The federal government has set a zero rate for the Selective Tax on the extraction of oil, natural gas, coal, and iron ore throughout the year 2027.
The federal government has officially announced a temporary exemption from the Selective Tax on the extraction of mineral and fossil resources across the entire national territory. The decision was published via Provisional Measure 1,399/2026 in an extra edition of the Official Gazette of the Union.
The determination ensures that the rate applied to the exploitation of oil, natural gas, coal, and iron ore will be zero throughout 2027. The measure aims to align the transition of the tax reform in the basic productive sector.
Created to apply to items considered harmful to health or the environment, the new tax had its general limits set by Complementary Law 214/2025. The legislation established a maximum rate of 0.25% for mineral extraction activities.
Economic motivations and impact on the energy sector
The grant of a zero rate addresses considerations presented by the Ministry of Mines and Energy (MME) in a technical note addressed to the Ministry of Finance. The ministry warned of the risks of increased costs for fuels and electricity.
One of the main obstacles identified by the sector was the difficulty in determining the final destination of natural gas in the first sale. The impasse could raise the commercial, residential, and industrial supply chain costs.
Taxation in the first sale stage could raise energy costs and create operational difficulties for its commercialization in the country.
The initiative also avoids tariff transfers to thermal power generation. Although the Federal Constitution prohibits direct taxation on electricity, the incidence on fossil inputs used by power plants still created market uncertainties.
Operational deadlines and legislative transition
The temporary tax benefit will cover only the 2027 fiscal year. The MP text requires the Executive Branch to submit to the National Congress, by May 31 of next year, a bill with permanent rates for 2028.
Respecting the constitutional ninety-day grace period, the new rules will take effect on February 2, 2027. The text also regulates levies on vehicles, vessels, alcoholic beverages, cigarettes, and gambling.
To avoid a loss of revenue during the transition period, the government submitted a Constitutional Amendment Proposal (PEC). The measure aims to preserve the incidence of the IPI on affected products until the new model is fully in force.
Outlook for the productive sector
The temporary tax relief provides predictability for investments in energy infrastructure and mining during the first year of the tax reform implementation.
Economic actors now focus on the negotiations that will take place in the Legislative Branch during the first half of the year, when the final rates for the extractive industry will be set from 2028.