Brazil’s government is expected to back a bill proposing a 10% reduction in federal tax breaks, with a 5% cut in 2025 and another 5% in 2026.
Brazil’s government is likely to support a bill for a 10% cut to federal tax breaks, multiple sources reported on 5 June 2025.
The bill proposed by lawmaker Mauro Benevides sets a 5% cut to tax benefits in 2025 and another 5% in 2026. It also applies to fiscal and credit benefits. The measures could boost government revenue by BRL 40 billion in 2025, and another BRL 40 billion next year.
The compromise followed after Brazil’s Congress lower house speaker, Hugo Motta, said on 29 May 2025 that the government would present an alternative plan for the IOF tax increase on financial transactions within 10 days.
Earlier, Brazil’s President Luiz Inacio Lula da Silva signed a law raising the financial transaction tax (IOF) on company credit, pension fund contributions, and some foreign exchange operations. The increases were aimed at boosting revenue during a major spending freeze but faced intense backlash.
The IOF is a financial levy applied to individuals and businesses in Brazil, covering a range of financial transactions.
Earlier, Brazil raised the financial transactions tax (IOF) rate on certain insurance, credit, and foreign exchange transactions. Similarly, Brazil’s Finance Ministry scrapped a higher tax on overseas investments on 23 May 2025 after critics called it a setback for capital controls.
