Introduction
The oil and gas industry has always been considered one of the most important sectors of the global economy, and the contractual framework governing upstream activities plays a decisive role in attracting foreign investment, allocating risks, and distributing revenues between host governments and international oil companies. Historically, traditional concession agreements granted extensive rights to foreign companies, while host governments received limited financial benefits. This imbalance gradually led to the development of new contractual models, including production sharing agreements and service contracts, through which governments attempted to increase their control over natural resources and obtain a greater share of petroleum revenues.
The financial and tax structure of petroleum contracts is one of the most significant elements affecting the economic balance between the parties. An efficient fiscal system should establish an appropriate relationship between risks undertaken by contractors and economic benefits obtained from petroleum operations. Therefore, countries have adopted different contractual and fiscal models based on their economic conditions, geological characteristics, political objectives, and investment requirements.
Brazil and Iran, as two major oil-producing countries, have developed different approaches regarding upstream petroleum contracts. Brazil has implemented a dual contractual system consisting mainly of concession agreements and production sharing contracts. Concession agreements are generally applied in non-strategic areas, while production sharing contracts are used in strategic areas, particularly pre-salt reserves. Under Brazilian concession agreements, government revenues are obtained through several mechanisms, including signature bonuses, royalties, special participation payments, and payments for occupation or retention of areas. In production sharing contracts, government revenues are mainly based on royalties and signature bonuses, while production sharing mechanisms determine the allocation of petroleum production between the parties.
In Iran, the introduction of the Iranian Petroleum Contract (IPC) represented a new generation of upstream contracts designed to overcome some limitations of previous buy-back agreements. The IPC model provides longer contractual periods, integration of exploration, development, and production activities, reimbursement of eligible costs, and payment of remuneration to contractors based on production performance and the R-factor mechanism. Unlike Brazilian contractual models, the IPC system does not provide direct participation of contractors in petroleum production but establishes a service-based remuneration mechanism.
This research aims to comparatively analyze the financial and tax structures of Brazilian upstream petroleum contracts and Iranian Petroleum Contracts. The main question of this study is: What are the similarities and differences between the financial and tax systems governing upstream petroleum contracts in Iran and Brazil?

Method
This research has been conducted through a descriptive-analytical method based on library research. The study examines legal documents, petroleum regulations, contractual frameworks, academic articles, books, and international reports related to the upstream petroleum industries of Iran and Brazil.
First, the contractual models of the Brazilian oil and gas industry are examined, focusing on concession agreements and production sharing contracts. The research analyzes the main sources of government revenue, including royalties, signature bonuses, special participation, area retention payments, and taxation mechanisms applicable to petroleum activities. Furthermore, the Brazilian tax system is studied considering its federal structure and the application of direct and indirect taxes at the federal, state, and municipal levels.
Second, the financial structure of Iranian Petroleum Contracts is analyzed, including cost recovery mechanisms, cost oil, contractor remuneration, risk allocation, and taxation rules applicable to petroleum operations. The study then compares these characteristics with the Brazilian system to identify similarities and differences between the two contractual approaches.

Conclusions
The findings demonstrate that the Brazilian and Iranian upstream petroleum contractual systems are based on different economic and legal approaches. Brazil has adopted a diversified fiscal framework in which government revenues are generated through multiple financial instruments. In concession agreements, contractors assume exploration and production risks and obtain ownership rights over produced petroleum after fulfilling contractual obligations, while governments receive revenues through royalties, signature bonuses, special participation, and area retention payments. In production sharing contracts, contractors recover eligible costs through cost oil and share the remaining production with the government.
In contrast, the Iranian Petroleum Contract follows a service-oriented model in which contractors do not acquire ownership rights over petroleum resources. Instead, they receive remuneration based on production levels, contractual performance, and the R-factor mechanism. The IPC model combines characteristics of buy-back contracts and service agreements by providing cost reimbursement and performance-based payments while maintaining national ownership over petroleum resources.
Regarding taxation, Brazil has developed a comprehensive petroleum taxation system due to its federal structure. Companies operating in the Brazilian oil and gas sector may be subject to various taxes, including corporate income tax, social contribution taxes, import taxes, industrial product taxes, and other sector-specific financial obligations. At the same time, Brazil provides investment incentives and tax benefits to improve competitiveness and attract international investors.
Iran, however, does not have a separate petroleum-specific taxation regime for IPC contracts. Instead, general tax regulations applicable to economic activities are applied to petroleum companies. Although some petroleum-related costs, including taxes and governmental charges, may be included among indirect contractual costs, the absence of a specialized petroleum tax framework can be considered one of the challenges of the Iranian system.
Overall, the comparative analysis indicates that Brazil has developed a more diversified fiscal system with multiple government revenue streams, whereas Iran has focused on maintaining ownership control and providing contractor incentives through remuneration mechanisms. Designing an effective petroleum fiscal regime requires balancing investment attraction, risk allocation, and the fair distribution of petroleum revenues between the host government and international contractors.