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The recently inaugurated Brazilian government of President Luiz Inácio Lula da Silva, who is known as Lula, has announced the extension of tax exemptions for fuels, including biodiesel and ethanol, AgriCensus reported.

Published in the country’s official gazette on 2 January and signed by the new president, the measure extended the tax exemption for diesel and biodiesel for a year, while a gasoline and ethanol tax exemption would remain in place for two months, the 3 January report said.

The former government of Jair Bolsonaro had previously passed a tax reduction bill applying to fuel including gasoline, diesel and ethanol in a bid to gain popularity ahead of the country’s October general election, AgriCensus wrote.

However, following Lula’s win at the end of October, there had been uncertainty in the market about whether the reductions would be extended, the report said.

The government also revealed at the end of December that it was further extending its suspension of the country’s import tariff on ethanol.

The suspension of the import tariff on ethanol will now last until at least the end of January, according to Brazil’s ministry of finance website.

This extended the suspension announced in March 2022 of tariffs on US ethanol and several other products until the end of last year, AgriCensus wrote.

The extension was welcomed by US biofuels lobby the Renewable Fuels Association (RFA), which called the extension “a positive first step toward a permanent resolution and it sends a favourable signal to the marketplace.”

“As we look ahead… we stand ready to work with incoming President Lula da Silva and his administration to restore free and fair ethanol trade between our nations,” RFA president and CEO Geoff Cooper was quoted as saying.

Brazil imported 1.7M tonnes of ethanol in the first 11 months of 2021, with the Netherlands, South Korea and the USA the key suppliers responsible for about 80% of the total.