coordinated measures aimed at addressing a severe exogenous price shock in the international energy market, marked by high volatility and a sharp rise in oil prices,” the government said in the appeal, seen by Valor.

The government also argued that the oil companies that went to court are all, without exception, “large companies, and their ability to absorb the higher tax burden must therefore be presumed, especially in a scenario of well-known appreciation in the products they sell, reflected in a considerable increase in profitability.”

“It is neither fair nor reasonable that the plaintiffs’ interest in increasing their gains (yes, because that is what this is about) should prevail over society’s interest in keeping inflation under control and maintaining the full functioning of different sectors of productive activity,” the National Treasury Attorney-General’s Office argued in the appeal.

As Valor previously reported, Roberto Ardenghy, president of the Brazilian Petroleum Institute, or IBP, said the provisional decree is weak and that the group is considering legal action.