Tax Reform Impacts on the Oil & Gas Sector: 5 Key Points to Watch

September 29, 2025•3 min read

With the upcoming Tax Reform in Brazil, different sectors of the economy will be affected — and the Oil & Gas sector will be no exception.

New rules may impact the tax burden, supplier contracts, and even the structure of operations. Below are 5 key points of attention that reflect the impacts on the sector:

1. Chartering (Afretamento)

The CBS and IBS will broadly apply to all operations involving goods and services. In these cases, “services” will be considered as all operations that do not involve tangible or intangible goods, real estate or movable property, including rights, provided they are onerous.

Therefore, leasing of movable and immovable property, which is currently not taxed, will now be considered a taxable event for IBS and CBS.

This change will have significant impacts on vessel chartering contracts with bundled services, where today only the service portion is taxed.

2. Increase in the Tax Burden on Services

The reform will bring a significant increase in the tax burden on service providers across the chain.

Currently, service providers are taxed as follows:

ISS: between 2% and 5%
PIS and COFINS: 9.25%

With the implementation of IBS and CBS, estimates suggest that taxation may reach between 26% and 28%, according to recent market projections.

Despite the promise of full non-cumulative credits — allowing credits on expenses that previously did not generate them — this change alone will not be enough to offset the impact of higher effective rates.

3. Cash Flow and Split Payment

The way tax credits are recognized will also change:

Credits will only be recognized after the tax is paid, creating a cash mismatch and pressuring working capital, especially in long supply chains.
With the Split Payment system, taxes will be withheld and paid directly to the government at the time of the transaction, reducing the company’s available cash and requiring new short-term financial planning.

This factor is particularly relevant to the O&G sector, given the scale and financial relevance of its operations.

4. Selective Tax (Imposto Seletivo)

The creation of this new tax could heavily impact the sector, as it will apply once (monophase) to the production, extraction, commercialization, or import of goods and services harmful to health or the environment.

Lawmakers have included mineral goods in this definition.

No official rate has been disclosed yet, but the market estimates between 0.25% and 2.5%.

Another uncertain point is exports: if the Selective Tax applies to goods destined for export, it could directly impact Brazil’s international competitiveness.

5. Special Regimes and Tax Benefits

Despite the gradual phase-out of ICMS tax benefits between 2029 and 2033, some special regimes will remain after the reform.

One example is REPETRO, whose validity has been extended until 2040.

This represents an important safeguard for companies operating in the oil and gas sector.

Conclusion

The changes introduced by the Tax Reform will require strategic and financial planning from companies in the Oil & Gas sector.

Impacts range from contractual adjustments to new cash flow management models, in addition to potential changes in effective taxation and export treatment.