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Reuters
12-06-2025
- Business
- Reuters
Brazil government revises IOF taxes after pushback, tweaks investment levies
SAO PAULO, June 11 (Reuters) - The Brazilian government published on Wednesday an executive order altering taxes levied on investments, as well as a new decree walking back part of the recently announced hikes on the IOF tax on financial transactions. The government had announced in May the increase of the IOF tax, including on credit and foreign-exchange transactions, to boost public revenues. The move triggered strong pushback from both Congress and market players, prompting the government to seek an alternative path as lawmakers threatened to overturn the measure. Wednesday's executive order, which will need Congress' approval to remain valid, includes measures previously unveiled by Finance Minister Fernando Haddad, such as taxes on investment income and capital gains, including stocks and bonds, at 17.5%, replacing the current sliding scale of 15% to 22.5%. It also sets a 5% income tax on investments currently except from income levy, and raises the income tax rate levied on so-called interest on equity (JCP) payments to 20% from 15%.
Reuters
11-06-2025
- Business
- Reuters
Brazil's finance minister urges lawmakers to back economic agenda
BRASILIA, June 11 (Reuters) - Brazil's Finance Minister Fernando Haddad said on Wednesday the country needs to push ahead with measures under consideration in Congress to ensure the current growth cycle in Latin America's largest economy is sustainable. Haddad made his remarks during a hearing in the lower house of Congress after Speaker Hugo Motta said earlier on Wednesday the government's proposal to roll back a controversial tax hike on some financial transactions faces resistance from lawmakers. On Sunday, Haddad proposed offsetting the revenue loss from the scaled-back financial transactions tax with higher taxes on online betting, private credit instruments and financial institutions. "We need to understand that presenting solutions focused on increasing revenue, without cutting spending, does not work," Motta added in a post on the X social media site. During his opening remarks at the hearing, Haddad noted that leftist President Luiz Inacio Lula da Silva's government is delivering average annual economic growth of 3%, but said it is necessary to "keep advancing with the economic measures being addressed to this House" to ensure the growth cycle continues. "There is no reason we can't continue to grow, but we must have the courage to face certain taboos," Haddad added. He also said the government has been expressing to Congress its concerns over certain spending trends, many of which are being honored by the Lula administration despite not having been initiated by it, such as rising expenditures related to the Fundeb education fund. Haddad argued it is better to correct distortions in the current tax system than to simply raise tax rates. He also defended an income tax reform bill sent to Congress that proposes higher exemptions for the middle class and a boost in taxation of wealthier people.
Reuters
11-06-2025
- Business
- Reuters
Brazil to spare individual tax breaks in fiscal package, sources say
BRASILIA, June 10 (Reuters) - Brazil's Finance Ministry does not plan on targeting income tax benefits for individuals in a broad reform of tax breaks to shore up public finances, two ministry officials told Reuters. The officials, who spoke on condition of anonymity because the measures are still being prepared, said the package will preserve all existing deductions for individuals in their income tax filings - such as those for health and education expenses. Exemptions for retirees over the age of 65 and individuals with serious illnesses will also be left untouched, they said. This year's federal budget projects 544 billion reais in total tax benefits, but politically sensitive exemptions and deductions for individuals account for 91.7 billion reais, or about 17% of the total. Finance Minister Fernando Haddad said that the government aims to pass a bill that would cut most tax expenditures by at least 10%, effectively excluding from the review benefits tied to the Manaus Free Trade Zone and the "Simples" tax regime for small businesses. Under former President Jair Bolsonaro, a 2021 constitutional amendment mandated a reduction in tax benefits but did not specify how such reductions would be achieved in subsequent legislation, rendering the measure largely ineffective. Now President Luiz Inacio Lula da Silva's government aims to lay out clear rules on which tax benefits would be affected and the methods for reducing each, one of the sources said. If a benefit grants a presumed tax credit, the taxpayer would retain 90% of the credit instead of 100%. If the benefit is a full exemption, the applicable tax rate would become 10%, the source added. "Once this bill is approved, it would allow these benefits to be automatically reduced starting next year," the source said, adding that the measure would be an important tool to help balance public accounts. Haddad has stressed that the government would maintain ongoing talks with Congress to finalize the proposal. Separately, the government has announced that it will issue an executive order to raise some taxes in order to roll back a controversial decree that increased the IOF tax rate on certain financial transactions. The package includes the creation of a single income tax rate of 17.5% for all types of financial investments, including stocks and bonds - except for currently exempt instruments, which would be taxed at 5%. According to one source, the current tiered structure, which ranges from 15% to 22.5% depending on asset class and holding period, distorts investor behavior by encouraging certain asset choices over others. The source also stressed that the flat rate will allow taxpayers to offset gains and losses across their investment portfolio when filing annual tax returns. Any excess tax payments would be refunded based on the net gains for the year.
Reuters
10-06-2025
- Business
- Reuters
Brazil bank chiefs balk at tax hike proposal, urge spending review
SAO PAULO, June 10 (Reuters) - The chief executives of some of Brazil's largest banks on Tuesday expressed concerns over government plans to raise taxes to meet the federal fiscal target, advocating instead for a review of public spending. The proposed fiscal measures, which President Luiz Inacio Lula da Silva has yet to formally receive, include higher taxes on online betting, private credit instruments and financial institutions, while trimming a tax hike on the IOF financial transaction tax. The government raised the IOF tax last month by decree, sparking backlash from Congress and the market. Roberto Sallouti, CEO of investment bank BTG Pactual , said at an event hosted by banking federation Febraban in Sao Paulo that focusing on spending efficiency would be preferable to tax increases, which he argued would harm economic growth. "Isn't it time to seek greater efficiency in Brazil's public budget spending?" Sallouti said, warning that increasing taxes would increase the cost of doing business in the nation. Lula's administration has so far avoided putting spending cuts on the agenda and defended allocations toward sweeping benefits programs. Marcelo Noronha, CEO of lender Bradesco , told the same panel that fiscal balance should be achieved through expenditure cuts, not revenue increases, and called for dialogue with policymakers. Santander Brasil CEO Mario Leao acknowledged the difficulty of such decisions but stressed their necessity. "No one wakes up wanting to pay more in taxes, no one wakes up wanting to manage spending proactively, but these are agendas that Brazil has to face," Leao said.
Bloomberg
07-06-2025
- Business
- Bloomberg
Brazil House Speaker, Top Banks Urge Reform, Slam Tax Strategy
Scaling back corporate tax exemptions in Brazil will be top of the agenda for lawmakers when they meet with the government on Sunday night, House Speaker Hugo Motta said. The talks come as the government of President Luiz Inacio Lula da Silva tries to plug a hole in the budget with tax hikes, a strategy criticized by Motta, who was elected speaker with broad backing, and the country's top bankers.
