The AGU argues that the Executive Branch has constitutional authority to adjust IOF rates and claims the National Congress violated the separation of powers by suspending presidential decrees.
Brazil’s Attorney General’s Office (AGU) appealed to the Federal Supreme Court to reinstate Presidential Decree No. 12.499/2025 and suspend Legislative Decree No. 176/2025 on 1 July 2025.
Legislative Decree No. 176/2025, approved by the National Congress on 25 June 2025, repealed three presidential decrees that had increased financial transactions tax (IOF) rates. This includes the suspension of Decree No. 12.466 of 22 May 2025 and Decree No. 12.467 of 23 May 2025, which had broadly increased the financial transactions tax (IOF) rates on specific insurance, credit, and foreign exchange transactions.
Additionally, Decree No. 12,499 issued on 11 June 2025, which replaced the earlier decrees while retaining some of their initial changes and introducing key adjustments, has also been suspended.
The AGU argues that the Executive Branch has constitutional authority to modify IOF rates and claims the National Congress violated the separation of powers by suspending the decrees.
The IOF, a financial tax in Brazil applied to various transactions, recently saw increases aimed at boosting government revenue during a spending freeze. This move has faced significant criticism and backlash.
Earlier, Brazil’s National Congress approved Draft Legislative Decree No. 214/2025 on 25 June 2025, repealing three presidential decrees that had increased the IOF rates. The decision was formalised as Legislative Decree No. 176 on 26 June 2025, and published in the Official Gazette on 27 June 2025.
