Brazil: Government Backs Investment Tax Reform
Brazil – June 13, 2025 – www.zonadeazar.com – While government-aligned senators defend the provisional measure that standardizes the taxation of financial investments as a key tool for fiscal adjustment, opposition and centrist senators argue more time is needed to review the proposal and assess its key elements. The topic was heavily discussed during Thursday’s (June 12) party leaders’ meeting.
Senator Randolfe Rodrigues (AP), the government’s leader in Congress, urged parliamentary groups to appoint members to the joint commission for reviewing the measure as soon as possible.
Provisional Measure 1.303/2025 was published on Wednesday (June 11) in a special edition of the Federal Register and must be approved by both chambers by August 28. The government expects to collect BRL 10.5 billion in 2025 and BRL 20.6 billion in 2026.
According to Rodrigues, the MP has three main pillars: fiscal responsibility, tax fairness, and public health. He emphasized that the proposal does not increase the tax burden but ensures fairer contribution rules — noting that it is unjust for most Brazilians to pay taxes while multimillionaires with large bank investments do not.
Previously exempt securities such as LCIs, LCAs, CRIs, CRAs, and incentivized debentures will now be taxed at 5%. Crypto assets and similar products will face a flat 17.5% income tax, regardless of holding period. Savings accounts remain tax-free.
The MP also changes the Social Contribution on Net Profit (CSLL) for financial institutions, eliminating the lower 9% rate.
Additionally, the tax on betting companies’ revenue increases from 12% to 18%. According to the government, this public health-oriented measure aims to reduce gambling addiction, which currently affects 70% of Brazilians.
The only point of consensus among senators is the betting tax hike. Senator Plínio Valério (PSDB-AM) acknowledged the Senate erred by rushing to regulate online betting and is now trying to make amends.
There was also discussion of a possible bill to tax betting transactions made via Pix, Brazil’s instant payment system. However, senators Carlos Viana and Plínio Valério warned such a move could trigger a wider crisis if the public perceives a risk of broader Pix taxation.
Regarding the broader contents of the MP, senators called for more time to analyze it and present amendments or veto points. Carlos Viana expressed strong opposition to any taxation of agribusiness investments, such as the Agricultural Credit Note (LCA), included in the MP.
The measure was introduced after the repeal of a presidential decree that had increased the IOF financial transaction tax. In its place, a new decree adjusted IOF rates: the fixed rate for corporate credit dropped from 0.95% to 0.38%, and the “risco sacado” transaction now has only a daily rate of 0.0082%.
Despite the changes, Speaker Hugo Motta confirmed that he will push for a vote to overturn the IOF decree. Randolfe warned that failure to approve both the MP and the IOF decree could trigger new budget freezes, potentially reaching up to BRL 80 billion and impacting congressional amendments.
Senators also agreed to fast-track voting on the bill (PLP 177/2023) to expand the number of seats in the Chamber of Deputies from 513 to 531, starting with the 2026 election.
Finally, a joint session of Congress is scheduled for next Tuesday (June 17), to review 60 presidential vetoes and read the motion to create the INSS Parliamentary Inquiry Commission (CPMI).
(Source: Agência Senado – Reproduction authorized with attribution)
Edited by: @_fonta – www.zonadeazar.com