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Brazil’s government said the oil and gas industry and its energy sector clients will no longer be elegible for tax benefits offered by certain types of bonds in the local market.
“All types of projects related to the oil producing supply chain and non-renewable electricity generation will cease to be a priority” and therefore will not qualify for tax incentives, the government said in a press release.
The changes apply to so-called incentivized debentures, which are tax exempt for retail investors, as well as a new infrastructure debentures launched in January that grant tax benefits to the issuer.
“This project aims at facilitating and accelerating investment projects,” said Brazilian civil chief of staff Rui Costa, who is number two in Lula’s government, on Tuesday. “The objective is to open a new window of financing for infrastructure projects in various areas of the economy, of public services. It opens an important window to receive financing from countries and international funds.”
However, the goal of the latest changes is to divert investment away from fossil fuels and toward renewable energy and research and development. The government also said incentivized debenture issuance will no longer need prior government approval.