Judge acknowledges “serious error” but keeps export tax on oil companies suspended

Federal Judge Humberto de Vasconcelos Sampaio of the 1st Federal Court of Rio de Janeiro acknowledged that paragraphs not contained in the government’s provisional measure creating a temporary export tax on crude oil were mistakenly included in his preliminary injunction. He said, however, that despite the material error, his ruling remains valid. He upheld his view that the tax was created for revenue-raising purposes rather than regulatory ones and therefore should remain suspended.

“It was a serious material error, but one that does not affect the conclusions drawn from the interpretive process under which the explanatory memorandum must be taken into account, especially because this is an executive measure, and therefore essentially administrative, even though it has the force of law,” Sampaio argued in response to an appeal filed by the federal government.

In his view, the government could not have created the tax in order to offset measures adopted to contain rising diesel prices in Brazil caused by the conflict in the Middle East. “There appears to be a defect at the origin, because the provisional measure stated in its rationale, though not in its text, a purpose that is not proper to an export tax and that therefore could not, in principle, even have been part of the government’s considerations when it devised the new levy, given that, as an executive act, its stated reasons bind the administrator and form part of the administrative act itself,” the judge wrote.

On Thursday night (April 9), as previously reported by Valor, Appellate Judge Carmen Silva Lima de Arruda of the 2nd Regional Federal Court denied the government’s appeal at the second-instance level and upheld Sampaio’s preliminary ruling.

As a result, collection of the oil export tax remains suspended for five oil companies operating in Brazil until the case is heard by a panel of the appeals court. The suspension benefits Equinor, TotalEnergies, Petrogal, Shell and Repsol Sinopec.

In addition to arguing in its appeal that the ruling contained a serious error by inventing paragraphs, the government said the export tax has a regulatory purpose because it was established in the context of measures intended to contain the effects of the war. It also argued that the tax is part of economic policy and market regulation.

“Provisional Measure 1,340/2026 did not institute a tax with a purely revenue-raising purpose. On the contrary, it is part of a package of complementary and coordinated measures to address a severe exogenous price shock in the international energy market, characterized by high volatility and a surge in the price of oil,” the government said in the appeal obtained by Valor.

“It is neither fair nor reasonable for the interests of the plaintiffs in increasing their gains, yes, that is what this is about, to prevail over society’s interest in keeping inflation under control and ensuring the full functioning of the various sectors of productive activity,” the government argued in the appeal.

The export tax was temporarily reinstated by the federal government at a rate of 12%, with the aim of offsetting subsidies granted to diesel producers and importers in Brazil. The subsidy is intended to prevent a rise in domestic diesel prices as a result of the surge in Brent crude prices.

Source: text by Jéssica Sant’Ana for Valor Econômico

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