Government announced “cashback” of federal taxes for the production and import of diesel and gasoline
The government announced this Wednesday (May 13, 2026) a new package to try to contain the rise in fuel prices in Brazil. The measure determines the creation of compensation mechanisms for gasoline and diesel in the face of the soaring price of oil on the international market caused by the prolongation of the war in the Middle East.
The measure seeks to contain the effects of the rise in the price of a barrel of Brent oil, which went from around US$70 at the end of February to more than US$100 after the start of the conflict.
According to government officials, the measure will be formalized through a provisional measure and published in the coming days. It will be initially valid for 2 months, with the possibility of extension. The Executive states that the expenses will be offset by increased revenue from royalties and special oil participations.
How the grant works
The model designed by the government works as a kind of “cashback” tax for fuel producers and importers. Instead of expanding tax relief, the Union intends to return to economic agents the federal taxes paid on gasoline and diesel to prevent these amounts from being passed on to the final consumer.
According to the Minister of Planning and Budget, Bruno Moretti, the subsidy will be paid directly to producers and importers through the ANP (National Agency for Petroleum, Natural Gas and Biofuels).
In the case of gasoline, the government will still define the value of the subsidy through an order from the Ministry of Finance. Gasoline today has a federal charge of R$0.69 per liter, considering PIS, Cofins and Cide. The maximum subsidy limit will be this amount, although government members state that the scenario being worked on is a subsidy between R$0.40 and R$0.45 per liter.
Gasoline had not yet received any type of subsidy or tax cut since the start of the war in the Middle East.
For diesel, the scenario is different. The fuel already has PIS and Cofins set to zero at R$0.35 per liter until May 31st. According to Moretti, the government’s intention is to replace this exemption with a subsidy mechanism from June 1st, keeping the fuel “unburdened” without the need to renew the tax exemption.
Currently, the government already maintains a diesel subsidy program of R$1.52 per liter for imported fuel and R$1.12 per liter for national diesel.
Tax impact
According to Moretti, the scenario worked out by the government for gasoline — with a subsidy of R$0.40 to R$0.45 per liter — would have a fiscal impact of R$1 billion to R$1.2 billion per month.
The estimated monthly expense is R$272 million for every R$0.10 subsidy on a liter of gasoline and R$492 million for every R$0.10 subsidy on a liter of diesel.
In the case of diesel, maintaining the tax relief of R$0.35 per liter via subsidy would have an impact of approximately R$1.7 billion per month.
Added together, the measures would have a monthly cost of just under R$3 billion. The government, however, claims that the increase in extraordinary revenue generated by the rise in oil prices will be enough to offset expenses.
“Brazil is a large exporter of liquid oil and increases revenue with rising prices [do barril de petróleo]“, Moretti told journalists.
According to Moretti, the government chose to replace the tax relief with a temporary subsidy – classified as an extraordinary expense – to avoid the need to compensate for a new loss of revenue under the terms of the .
The minister stated that the subsidy will be operationalized through extraordinary credit, a mechanism that is outside the spending limit, but continues to impact the primary result target.
According to him, if the extra revenue generated by the rise in oil prices is not enough to offset the expense, the government may make contingencies to meet the fiscal target.
Also present at the announcement of the package, the executive secretary of the (Ministry of Finance), Rogério Ceron, said that in the next bimonthly revenue and expenditure report, scheduled for May 22, it will be possible to more accurately assess the fiscal impact of the measures.
“You will be able to get an idea of how this portrait of the inspector is, considering the measures that have been adopted since the last two months until nowa,” he said.
Initially, the government planned to use a PLP (complementary bill) to contain the rise in fuel prices through a temporary reduction in federal taxes. The proposal would authorize the Executive to compensate for the loss of revenue with extraordinary revenues generated by the increase in oil prices.
According to Ceron, the government opted for the subsidy because the mechanism can be implemented more quickly while the PLP is still being processed in Congress. Furthermore, the economic team argues that the temporary subsidy avoids the need for immediate tax compensation required in cases of tax waiver.
The PLP was sent to the Chamber on April 23, being processed urgently and had the deputy (Republicanos – GO) as designated rapporteur.
