Country Report

Brazil upstream fiscal summary

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29 April 2019

Brazil upstream fiscal summary

Report summary

Brazil's upstream industry is primarily licensed with a complex concession fiscal regime. From October 2013, profit sharing contracts (PSC) are used for pre-salt developments and other strategic areas. Licences are awarded in regular rounds. Concession terms primarily include a 10% royalty, special participation tax that varies with time, location and production between 10% and 40%, and a 34% corporate income tax. PSC terms mainly include a 15% royalty, 80% cost recovery ceiling, and a biddable government profit share. The latter is adjusted based on a price and production combination. Corporate income tax applies similar to concessions. A key issue in Brazil is the complex range of indirect taxes in both regimes at the federal, state and local levels. These taxes add approximately 15% to 20% to project investments and costs.

Table of contents

    • Basis
    • Licence terms
    • Government equity participation
    • Fiscal terms
    • Bonuses, rentals and fees
    • Area rentals
    • Environmental compensation tax (SNUC)
    • Indirect taxes
    • Royalty
    • Landowner override
    • Research and development obligation
    • Special participation tax (Participação especial)
    • Corporate income tax
    • Fiscal treatment of decommissioning costs
    • Product pricing
    • Summary of modelled terms
    • Basis
    • Government equity participation
    • Fiscal terms
    • Bonuses, rentals and fees
    • Environmental compensation tax (SNUC)
    • Indirect taxes
    • Royalty
    • Research and development obligation
    • PSC production sharing
    • PSC cost recovery
    • PSC profit sharing
    • Corporate income tax
    • Fiscal treatment of decommissioning costs
    • Product pricing
    • Summary of modelled terms
  • Recent history of fiscal changes
  • Stability provisions
    • Concession
  • PSC
  • Effective royalty rate and maximum government share
  • Concession
  • PSC
  • Concession
  • PSC
  • Progressivity
  • Concession
  • PSC
  • Fiscal deterrence
  • Concession
  • PSC

Tables and charts

This report includes 42 images and tables including:

  • Timeline
  • Split of the barrel - oil
  • Split of the barrel - gas
  • Share of profit - oil
  • Share of profit - gas
  • Effective royalty rate - onshore
  • Effective royalty rate - offshore
  • Effective royalty rate
  • Maximum government share - onshore
  • Maximum government share - offshore
  • Maximum government share
  • State share versus Pre-Share IRR - oil
  • State share versus Pre-Share IRR - gas
  • State share versus Pre-Share IRR - oil
  • State share versus Pre-Share IRR - gas
  • Investor IRR versus Pre-Share IRR - oil
  • Investor IRR versus Pre-Share IRR - gas
  • Investor IRR versus Pre-Share IRR - oil
  • Investor IRR versus Pre-Share IRR - gas
  • Wood Mackenzie standard indirect tax assumptions
  • Special Participation Rates (%) - Onshore
  • SPT Onshore Concession
  • Special Participation Rates (%) - Shallow water
  • SPT Shallow water Concession
  • Special Participation Rates (%) - Deepwater
  • SPT Deepwater Concession
  • Brazil Concession (onshore)
  • Brazil Concession (shallow water)
  • Brazil Concession (deepwater)
  • Total Government Profit Share with an assumed 60% bid
  • Split of the barrel - oil
  • Split of the barrel - gas
  • Share of profit - oil
  • Share of profit - gas

What's included

This report contains:

  • Document

    Brazil upstream fiscal summary

    PDF 1.11 MB

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