LISBON, July 30 (Xinhua) -- Portugal's Council of Ministers on Thursday approved a temporary windfall tax on the excess profits of oil extraction and refining companies, becoming the first of five European Union countries that had urged the European Commission to authorize such a measure to put forward concrete legislation.
The Temporary Solidarity Contribution on the Petroleum Sector will impose a 33 percent levy on the portion of a company's 2026 profits that exceeds by more than 20 percent the average profits recorded in 2024 and 2025. The tax will be assessed and paid by the end of September 2027.
The Finance Ministry said the measure targets "extraordinary profits resulting exclusively from external market circumstances," referring to the sharp rise in fossil fuel prices triggered by the Middle East conflict following U.S. and Israeli strikes against Iran.
Revenue from the tax will be directed toward supporting households and sectors most affected by rising fuel costs, as well as financing investments in energy efficiency and economic decarbonization to reduce dependence on fossil fuels.
Finance Minister Joaquim Miranda Sarmento and his counterparts from Germany, Spain, Italy and Austria jointly written to the European Commission in early April requesting a windfall profit tax mechanism similar to measures adopted during the 2022 energy crisis. Brussels approved the framework in April, but the other four countries have yet to introduce specific legislation, still preferring an EU-wide solution.
The government justified the measure by pointing to the "significant worsening" of costs borne by families and businesses as a result of international energy market instability, while oil and refining companies simultaneously recorded extraordinary profits from the same market conditions.
Portugal's leading oil and gas company Galp reported on Monday that its first-half net profit rose 44 percent year-on-year to 812 million euros (933.8 million U.S. dollars), driven by higher oil production in Brazil and a higher average Brent crude price. ■
