Brazil’s government will present an alternative plan for the IOF tax increase within 10 days.  

Brazil’s Congress lower house speaker, Hugo Motta, said in an X post on 29 May 2025, that the government will present an alternative plan for the IOF tax increase on financial transactions within 10 days.

This follows Brazil’s President Luiz Inacio Lula da Silva signing a law to increase the financial transaction tax (IOF) on the cost of credit for companies, pension fund contributions, and certain foreign exchange operations.

The IOF increases were aimed at raising revenue amidst a major spending freeze, which received intense backlash.

The IOF is a financial levy applied to individuals and businesses in Brazil, covering a range of financial transactions.

As previously reported, the government announced plans to cut BRL 31.3 billion from the 2025 budget to meet fiscal rules and plans to increase the tax on financial transactions.

Treasury Secretary Rogerio Ceron said at a press conference that no solution has been defined yet and discussions are still pending.

Several measures to curb tax expenditures sent to Congress have been watered down or stalled in the legislative process.

Motta previously stated that Congress will likely overturn the proposal to increase the tax on financial transactions if it reaches the voting agenda.

Earlier, Brazil issued Decree No. 12.466 of 22 May 2025, which increases the financial transactions tax (IOF) rate on specific insurance, credit, and foreign exchange transactions.

In a similar move, Brazil’s Finance Ministry scrapped a higher transaction tax on overseas investments on 23 May 2025 after critics called it a step backwards for capital controls.