Brazil Enacts 30-Day Fuel Tax Break

On October 9, 2026, Brazil’s federal government issued a decree that eliminates federal taxes on gasoline imports and gasoline sales for a 30-day period. The temporary measure is designed to directly reduce the tax burden on gasoline and support price relief at the pump during this window.

The tax suspension applies across both imported gasoline and gasoline sold domestically, creating a unified 30-day federal tax holiday on this fuel. By removing these levies, officials seek to improve the economics of bringing gasoline into the country at a time of heightened attention to fuel costs.

Alongside gasoline tax relief, the decree extends an existing federal tax exemption for ethanol. Authorities are keeping this exemption in place rather than allowing it to lapse, maintaining a more favorable tax treatment for the biofuel.

The government is also increasing subsidies for ethanol as part of the same package. Higher subsidies aim to reinforce the role of ethanol in Brazil’s fuel mix by improving its financial attractiveness for producers and distributors.

The package includes additional subsidies for diesel importers. These measures are intended to support the economics of importing diesel, a key fuel for transportation and logistics in Brazil.

By providing extra financial support to diesel importers, the government is seeking to ensure that supply remains sufficient and that bringing diesel into the country remains commercially viable under current market conditions.

Officials stated that the overarching goal of the new measures is to keep fuel imports economically viable at a critical time for the country’s fuel supply. Ensuring that import operations remain attractive is seen as important for maintaining adequate availability of gasoline and diesel.

The federal government has indicated that the fiscal impact from the tax exemptions and subsidies will be offset by revenues from its oil assets. This approach is intended to balance short-term fuel relief with budget considerations by using income tied to the country’s energy sector.

The October 9 announcement comes just over two weeks before Brazil’s presidential runoff, scheduled for October 25, 2026. Voters will choose between Luiz Inácio Lula da Silva and Sen. Flávio Bolsonaro in this second round.

Fuel costs have been a sensitive issue, and the timing places the fuel measures in the final phase of the election period. The 30-day duration of the gasoline tax suspension covers the runoff date, aligning the relief with a politically important moment for the country.