Portugal Reduces Fuel Tax to Offset Rising Prices Amid Agricultural Sector Concerns

The Portuguese government approved a reduction in the Tax on Petroleum Products of 6.3 cents per liter for diesel and 7.3 cents per liter for gasoline, according to an announcement by the Ministry of Finance on March 13, 2026. The measure was designed to offset rising fuel prices, which had climbed 52 cents over a two-week period. The ministry stated that the reduction would return to consumers the increase in VAT revenues generated by higher fuel prices. The government framed the move as an extension of measures already in force, maintaining the tax burden at the level equivalent to August 1, 2021. According to the ministry's statement, the reduction takes effect from the following Monday.

The ministry noted that when combining the reduction already in force in August with the additional reduction announced on March 13, the total cut relative to rates in force at the end of 2021 amounts to approximately 35.1 cents per liter on diesel and 36.1 cents per liter on gasoline. The existing reduction already incorporated the suspension of the update of the carbon tax and an additional component to offset extra VAT revenue. The ministry described the new measure as "an update of the measures in force to offset the increase in tax revenue resulting from the application of VAT to rising prices." Web search results confirm that Joaquim Miranda Sarmento serves as Portugal's Minister of Finance in March 2026; the source article references Fernando Medina in that role, which reflects historical or recycled content from an earlier period.

„In this way, the increase in revenues from VAT resulting from the increase in fuel prices is returned to consumers.” (In this way, the increase in revenues from VAT resulting from the increase in fuel prices is returned to consumers.) — Ministry of Finance via RTP

Portugal has maintained a system of ISP reductions and VAT offset mechanisms since fuel prices began rising sharply in 2021, using excise duty adjustments to shield consumers from the full impact of global oil price increases. The reference baseline for current reductions is the tax burden level of August 1, 2021, as stated in government communications. Agricultural diesel has historically carried a separate, lower discount structure compared to road fuels in Portugal.

CONFAGRI demanded that agricultural diesel receive the same discount as road fuels, warning that the disparity was pushing the agricultural sector toward crisis. The current discount for agricultural diesel stands at 7.6 cents per liter, far below the 6.3 cents reduction for road diesel announced by the government — a gap the confederation said was unsustainable given the 52-cent price increase recorded over two weeks. CONFAGRI argued that the agri-food sector faced disproportionate cost pressure because agricultural machinery depends heavily on diesel and cannot easily absorb rapid price swings. The confederation called on the government to establish parity in fuel discounts to prevent lasting damage to agricultural production and food supply chains.

52 (cents per liter) — fuel price increase over two weeks in Portugal

ISP fuel discount — road vs agricultural diesel: Discount per liter (before: Agricultural diesel: 7.6 cents, after: Road diesel: 6.3 cents reduction (new measure), plus prior reductions totaling ~35.1 cents vs 2021 baseline)