The Brazilian government this week increased the tariff on imported ethanol from 9.25 percent to 11.75 percent, effective immediately.

The Brazilian Sugarcane Industry Association (UNICA) issued a statement regarding the changes to Brazil’s tax policy signed into law by Brazilian President Dilma Rousseff Monday.

Ethanol produced in Brazil is subject to a range of federal taxes with revenue allocated to social security, including the social participation program (PIS) and social security financing contribution (COFINS) on domestic production. Today’s action by President Rousseff will level the playing field between Brazilian sugarcane ethanol and imported biofuels by subjecting foreign renewable fuels to comparable taxation and should not be confused with an importation tariff.

It is important to note the PIS and COFINS paid on ethanol imports will turn into a credit for the importer, which may then be used to pay other tax debts or be reimbursed by the Brazilian government, having the effect of anticipated taxes that would already be collected.

“Brazilian sugarcane producers have long been strong advocates of removing trade barriers and creating tax parity for renewable fuels,” said Elizabeth Farina, UNICA President. “Working together, the United States and Brazil have built a thriving global biofuels trade benefiting both countries, and we look forward to continued progress toward shared environmental and economic goals.”