Brazil implements temporary tax relief on ethanol and gasoline

The Brazilian federal government has implemented a temporary reduction in taxes on fuels. Under Decree No. 13.116/2026, the PIS/Pasep and Cofins rates for hydrated ethanol have been set to zero, while contributions on gasoline and its derivatives have also been reduced. These new rules, effective from September 10 to October 9, 2026, aim to create space for lower fuel prices, though the government does not mandate specific retail prices.

For ethanol, the tax relief is approximately R$ 0.19 per liter. However, the actual impact on consumer prices depends on various factors, including production costs, freight, distributor margins, and state-level ICMS taxes.

In a separate market observation, the National Agency of Petroleum, Natural Gas and Biofuels (ANP) reported that the average price of hydrated ethanol rose by 2.28% between September 6 and September 12, reaching R$ 4.04 per liter. This price increase occurred in 14 states and the Federal District, while some regions saw decreases. Despite the recent rise, the economic parity of ethanol compared to gasoline remained at a national average of 61.87%, which is below the 70% reference threshold used to determine competitiveness.