Federal Supreme Court Justice Alexandre de Moraes has reinstated Decree No. 12.499 with retroactive effect from 11 June 2025 after failed government-National Congress conciliation.
Brazil’s Federal Supreme Court Justice Alexandre de Moraes issued a ruling on 16 July 2025, which largely reinstates the validity of the government’s latest decree, which raised the financial transactions tax (IOF) rates and broadened its scope.
This decision followed a failed conciliation hearing between the government and the National Congress the day before.
Earlier, 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Legislative Decree No. 176/2025, approved by the National Congress on 25 June 2025, repealed three presidential decrees that had increased financial transactions tax (IOF) rates.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, had also been suspended.
Justice Moraes has reinstated Decree No. 12.499 with retroactive effect from 11 June 2025, but has suspended the levy of IOF on drawn risk transactions, similar to forfait operations in trade financing. The decision remains subject to review by the Court’s full bench.
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.
